SCHICK v HOST MARRIOT CORP - Legal Case Documents


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SCHICK v HOST MARRIOT CORP

Keywords & Phrases

CaseNo: C.A. No. 15,991, CourtCode: CC, CourtName: IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE, Plaintiff: SCHICK, State: DE Delaware, UniqueCaseRef: DE>CC>00015991, Marriott, Limited Partners, Partnership, Agreement, Courtyard, Management, Marriott Corporation, Intervenor, Cbm, Distribution, Partnerships, Refinancing Proceeds, Priority, Host Marriott, Class Action, Hotels, Intervention, Delaware, Schick, Hirsch, Weiss, Cmc, General Partner, Stemerman, Objectives, Hospitality Valuation Services, Investment, Class Action Petition, Marketing, Agreements, Assert, Management Fee, Stephen Rushmore, Operating, Robert, Texas, Complaint, Restated Loan , ContentID: 120240981

Case Documents

AMENDED MOTION FOR INTERVENTION
[ see first page and extracted highlights below ] ItemID: 103557

CLASS ACTION PETITION
[ see first page and extracted highlights below ] ItemID: 103559

MOTION FOR INTEREVENTION
[ see first page and extracted highlights below ] ItemID: 103558

CLASS ACTION COMPLAINT
[ see first page and extracted highlights below ] ItemID: 102184

Total Documents: 4 documents , 50 pages

Price: $ 34.95

IVESLCD01 KGI0001

1 . AMENDED MOTION FOR INTERVENTION

EXTRACTED KEY WORDS

CBM
INTERVENTION
DEFENDANTS
SCHICK
HIRSCH
COURT
WEISS
LIMITED PARTNERS
COURTYARD
COUNSEL
MARKETING
ASSERT
HOST MARRIOTT
AGREEMENT
AMENDED MOTION
OPERATING
DELAWARE
PLAINTIFFS
ROBERT
COURTYARD MANAGEMENT
TEXAS
COMPLAINT
PARSONS
LLP
DISCOVERY
FRAUDULENT
MILKES ACTION
REPRESENTATIVES
HAAS ACTION

                 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                               IN AND FOR NEW CASTLE COUNTY

MARVIN SCHICK and JACK HIRSCH,
individually and on behalf of all others
situated,

         Plaintiffs,

         V.

HOST MARRIOTT CORPORATION, CBM
ONE            CORPORATION,         B R U C E   F .
STEMERMAN, ROBERT E. PARSONS, CA. No. 15991NC
MARRIOTT INTERNATIONAL, INC., and
COURTYARD MANAGEMENT CORP.,

         Defendants.
                                                                                           `,






                                NOTICE OF AMENDED MOTION

TO:      William D. Johnston, Esquire
         Young Conaway Stargatt & Taylor, LLP
         Eleventh Floor, Rodney Square North
         P.O. Box 391
         Wilmington, Delaware 19899-0391

         Lawrence C. Ashby, Esquire
         Ashby & Geddes
         One Rodney Square
         P.O. Box 1150
         Wilmington, Delaware 19899

         James C. Strum, Esquire
         Chimicles & Tikellis LLP
         One Rodney Square
       Wilmington, Delaware 19801

         PLEASE TAKE NOTICE that the attached amended motion will be presented at a date

and time convenient to the Court. Intervenor is filing this amended motion to delete references

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

MARVIN SCHICK and JACK HIRSCH, individually and on behalf of all others situated,

HOST MARRIOTT CORPORATION, CBM

STEMERMAN, ROBERT E. PARSONS, CA.

COURTYARD MANAGEMENT CORP.,

PLEASE TAKE NOTICE that the attached amended motion will be presented at a date

to parties who have not yet been named as defendants.

is substantively identical to the Motion for Intervention filed on April 28,

Texas 77002 Telephone: 238-2000 Facsimile: 2382002

In their complaint, Schick and Hirsch describe in general terms Marriott's

marketing CBM I in 1986, the dismal failure of CMB I as an investment, the exorbitant fees

One's agreement in 1994 and 1997, without the consent of CBM I's limited partners, to decrease

the defendants and counsel for plaintiffs Schick and Hirsch have informed

Counsel for Intervener Weiss filed suit against the Marriott defendants

form of recission and/or reformation of relevant operating documents.

