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A New York state judge has refused to dismiss a suit alleging that Robert J. Ivanhoe, chairman of Greenberg Traurig‘s New York office and head of its real estate group, disregarded his “legal and fiduciary duties” by taking a personal financial stake in a competitor to a client that had invested in a multibillion-dollar real estate venture. New York Supreme Court Justice Richard B. Lowe of Manhattan held in Nama Holdings LLC v. Greenberg Traurig LLP, 601054/08, that the operating agreement of Alliance Network, which retained Ivanhoe in connection with a multi-phase development project in Las Vegas, permitted the company’s principal investor, NAMA Holdings, to derivatively sue on behalf of Alliance. The judge also permitted the suit against Ivanhoe and Greenberg Traurig to proceed even though the defendants argued that a pending arbitration in California, which purportedly involves the “same allegations,” would “resolve or moot the issues” in the New York action. NAMA sued Ivanhoe and Greenberg Traurig in April 2008 for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, tortious interference with prospective economic damages, and malpractice. It also accused Ivanhoe of unjustly enriching himself at “the expense of Alliance” and NAMA, and asked that he and Greenberg Traurig be removed as attorneys for Alliance. Greenberg Traurig said in a statement that the allegations were “without merit” and vowed to appeal Lowe’s ruling. “Prior to filing the action, an arbitration panel had already denied the plaintiff’s earlier request to disqualify the firm and Mr. Ivanhoe [as Alliance's attorneys],” the firm stated. “When the facts are fully developed, we are confident the record will show there was no wrongdoing and that this lawsuit is an improper litigation tactic designed to gain leverage in the private arbitration and coerce an unjust settlement by suing an opposing party’s attorneys.” In the arbitration, Alliance is suing NAMA over failure to meet a capital call. Robert A. Rosenbaum, president of Greenberg Traurig, said in a separate statement that “Rob Ivanhoe is someone I and many in this community look up to as a leader, a lawyer and a human being who represents excellence and integrity of the highest caliber.” Alliance was formed in connection with the WMC Project, an eight-phase development situated on the 57-acre World Market Center in downtown Las Vegas. The convention center and showroom campus, designed to compete with the furniture complex in North Point, N.C., ultimately is expected to contain eight buildings with 12 million square feet of exhibit space. According to the complaint filed on behalf of it and Alliance, NAMA, a Nevada company, owns approximately a 70 percent equity interest in Alliance. A memorandum of law complaint says that Greenberg Traurig and Ivanhoe became involved with Alliance when the company’s managers, Shawn Samson and Jack Kashani, offered Related Companies — allegedly the firm’s largest real estate client — a 50 percent stake in the venture. Soon after Greenberg Traurig and Ivanhoe were retained by Alliance, they allegedly embarked on a covert partnership with Samson and Kashani to develop the competing Blue Diamond Venture, a proposed 100-acre convention center and furniture showroom situated “just miles” from the WMC project, which allegedly “seeks to exploit” ideas and infrastructure owed by Alliance. In a memorandum of law, NAMA accuses Ivanhoe “and perhaps other Greenberg Traurig lawyers” of having a “personal financial interest” in Blue Diamond. The papers fail to identify other firm attorneys who might possess a stake in the allegedly competing venture. Greenberg Traurig said Ivanhoe “has a small, deeply subordinated carried interest in Blue Diamond.” At any rate, the firm said the World Market Center is a different venture from Blue Diamond. “Blue Diamond is outside the radius of the World Market Center project,” the firm wrote in an e-mail. The firm said none of its other attorneys had any interest in Blue Diamond. According to NAMA’s complaint, Greenberg Traurig and Ivanhoe, along with Samson and Kashani, “sought to divest the remaining members of Alliance Network of their interests” by issuing and delivering “significant, improper, and unnecessary capital calls” to NAMA, refusing to distribute millions of dollars owed to it, withholding critical information from NAMA, coercing Alliance’s remaining members to give up “substantial” benefits, and concocting “a bogus assignment” of NAMA’s interests to Mendi and Moises Gertner — purportedly clients of defendants who had a stake in Blue Diamond. The firm and Ivanhoe not only failed to disclose their representation of the managers and the Gertners to NAMA, but kept Blue Diamond and Ivanhoe’s participation in the competing venture secret, NAMA claims. DELAWARE RULING On a motion to dismiss the New York suit, Greenberg Traurig and Ivanhoe noted that NAMA had lost the right to participate in certain aspects of the World Market Center project, as a result of its failure to meet a capital call. The defendants said that the legality of the capital call, NAMA’s attempt to secure records relating to the project, the managers’ participation and Ivanhoe’s purported investment in Blue Diamond, and the defendants’ role in allegedly assisting the managers’ wrongdoing are being litigated in a pending arbitration action in California, which will “resolve, and thus moot, the issues in this action.” Greenberg Traurig said in court papers that NAMA has already moved unsuccessfully to disqualify the defendants as Alliance’s attorneys in the arbitration “based on the same contentions” it asserts in the New York action. It also cited a 2007 Delaware Chancery Court ruling, NAMA Holdings, LLC v. World Market Center Venture, LLC, 2756-VCL, in which the judge “criticized NAMA for threatening to reveal confidential information about the World Market Center to its sole competitor” in High Point, N.C. Calling NAMA’s current suit “a thinly veiled effort to evade the prior rulings,” Greenberg Traurig and Ivanhoe contended before Lowe that NAMA’s derivative claims were precluded by Alliance’s operating agreement, which they said gives the managers sole authority to sue on behalf of the company. NAMA countered that allegations that the firm and Ivanhoe violated their “professional, ethical and fiduciary duties” to Alliance were “wholly separate” from the arbitration claims, and maintained that the operating agreement permitted NAMA to bring a derivative action. OPPORTUNITY TO CONTEST Justice Lowe agreed on both counts. Citing Nevada Business Associations Law §86.483, which allows a member to bring a derivative action “unless otherwise prohibited,” the judge ordered NAMA’s derivative suit to proceed against the defendants. He also rejected the defendants’ claim that the New York action should be dismissed because of the pending arbitration. The judge noted that “the two proceedings here lack even substantial identity of the parties because the only defendants in the action (Greenberg Traurig and Ivanhoe) are not parties” to the arbitration. The judge also concluded that NAMA’s unsuccessful attempt in the arbitration proceeding to disqualify Greenberg Traurig as Alliance’s attorney failed to “demonstrate conclusively that NAMA had a ‘full opportunity’ to contest the issue.” Lowe refused to stay the issue and directed the defendants to answer the complaint within 20 days of service of his order. NAMA is represented by Steven A. Berger and Jonathan Rogin of Berger & Webb. Berger said in an interview that Lowe’s ruling “speaks volumes” about Greenberg Traurig’s “perception of the case” and added, “We are going to pursue our claims vigorously.” Martin I. Kaminsky, Edward T. McDermott and Justin Y.K. Chu of Pollack & Kaminsky served as counsel to Greenberg Traurig and Ivanhoe. Richard A. Schirtzer of Quinn Emanuel Urquhart Oliver & Hedges‘ Los Angeles office represent Samson and Kashani in the arbitration but not in the suit before Lowe. Schirtzer said the managers denied any wrongdoing.

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