CBL & Associates Properties Inc.
Robbins Arroyo LLP: CBL & Associates Properties, Inc. (CBL) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against CBL & Associates Properties, Inc. (NYSE: CBL) in the U.S. District Court for the Middle District of Florida, Fort Myers Division. The plaintiff brings the complaint on behalf of all similarly situated current and former CBL & Associates, Inc. tenants for alleged breach of contract and breach of the implied covenant of good faith and fair dealing by CBL & Associates’ officers and directors. CBL & Associates is a public real estate investment trust that acquires, develops, and manages properties.
CBL & Associates Accused of Engaging in a Racketeering Enterprise
According to the complaint, CBL & Associates executed a fraudulent scheme through a criminal enterprise to overcharge its small business tenants for electricity at its shopping malls. In its standard form lease agreements, CBL falsely represented that it would charge its tenants the amount the local public utility charged CBL to supply those tenants with electricity. To affect this scheme, CBL directed energy company Valquest Systems, Inc. to artificially inflate the amount of electricity costs in the energy surveys it provided to CBL’s tenants in exchange for payments from CBL. CBL’s fraudulent markups allegedly exceeded 100% of the tenant’s actual electricity usage charges. To conceal its illegal conduct, CBL inserted a clause into its lease agreements that required its tenants to waive their right to audit CBL’s electric bills to determine whether they were actually being charged the correct amount for electricity.
The complaint alleges that CBL used its financially advantageous position and superior bargaining power to victimize and defraud its tenants to reap illegal profits. CBL’s scheme was unmasked when CBL’s Gulf Coast Town Center (“GCTC”) mall went into foreclosure and was taken over by CBL’s lender. When the new management company performed a utility usage evaluation of the mall, it uncovered that CBL had been significantly overcharging its tenants for electricity. CBL’s practice of overcharging its tenants is not isolated to GCTC, where one tenant suffered damages in excess of $10,000—it allegedly implements a nationwide policy and practice of charging its tenants in excess of their actual costs for electricity.
CBL & Associates Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.