Discovery in the Milkes Action has been extensive.

including representatives of Bear Steams Inc. and Salomon Smith Barney (both of whom

585 investors filed suit on the basis of Marriott's fraudulent practices in marketing and

the Haas Action and the case before this Court plainly concern the

Schick and Hirsch do not assert any causes

2 . CLASS ACTION PETITION

EXTRACTED KEY WORDS

DEFENDANTS
COURTYARD
INTERVENOR
MARRIOTT CORPORATION
PARTNERSHIPS
HOST MARRIOTT
CLASS ACTION
MANAGEMENT
HOTELS
CBM
DELAWARE
CLASS ACTION PETITION
LIMITED PARTNERS
AGREEMENTS
STEPHEN RUSHMORE
HOSPITALITY VALUATION SERVICES
STEMERMAN
INTERVENTION
LEASE AGREEMENTS
AFFILIATES
CLASS MEMBERS
PRESIDENT
PARTICIPANT
GENERAL PARTNER
MISREPRESENTATIONS
SUFFER INJURY
INVESTMENT
OFFERING MATERIALS
OBLIGATIONS

                  IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                                IN AND FOR NEW CASTLE COUNTY

MARVIN SCHICK and JACK HIRSCH,
individually and on behalf of all others
situated,

         Plaintiffs,

MURRAY F. WEISS,

         Intervenor,

         V .                                         CA. No. 15991NC

HOST MARRIOTT CORPORATION, CBM
ONE             CORPORATION,      COURTYARD
MANAGEMENT CORPORATION, HOST
INTERNATIONAL, INC., J.W. MARRIOTT,
JR., BRUCE F. STEMERMAN, ROBERT
PARSONS, STEPHEN RUSHMORE, and
HOSPITALITY VALUATION SERVICES,
INC.,

         Defendants



                        CLASS ACTION PETITION IN INTERVENTION

         Murray F. Weiss, Intervenor, on behalf of himself and all others similarly situated, file

this Class Action Petition in Intervention against Marriott International, Inc., Host Marriott

Corporation, CBM One Corporation, Courtyard Management Corporation, Host International,

Inc., Bruce F. Sternerman, Robert E. Parsons, J.W. Marriott, Jr., Stephen Rushmore and

Hospitality Valuation Services, Inc., Defendants.



                                           The Parties

        1.     This action is instituted by Intervenor individually and on behalf of a class of all

others similarly situated.

HOST MARRIOTT CORPORATION, CBM

Murray F. Weiss, Intervenor, on behalf of himself and all others similarly situated, file

this Class Action Petition in Intervention against Marriott International, Inc., Host Marriott

Corporation, CBM One Corporation, Courtyard Management Corporation, Host International,

Hospitality Valuation Services, Inc., Defendants.

Courtyard I was formed by Marriott Corporation in 1986.

International, Inc., a corporation organized and existing under laws of the State of Delaware.

Courtyard I hotels.

was Chairman of the Board and President of Marriott

Defendant Bruce F. Stemerman is a director and the President of CBM One and is

who was a director and the President of the General Partner at all relevant times until

Courtyard I since its inception, excluding however, the defendants, their subsidiaries or

of documents provided to class members,

expense of CBM I limited partners,

all subject to lucrative management or lease agreements.

through Courtyard I and through other limited partnerships

investment for the limited partners.

Marriott attempted to insulate a substantial part of its assets from its obligations to the

distributions at anywhere near the level forecast in the offering materials.

was an active participant in and a major beneficiary

causing to be made material misrepresentations to Intervenor and/or failed to disclose

Intervenor have suffered and will continue to suffer injury.

3 . MOTION FOR INTEREVENTION

EXTRACTED KEY WORDS

CBM
INTERVENOR
SCHICK
HIRSCH
WEISS
DEFENDANTS
COURT
LIMITED PARTNERS
HOST MARRIOTT
COUNSEL
MARKETING
ASSERT
COURTYARD
AGREEMENT
OPERATING
PLAINTIFFS
MANAGEMENT CORPORATION
ROBERT
HOSPITALITY VALUATION SERVICES
TEXAS
COMPLAINT
PARSONS
LLP
DELAWARE
DISCOVERY
FRAUDULENT
REPRESENTATIVES
HAAS ACTION
MILKES ACTION

                 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE                           `)
                               IN AND FOR NEW CASTLE COUNTY

MARVIN SCHICK and JACK HIRSCH,
individually and on behalf of all others
situated,

         Plaintiffs,

MURRAY F. WEISS,

         Intervenor,

         V.                                      C.A. No. 15991NC
                                                                     ,            .I

HOST MARRIOTT CORPORATION, CBM                                              :           .
                                                                     1..

ONE            CORPORATION,         COURTYARD
MANAGEMENT CORPORATION, HOST
INTERNATIONAL, INC., J.W. MARRIOTT,
JR., BRUCE F. STEMERMAN, ROBERT
PARSONS, STEPHEN RUSHMORE, and
HOSPITALITY VALUATION SERVICES,
INC.,

         Defendants



                                       NOTICE OF MOTION

TO:      William D. Johnston, Esquire
         Young Conaway Stargatt & Taylor, LLP
         Eleventh Floor, Rodney Square North
         P.O. Box 391
         Wilmington, Delaware 19899-0391

         Lawrence C. Ashby, Esquire
         Ashby & Geddes
         One Rodney Square
         P.O. Box 1150
         Wilmington, Delaware 19899

         James C. Strum, Esquire
         Chimicles & Tikellis LLP
         One Rodney Square
         Wilmington, Delaware 19801

