At a recent hearing, a judge ruled the case in which the former CFO of Jackson’s Parkway Properties Inc. (NYSE: PKY) alleges wrongful termination and fraud will be tried June 4. The judge did not rule on disagreements about the plaintiff’s expert witnesses or the production of certain Parkway financial records.
Parkway says it fired its former CFO Mitch Collins in February 2010, accusing him of being a “workplace bully.” Collins, however, says he had already resigned from the company in January 2010, and filed suit in Hinds County Circuit Court for wrongful termination, defamation and fraud, claiming there were issues with forward-looking guidance and liquidity. Parkway denies the accusations.
At a Sept. 19 hearing Collins’ counsel stressed the need for financial documents Parkway won’t provide. Collins claims he was terminated because he refused to participate in fraudulent activities these documents would show, an attorney said. The plaintiff is seeking documents concerning alleged loan compliance problems; Parkway’s $190 million line of credit starting in May 2010; tenant move outs, vacancies and occupancy declines starting in October 2010; and some acquisitions and renovations.
Another unresolved issue is a disagreement over an e-mail attachment regarding leasing assumptions that Collins’ counsel said Parkway has forged.
In a deposition Collins said that while still employed at Parkway in January 2010, he sent an e-mail predicting that FAD (funds available for distribution) would “be short around 30 to 40 cents” to key executives. Collins says he attached a spreadsheet, which his counsel has retained, showing leasing assumptions of $5 and $3 per foot that would reflect that shortfall.
Parkway said in a court filing the actual attachment that accompanied that same e-mail from Collins contains leasing assumptions of $2.93 and $3.54, thus showing no FAD shortfall. Collins says Parkway’s attachment is fraudulent.
FAD is a measure of the amount of capital on hand for paying shareholders in a real estate investment trust (REIT) like Parkway that holds a portfolio of income-producing properties and pays dividends.
Parkway said its expert IT witness has verified the attachment with lower numbers predicting no FAD shortfall was actually the original attachment to Collins’ e-mail, suggesting that Collins’ attachment was “a post-termination invention crafted to support this suit.”
Parkway also says the plaintiff’s counsel inappropriately maintained copies of electronic documents that should have been returned to Parkway under an agreed protective order issued by the court.
Collins counsel said in a filing that Parkway’s counsel was made aware a copy of the attachment was retained and that “although it was certainly the hope and expectation that Parkway would not falsify Collins’ e-mail, one of the reasons that a copy was retained as ‘insurance’ was for this very purpose.”
Parkway Properties, a member of the S&P Small Cap 600 Index, is a self-administered REIT specializing in office properties. Parkway owns or has an interest in 67 office properties in 12 states with an aggregate of approximately 14.5 million square feet of leasable space as of Sept. 19. Included in the portfolio are 26 properties totaling 6.6 million square feet that are owned jointly with other investors, representing 45.5 percent of the portfolio.
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