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1
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ANSWER TO AMENDED DERIVATIVE COMPLAINT
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EXTRACTED KEY WORDS
PARAGRAPH DENY ADMIT ALLEGE SECOND SENTENCES COURT RESPONSE NVC THIRD SENTENCE RESPECTFULLY REFER BGL MEETING TRANSACTION AVER STOCK PURPORTS PLAINTIFFS DEFENDANTS LORBER BEINSTEIN BROOKE OUTSTANDING SPECIAL COMMITTEE FISCHBEIN BADILLO OPPENHEIMER RESSLER INFORMATION SUFFICIENT TRUTH |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`7" ,`r.;
,si ,.,- `2
IN AND FOR NEW CASTLE COUNTY
__.--__ --I ,.
IN RE NEW VALLEY CORPORATION
DERIVATIVE LITIGATION Consolidated CA. No. 17649NC
ANSWER TO AMENDED DERIVATIVE COMPLAINT
Defendants New Valley Corporation ("NVC"), Brooke Group Ltd. ("E1GL") (now
known as Brooke Group Holdings), Bennett S. LeBow ("LeBow"), Howard M. Lorber
("Lorber"), Arnold 1. Burns ("Bums"), Ronald J. Kramer ("Kramer"), Richard J. Lampen
("Lampen"), Hem-y C. Beinstein ("Beinstein"), Barry W. Ridings ("Riding?) and Richard S.
Ressler ("Ressler"), by their undersigned attorneys, hereby respond to the Amended Derivative
Complaint ~("Complaint") as follows:
1. Aver that Paragraph 1 of the Complaint purports to state a legal conclusion
as to which no response is required, except that to the extent that any facts are de'smed to be
alleged, they are denied.
2. Deny having knowledge or information sufficient to form a bel; ef as to the
truth of the allegations contained in the first and second sentences of Paragrap:i 2 of the
Complaint. Admit the allegations contained in the third, fourth and fifth sentences o:FParagraph
2 of the Complaint. Deny having knowledge or information sufficient to form a belief as to the
truth of the allegations contained in the sixth sentence of Paragraph 2 of the Complaint.
3. Deny having knowledge or information sufficient to form a belief as to the
truth of the allegations contained in Paragraph 3 of the Complaint.
4. Deny the allegations contained in Paragraph 4 of the Complaint, except
admit that plaintiffi; purport to bring this action derivatively on behalf of and for the
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2
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MEMORANDUM OPINION
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EXTRACTED KEY WORDS
PLAINTIFFS DEFENDANTS COURT MOTION DISMISS AMENDED COMPLAINT FACTS OPINION VALLEY DELAWARE DERIVATIVE ACTION TRANSACTION PARTIES CHANCERY BROOKE ALLEGATIONS FAIRNESS OPINION DIRECTORS SPECIAL COMMITTEE SHAREHOLDER LITIG WILMINGTON LLP ATTORNEYS CHANCELLOR CHANCERY RULE FACTUAL ALLEGATIONS CASTLE COUNTY EISENHOFER MEMORANDUM OPINION |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE NEW VALLEY > Consolidated
CORPORATION DERIVATIVE ) Civil Action No. 17649
LITIGATION > & CD
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y:`; :.-
-..I :.T 3 5
r*`l 4 --)
MEMORANDUM OPINION -rr.
.--, --
.,A. % ,.`. ;I
-_*
Date Submitted: December 19, 2000
Date Decided: January 11,200l
Jay W. Eisenhofer, Megan D. McIntyre, John C. Kairis, of GRANT &
EISENHOFER, P.A., Wilmington, Delaware; and Norman M. Monhait, of
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A., Wilmington,
Delaware; OF COUNSEL: Judith L. Spanier, of ABBEY, GARDY &
SQUITIERI, LLP, New York, New York, Attorneys for Plaintiffs.
Michael D. Goldman, Peter J. Walsh, Jr., Brian C. Ralston, of POTTER
ANDERSON & CORROON LLP, Wilmington, Delaware; OF COUNSEL:
Michael L. Hirschfeld, Jennifer M. Anglim, Allana F. Stark, Teresa A.
Gonsalves, of MILBANK, TWEED, HADLEY & McCLOY LLP, New
York, New York, Attorneys for Defendants.
CHANDLER, Chancellor
Pending before me in this derivative action is defendants' motion to
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3
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OPENING BRIEF IN SUPPORT OF DEFENDANTS MOTION TO DISMISS THE AMENDED COMPLAINT
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EXTRACTED KEY WORDS
PLAINTIFFS SPECIAL COMMITTEE COURT DEFENDANTS TRANSACTION NVC DEL ALLEGATIONS COMPLAINT MOTION INDEPENDENCE DISMISS FACTS APPRAISALS DUCAT BROOKEMIL TRANSACTION BGL FAIRNESS OPINION CONSOLIDATION OPPENHEIMER STOCK PURCHASE AGREEMENT SHAREHOLDERS REAL ESTATE RJR NABISCO DISINTERESTEDNESS WALT DISNEY COMPENSATION RUSSIAN REAL ESTATE RECOMMENDATION |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE NEW VALLEY CORPORATION Consolidated C.A. No. 17649NC
DERIVATIVE LITIGATION
OPENING BRIEF IN SUPPORT OF DEFENDANTS'
MOTION TO DISMISS THE AMENDEDCOMPLAINT
Of Counsel: Michael 1~. Goldman
Michael L. Hirschfeld Peter J. Walsh, Jr.