MARVIN SCHICK and JACK HIRSCH, individually and on behalf of all others situated,

MURRAY F. WEISS,

MANAGEMENT CORPORATION, HOST INTERNATIONAL, INC., J.W. MARRIOTT, JR., BRUCE F. STEMERMAN,

PARSONS, STEPHEN RUSHMORE, and

HOSPITALITY VALUATION SERVICES, INC.,

Wilmington, Delaware 19899-0391

Texas 77002 Telephone: 238-2000 Facsimile: 238-2002

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

HOST MARRIOTT CORPORATION, CBM

and Jack Hirsch on behalf of purchasers of limited partnership units in Courtyard by Marriott

Named as defendants are various Marriott entities, including Host Marriott

In their complaint, Schick and Hirsch describe in general terms Marriott's

marketing CBM I in 1986, the dismal failure of CMB I as an investment, the exorbitant fees

One's agreement in 1994 and 1997, without the consent of CBM I's limited partners, to decrease

the defendants and counsel for plaintiffs Schick and Hirsch have informed

form of recission and/or reformation of relevant operating documents.

Discovery in the Milkes Action has been extensive.

including representatives of Bear Steams Inc. and Salomon Smith Barney (both of whom

585 investors filed suit on the basis of Marriott's fraudulent practices in marketing and

the Haas Action and the case before this Court plainly concern the

Schick and Hirsch do not assert any causes

4 . CLASS ACTION COMPLAINT

EXTRACTED KEY WORDS

PARTNERSHIP
AGREEMENT
DISTRIBUTION
MANAGEMENT
DEFENDANTS
REFINANCING PROCEEDS
PRIORITY
MARRIOTT
MARRIOTT CORPORATION
PLAINTIFFS
COURTYARD
CBM
CMC
OBJECTIVES
GENERAL PARTNER
INVESTMENT
MANAGEMENT FEE
RESTATED LOAN
STEMERMAN
RESTRUCTURING
UNITHOLDERS
CASH FLOW
OPERATING PROFIT
FIDUCIARY DUTIES
COMMON STOCK
SALE PROCEEDS
LEASE AGREEMENT
ATTORNEYS
IMF

                                                                                   `/  :       /

             IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                                IN AND FOR NEW CASTLE COUNTY



MARVIN SCHICK and JACK HIRSCH, individually                           :
and on behalf of all others similarly situated,

                                   Plaintiffs,

        -against-

HOST MARRIOTT CORPORATION, CBM ONE
CORPORATION, BRUCE F. STEMERMAN,
ROBERT E. PARSONS, MARRIOTT
INTERNATIONAL, INC., and COURTYARD
MANAGEMENT CORPORATION,

                                   Defendants.
------------------_-----------------------------------------------------X

                                     CLASS ACTION COMPLAINT                  __     .

                 Plaintiffs, by their attorneys, allege as follows:

                                       NATURE OF THE ACTION

                 1.       The primary investment objective of Courtyard by Marriott Limited

Partnership (the "Partnership") was to provide the limited partners with an annual

priority return from operations while providing a tax-free return of capital from

refinancing proceeds. The defendants have restructured the Partnership's distribution

structure to reduce or eliminate the annual priority return upon the receipt of

refinancing proceeds, without the requisite limited partner approval, contrary to the

terms of the Partnership's Amended and Restated Agreement of Limited Partnership

(the "Partnership Agreement").



                                         PARTIES

-against-HOST MARRIOTT CORPORATION, CBM ONE CORPORATION, BRUCE F. STEMERMAN, ROBERT E.

Plaintiffs, by their attorneys, allege as follows:

The primary investment objective of Courtyard by Marriott Limited

Partnership was to provide the limited partners with an annual

priority return from operations while providing a tax-free return of capital from

The defendants have restructured the Partnership's distribution

refinancing proceeds, without the requisite limited partner approval, contrary to the

terms of the Partnership's Amended and Restated Agreement of Limited Partnership

Defendant Host Marriott Corporation is a corporation

Defendant CBM One Corporation ("CBM One" or the "General

One is a wholly-owned subsidiary of Host, and is the Partnership's general partner.

Ml is in the business of operating the hotels owned by Host, and its common stock is

Defendant Courtyard Management Corporation (`CMC" or the

CMC is a whollyowned subsidiary of Ml and is the Partnership's property manager.

in furtherance of the best interests of the Partnership and its Unitholders so as to

Agreement and/or their fiduciary duties to the Limited Partners and/or have aided,

Objectives and Management Fee Structure

investment in the Partnership will provide the Limited Partners an opportunity to benefit

Incentive Management Fee to a 10% priority return.

CMC is entitled to IMF

remainder of Cumulative Capital less cumulative distributions of Sale Proceeds."

"Restated Loan") with its lenders on April 18,

The Partnership, as lessor, earns annual rent equal to 85% of the operating profit.

Marriott Corporation underwent a restructuring in 1993 that led to

This re-definition of Priority Return in the Lease Agreement


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