MemberWorks Sues Homestore
March 13, 2002
Former iPlace Owner Claims HOMS Stock Remains Unregistered
Inman News Features
Yet another lawsuit has been filed against Homestore.com, and this one has the potential to block the company?s sale of certain iPlace-connected assets.
Stamford, Conn.-based MemberWorks (Nasdaq: MBRS) announced it has filed a legal action against Homestore, a motion for a temporary restraining order, preliminary injunction and expedited discovery, and an application for prejudgment attachment.
The lawsuit concerns Homestore?s August acquisition of iPlace, a company formed through prior mergers of ConsumerInfo, eNeighborhoods and QSpace. The consideration Homestore paid for MemberWorks' equity interest in iPlace consisted substantially of Homestore common stock, valued in the merger agreement at approximately $36 million, or $22 per share, according to MemberWorks.
But MemberWorks in its lawsuit alleges that Homestore neglected to file a registration statement for those shares with the Securities Exchange Commission before Dec. 22, as provided in the agreement.
Homestore announced on Dec. 21 that would restate certain prior financial statements and later said the restatements related to its overstatement of more than $100 million of advertising revenue.
MemberWorks said it hasn?t been able to sell any of the Homestore shares because they aren?t registered.
Homestore recently sold the eNeighborhoods business unit of iPlace to Siegel Enterprises and reportedly is seeking a buyer for the ConsumerInfo.com unit of iPlace. But MemberWorks is seeking an order enjoining Homestore from selling iPlace or any of iPlace's assets.
MemberWorks in its complaint asserts a laundry list of causes of action against Homestore, including securities fraud, common law fraud, negligent misrepresentation, unjust enrichment, violation of the Connecticut Unfair Trade Practices Act and breach of contract.
MemberWorks design membership programs that offer consumers services and discounts on healthcare, personal finance, insurance, travel, entertainment, computing, fashion and personal security products and services through affinity, marketing and online channels.
Copyright: Inman News Service