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EXCLUSIVE: Fired REIT CEO Sues For Wrongful Termination, Says Executives Conspired In 'Ruthless Power Grab'


Former Whitestone REIT CEO James Mastandrea is suing the company for $25M, citing wrongful termination a month after Whitestone disclosed he had been fired for cause.

The suit, filed in Harris County, Texas, by Mastandrea against Whitestone executives and trustees as well as Whitestone itself, alleges that the defendants lied to take control of the company, violated Mastandrea’s contract and caused economic suffering to Whitestone and shareholders. The suit names board members David Taylor, Jack Mahaffey, Jeff Jones and Nandita Berry, and singles out Chief Financial Officer David Holeman, Executive Vice President Christine Mastandrea and General Counsel Peter Tropoli for launching "a ruthless grab for power."

Transwestern Senior Vice President Crystal Allen and Whitestone REIT CEO James Mastandrea at Bisnow's Houston Multifamily and Mixed-Use Conference 2017

Christine Mastandrea is embroiled in divorce proceedings with Mastandrea, according to the suit, and has since been named Whitestone's chief operating officer, replacing John Dee, who left the company Feb. 9 for unknown reasons, according to the Houston Business Journal. Dee started his career at Whitestone the same year as Mastandrea. Bradford Johnson, Whitestone's executive vice president of acquisitions and asset management, also left the company the same day. 

Holeman now acts as CEO of the REIT.

“This is no ordinary wrongful termination case," the suit states. "The wrongful termination of Mastandrea is the intended consequence of a much larger scheme to wrestle control of Whitestone from the man who built the Company, its strategic leader and other key executive management, who took a struggling real estate business, and grew it into a successful, publicly-traded REIT with over $1 billion in assets."

The suit implies that Whitestone accused Mastandrea of allegedly disclosing confidential and proprietary information to third parties and personal impropriety. Mastandrea alleges that he was fired because he was in negotiations to sell Whitestone. 

“The Named Trustees were advised of the falsity of the allegations being made by certain Whitestone executives. Nevertheless, they wrongly decided to deny Mastandrea fundamental due process in a rush to judgment in favor of a ruthless grab for power by David Holeman, Christine Mastandrea and Peter Tropoli,” the suit states. 

Mastandrea was fired in January after an internal investigation, due to what the company said was a violation of an employee agreement and conduct that didn’t meet company standards or responsibilities of the CEO. The company gave no further details.

In an emailed statement, Whitestone said the lawsuit had no merit.

"Following the completion of a comprehensive independent internal investigation, the Board voted to terminate James Mastandrea’s employment for cause," Whitestone said.

"The investigation found Mr. Mastandrea’s conduct to be in violation of his employment agreement and inconsistent with Company standards and the responsibilities of the CEO. Mr. Mastandrea’s termination was consistent with the highest standards of corporate governance. Whitestone is a strong, resilient company with outstanding assets in attractive growth markets, loyal tenants, and talented and committed employees."

Mastandrea is being represented by Thomas Ajamie, managing partner with Ajamie LLP, who has been involved in cases with Enron and Harvey Weinstein. 

In an interview with Bisnow, Ajamie said that Whitestone executives held a meeting with Mastandrea on Jan. 18, a day before the announcement was made that he had been fired. Ajamie said Mastandrea was presented with grievances and voted out in the same meeting, though the vote was not unanimous. Ajamie said that animosity between Mastandrea and other Whitestone executives only began this year. 

“David Taylor, the chairman, rattled off, very quickly, some of the charges against him. I say ‘quickly’ because I was trying to write all this stuff down very quickly,” Ajamie said. “I said, ‘May we have time to respond to this? We’re hearing this for the first time. And can you put it in writing?’ They said, ‘No, we’re going to take a vote right now.’”

Ajamie said that Mastandrea’s firing almost entirely revolved around talks of selling Whitestone. He said that an unnamed company wrote a letter of intent to purchase the company, and alleges that other Whitestone executives, namely Tripoli, Holeman and Christine Mastandrea, were afraid of losing their jobs in the case that Whitestone was bought. He went on to allege that ageism was a factor, as the executives who have recently left the company are over 60 years old. 

Mastandrea, who had been CEO since 2006, alleges in the suit he had to “build the company from the ground up,” and increased the company’s assets 500% to $1.1B. 

Mastandrea went on to allege that his ouster came from a professional disagreement over strategic goals that turned personal. 

“In order to avoid owing Mastandrea compensation and other benefits under the Employment Agreement, and in furtherance of their wrongful scheme, the Individual Defendants cobbled together false, misleading, and disparaging allegations to effectuate their conspiracy. As noted earlier, certain confidentiality agreements prevent a full disclosure of the underlying facts showing that Mastandrea did not violate the terms of his Employment Agreement,” the suit states. 

Mastandrea is currently engrossed in the lawsuit and does not have other announced plans to work elsewhere, according to Ajamie.

UPDATE, FEB. 25, 3:50 P.M. ET: This story has been updated with comments from both Whitestone and James Mastandrea attorney Thomas Ajamie. 

CORRECTION, FEB. 28, 8 P.M. ET: The story has been updated to reflect the amount Mastandrea claims is owed to him under his employment agreement.