Wenzel v. Knight et al

Filing 49

OPINION. Signed by District Judge John A. Gibney, Jr on 6/1/15. (tdai, )

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division DOROTHY WENZEL, on behalf of herself and all others similarly situated, Plaintiff, V. CaseNo. 3:14-cv-432 GLADE M. KNIGHT, et al., Defendants. OPINION Apple REIT Eight, Inc. ("A8"), the company at the center of this suit, created a program that allowed its shareholders to forgo a cash dividend in favor of receiving more shares in the company. Wenzel, an A8 shareholder, brings this putative class action against A8, its directors, managers, and advisors, alleging that they set the price for those dividend-reinvestment shares at an artificially high rate. Having already had her first complaint in this matter dismissed, Wenzel comes back for a second bite. She asks the Court to find that, in setting the share price so high, the defendants breached a contract, interfered with her business expectancy, defrauded shareholders, committed negligence, and perpetrated Virginia state law securities fraud. The defendants filed this motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Wenzel originally brought this action against A8 and Apple REIT Seven, Inc. ("A7"), a similarly managed but legally distinct real estate investment trust. The Court dismissed that original complaint because Wenzel lacked standing to sue on behalf ofA7 shareholders, failed to appropriately assert fiduciary breach claims against A8 as derivative actions, and failed to state a

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