Allana F. Stark Brian C. Ralston
Teresa A. Gonsalves POTTER ANDERSON &
MILBANK, TWEED, HADLEY CORROON LLP
& McCLOY LLP Hercules Plaza
1 Chase Manhattan Plaza 13 13 North Market Street
New York, New York 10005 Post Offi'ce Box 95 1
(212) 530-5000 Wilmington, Delaware 19899-095 1
(302) 98'1-6000
Attorneys for Defendants
Dated: March 13,200O
411002
TABLE OF
Page
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4
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AMENDED DERIVATIVE COMPLAINT
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EXTRACTED KEY WORDS
BROOKE LEBOW TRANSACTION PURCHASE STOCK SPECIAL COMMITTEE SHAREHOLDERS CHAIRMAN HEALEY BML PLAINTIFF RICHARD PRICE DEFENDANT BAKER MARKET OPPENHEIMER APPRAISALS CHIEF EXECUTIVE OFFICER COMPENSATION PARAGRAPHS COMMON STOCK REAL ESTATE FAIRNESS OPINION EMPLOYMENT SUBSIDIARIES STOCKHOLDER OUTSTANDING EXECUTIVE VICE PRESIDENT INDIVIDUAL DEFENDANTS |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
------------------------~---------------------------------------x
IN RE NEW VALLEY CORPORATION CONSOLIDATED
DERIVATIVE LIT1 GATION C.A. No. 17649-NC :
------------------------..-------------------------------------~-x
AMENDED DERIVATIVE COMPLAlNT
Plaintiffs Richard C. Goodwin ("Goodwin") and Richard Fuss ("Fuss") (collectively,
"Plaintiffs"), by and through their attorneys, allege, upon personal knowledge as to paragraphs I
through 3, and upon information and belief (based on the investigation of their counsel, including
counsel's review of books and records received from New Valley Corporation in response to
Goodwin's action pursuant to 8 Del. C. Q 220 `riled on December 11, 1998) as to all other matters
as follows:
NATURE OF ACTION
1. Plaintiffs, shareholders of New Valley Corporation ("New Valley" or the
"Company"), seek in this action the damages sustained by New Valley upon its purchase of
BrookeMil Ltd. ("BML") from Brooke Group, Ltd. ("Brooke") for a price far exceeding BML's
fair market value. This transaction was orchestrated by Bennett S. LeBow (L`LeBow"), the
Chairman and controlling stockholder of both New Valley and Brooke, in order to transfer
wealth from New Valley to Brooke (and ultimately to LeBow), at a time when New Valley was
financially sound and Brooke was in financial distress. Plaintiffs seek an order declaring that
Brooke, LeBow and the other New Valley directors who approved this transaction breached their
fiduciary duties and are liable to New Valley, and awarding, inter alia, New Valley the losses and
damages it has sustained as a result of Defendants' actions in approving this transaction on terms
completely unfair to New Valley.
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5
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DERIVATIVE COMPLAINT
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EXTRACTED KEY WORDS
BROOKE LEBOW DEFENDANTS PURCHASE LORBER PLAINTIFF STOCK RESSLER RICHARD GOODWIN VALLEY CORPORATION TRANSACTION SPECIAL COMMITTEE SHAREHOLDERS HEALEY BML OPPENHEIMER APPRAISALS PARAGRAPHS COMPENSATION BROOKE GROUP PLAINTIFFS ACTION PURSUANT REAL ESTATE COMMON STOCK FAIRNESS OPINION CHIEF EXECUTIVE OFFICER EMPLOYMENT CONTRACT INDIVIDUAL DEFENDANTS PERSONAL KNOWLEDGE |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
----------------------------------------------------------------x
RICHARD C. GOODWIN,
Plaintiff,
V. C A N
. . o. ) +`yr3c
BENNETT S. LEBOW, HOWARD M. LORBER, :
ARNOLD I. BURNS, RONALD J. KRAMER, :
RICHARD R. RESSLER, RICHARD J. LAMPEN, :
HENRY C. BEINSTEIN, BARRY W. RIDINGS :
and BROOKE GROUP, LTD.,
Defendants,
-and-
NEW VALLEY CORPORATION,
!'
-_
Nominal Defendant. :
- .+
-----------------------------------------------~----------------x
Plaintiff Richard C. Goodwin ("Goodwin" or "Plaintiff'), by and through his attorneys,
alleges, upon personal knowledge as to paragraphs 1 and 2, and upon information and belief (based
on the investigation of his counsel, including counsel's review of books and records received from
New Valley Corporation in response to Plaintiffs action pursuant to 8 l&& C 0 220 filed on
December 11, 1998) as to all other matters as follows:
TURE OF ACTION
1. Plaintiff, a shareholder of New Valley Corporation ("New Valley" or the
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