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NEW YORK CITY-Coventry Real Estate Advisors filed a $500-million lawsuit Wednesday against Developers Diversified Realty, alleging that DDR committed fraud, malfeasance, mismanagement, violation of fiduciary and contractual obligations and self-dealing in a dozen retail properties DDR was leasing and managing for Coventry. In a release, locally based Coventry said it had terminated DDR as leasing and managing agent of those assets. A spokesman for DDR denies Coventry’s allegations.

The complaint against Cleveland-based DDR, filed Wednesday in New York State Supreme Court here, says that although Coventry negotiated for “first class” leasing, management and development services on the properties, DDR failed to provide them. Further, the complaint says that DDR “left Coventry in the dark” when it came to financial, development and leasing reports on the properties, which the two companies acquired between 2003 and 2006 in a co-investment agreement.

Also alleged in the complaint is that DDR’s intent was “to allow the properties to flounder and ultimately fail, while focusing on its real goal: collect as much in fees as possible while making only the most cursory effort to perform its responsibilities.” The rationale, according to the complaint, was that DDR as a publicly traded company wanted to boost its short-term earnings “without regard for the long-term health of the properties.” Coventry is seeking at least $500 million in consequential and punitive damages, according to the complaint.

“After attempting for years to compel DDR to live up to its obligations, it is with great reluctance that we take this step,” Peter Henkel, Coventry’s president and CEO, says in a release. “We have, however, a fiduciary obligation to protect the significant investment of hundreds of millions of dollars made by many institutional investors, including pension and retirement funds on behalf of their investors.”

DDR’s spokesman tells GlobeSt.com that the company had been sent the news release announcing the lawsuit, but had not yet been served with the complaint itself as of late Wednesday afternoon. He says DDR “vehemently denies the allegations” presented in the release and will “vigorously defend itself against such allegations in any legal proceeding.” The spokesman adds that DDR has not received notice of termination of any of its agreements with Coventry, “and denies that it has breached any terms of any such agreements.”

DDR and Coventry had previously joint ventured with Boston-based Harbor Cos. to build Bloomfield Park, a the 88-acre master-planned community in Bloomfield Hills, MI. The project from its inception was plagued by border disputes and fiduciary disagreements between the developers.

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