The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:
MEMORANDUM OPINION AND ORDER
Patricia Fox, on behalf of a putative class of former preferred shareholders, filed suit against Prime Group Realty Trust (PGRT), its directors, and Five Mile Capital Partners LLC and its affiliates (Five Mile). Fox moved for a preliminary injunction against a proposed cash-out merger, which the Court denied. Fox v. Prime Group Realty Trust, No. 12 C 9350, 2012 WL 6680349 (N.D. Ill. Dec. 21, 2012). The Court later granted Fox leave to amend her complaint.
In her amended complaint, Fox alleges that PGRT (now called Riverview Realty Partners), its directors, and its management breached fiduciary duties owed to Fox and other preferred shareholders and that Five Mile aided and abetted these breaches. Fox also alleges self-dealing on the part of PGRT's officers. She also claims that Five Mile breached its fiduciary duties as a majority shareholder and was unjustly enriched as a result. Defendants have moved to dismiss all of Fox's claims for failure to state a claim.
For the reasons stated below, the Court dismisses certain of Fox's claims but declines to dismiss others.
The Court draws the following facts from Fox's complaint and accepts those facts as true for purposes of the motion to dismiss. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
PGRT, now known as Riverview Realty, was a real estate investment trust organized under the laws of Maryland. The company owned, managed, and leased office buildings, including one at 330 N. Wabash Street in Chicago.
In 1998, PGRT issued four million shares of Series B Cumulative Redeemable Preferred Stock. Under the Articles Supplementary governing the preferred shareholders' rights, if dividend distributions were in arrears for six or more quarterly periods, preferred shareholders were entitled to vote for the election of two trustees to serve on the board. Preferred shareholders otherwise were not entitled to vote for board members. The Articles Supplementary also gave shareholders the right to vote on any proposed merger that would result in an exchange of their shares. In order for a merger to take place, at least two-thirds of the preferred shareholders were required to vote in its favor.
In 2005, The Lightstone Group acquired all of PGRT's outstanding common shares. On February 11, 2011, Lightstone transferred all of its common shares back to PGRT for no financial consideration, leaving the preferred shareholders as PGRT's sole shareholders. Various trustees affiliated with Lightstone resigned from the board. The remaining trustees were Patterson, Sabin, Tominus, and Whittemore (the trustee defendants).
Three days later, on February 14, 2011, PGRT and Five Mile, an investment and asset management company, entered into a joint venture agreement concerning the 330 N. Wabash building as well as a proposed merger agreement. Under the terms of the joint venture agreement, PGRT contributed its interest in the 330 N. Wabash building and approximately $12.3 million in cash. In return, Five Mile contributed $22.2 million in cash and committed to contribute up to approximately $97 million more. In connection with the proposed merger, Five Mile made a tender offer of $5.00 per share for PGRT's preferred shares and offered PGRT's officers retention and incentive plan payments. Fox alleges that the trustee defendants stated in the proposed merger proxy statement that if the merger was not approved, the board would authorize a dividend in the form of common stock to be issued to the preferred shareholders on a basis of one common share for each preferred share outstanding.
On June 6, 2011, at a special meeting of the preferred shareholders, less than two-thirds of the preferred shareholders voted for the merger. In addition to voting down the merger, the preferred shareholders -- having last received dividends on January 20, 2009 -- exercised their right to elect two trustees: Orticelli and Rameson.
Rather than issuing the promised common stock dividend to the preferred shareholders, the newly constituted board instead amended PGRT's declaration of trust to grant the preferred shareholders voting rights. The board scheduled a meeting for August 23, 2011 to formally review and approve the draft proxy materials, which, among other things, provided for the re-election of the existing board members and set the date for the annual meeting to vote on the amendment, to be held on October 7, 2011.
According to Fox, the trustee defendants specifically told the new board members at the meeting that the goal of the proxy materials was to get the current board re-elected. Though this would have guaranteed the newly-elected board members' positions, the new board members nonetheless sought inclusion of a mechanism that would allow the preferred shareholders to change the composition of the board.
On August 29, 2011, the board met to finalize the proxy materials. It voted to postpone the annual meeting to October 18, 2011. The next day, all board members received the final proxy materials and were advised that they would be delivered to shareholders over the next few days.
Fox alleges that in an attempt to thwart preferred shareholders' control, PGRT's officers used the time leading up to the annual meeting to negotiate a common share issuance and tender offer transaction with representatives of Five Mile. According to Fox, the officers -- without any board authority -- met and negotiated the deal with Five Mile, retained Duff & Phelps, LLC (D&P) to render a fairness opinion on the consideration offered for both the common and preferred shares, hired Compass Point Research & Trading, LLC (Compass) to conduct a market check, determined that common shares would be sold for $625,000, and agreed to a tender offer at $5.00 per preferred share.
On the evening of October 7, 2011, PGRT's officers e-mailed the board members, announcing a board meeting for October 10, 2011, which was Columbus Day. The agenda included an executive summary stating that "management has negotiated a Stock Purchase Agreement and related agreements with Five Mile Capital Partners LLC." Compl. ¶ 72. The board materials consisted of 171 pages. Orticelli did not receive the e-mail or materials because he had already left town for the holiday weekend. Nevertheless, PGRT's officers denied Orticelli and Rameson's requests to postpone the meeting. Thus on October 10, 2011, the board met as scheduled and voted to approve the common share issuance to Five Mile.
After the sale of common stock to Five Mile closed, Five Mile, pursuant to a settlement agreement in litigation brought by Rameson, agreed to increase its tender offer price for the preferred shares to $5.25 per share. Rameson and a number of other preferred stockholders tendered their shares, leaving Five Mile with 100 percent of PGRT's common stock and sixty-five percent of PGRT's preferred shares. As part of the settlement agreement, Rameson resigned from the board. By March 29, 2012, Five Mile, as majority shareholder for both the common and preferred stock, had "installed and controlled every member of PGRT's board." Id. ¶ 93.
Fox alleges that the preferred shares were worth more than $5.25 per share before PGRT issued Five Mile common shares. According to Fox, the 330 N. Wabash building had gained value in 2011, primarily because its attached garage was raising more revenue and because the American Medical Association had signed a letter of intent to lease space in the building beginning in September 2013. Fox also alleges that Five Mile's payment of $625,000 in exchange for all of PGRT's common shares was "inadequate" given that PGRT sold control of the company for only $.10 per share. Id. ¶ 76.
On June 26, 2012, Five Mile made an offer to the board to acquire the balance of the preferred shares that Five Mile did not yet own, for $5.25 per share. The next day, the board formed a special committee comprising trustee defendants Sabin, Whittemore, and Tominus to evaluate the offer. On June 28, 2012, the special committee again retained D&P to provide an opinion on the fairness of the merger consideration. Fox alleges that D&P reported the 330 N. Wabash building's income incorrectly, thereby skewing its valuation of the preferred shares.
On September 21, 2012, Sabin met with members of Five Mile in New York and made a counteroffer of $5.35 per preferred share. On September 24, 2012, Five Mile notified the special ...