Humphrey Hospitality Trust officials declined to comment Thursday on the lawsuit. Since announcing the problems with the hotel management company, the REIT has appointed a panel to explore the options available for managing its properties and last week said it had appointed the NYC-based company Cohen & Steers Capital Advisors LLC as its financial advisor.

The suit was filed in the US District Court for the Eastern District of Virginia on behalf of everyone who bought Humphrey Hospitality Trust securities between Nov.14, 2000 and Mar. 29, 2001. Also named in the suit are Humphrey chairman Paul J. Schulte, president and treasurer James I. Humphrey, Jr. and executive vice president Steven H. Borgmann.

Shortly after that filing, another firm, Cohen, Milstein, Hausfeld & Toll PLLC, which specializes in class-action litigation, joined the suit. Its chairman, Michael D. Hausfeld, was named "the most feared lawyer" in Washington, DC in an article in Regardies Power that detailed his work on behalf of injured people against such corporate giants as Texaco, Exxon and the Swiss banks.

The suit claims that during the November to March time frame, the REIT and its officers issued "a series of material misrepresentations... thereby artificially inflating the price of Humphrey securities." It also says the "defendants conditioned the market to believe in the strength of Humphrey's financial condition, and that Humphrey's conservative fiscal policies meant that its dividend was secure."

The announcement on Mar. 29 that the hotel managers leasing the REIT's properties wouldn't be able to continue to operate them without its rent substantially reduced "shocked the market" and led to a drop in the stock's value from $7.09 per share to $4.78 per share after heavy trading, according to the lawsuit. The REIT also announced it wouldn't be paying its normal dividend.

Humphrey Hospitality Trust owns 92 limited service hotels and one office building in 19 states, primarily in the Midwest and eastern United States. The properties are leased to Humphrey Hospitality Management, Inc. and its subsidiary Supertel Hospitality Management Inc.

The deadline for joining the claim is June 18.