Maryland Court Delivers Mixed Ruling in Ongoing Hartman vs. Silver Star Battle

In what has now been a years-long dispute between Silver Star Properties REIT, a publicly registered non-traded real estate investment trust formerly known as Hartman Short Term Income Properties XX Inc., and its former chief executive officer, Allen R. Hartman, the Circuit Court for Baltimore, Md., issued a mixed ruling ordering Silver Star Properties to hold an annual shareholder meeting and addressing several other key points of contention between the two parties.

The war between Silver Star and Hartman has been ongoing since at least March 2023 when Silver Star announced the removal of Hartman as executive chairman. Hartman, who remains a director and stockholder of Silver Star, then initiated legal proceedings against Silver Star, alleging that, among other charges, the company breached Maryland law by not holding an annual stockholder meeting. Hartman further contested that Silver Star’s initial public offering, or IPO, ended in 2013 and that the company is obligated to liquidate its assets because it failed to list its shares on a public exchange within 10 years of completing its IPO.

Silver Star responded by claiming that the IPO concluded in 2016 and that the company has started the process of listing its shares on a public exchange and should not be forced into liquidation.

In its ruling, the court agreed with Hartman in regard to the concluding date of the IPO and, consequently, stated that the 10-year liquidation trigger date occurred in 2023. The court determined that Silver Star had failed to comply with its charter obligation to either list its shares or obtain stockholder approval to defer liquidation by that date.

Nonetheless, the judge declined Hartman’s demand for immediate liquidation. Citing the “drastic” nature of forced liquidation, the court instead ordered Silver Star to hold a stockholder meeting within six months. At this meeting, investors will be asked to vote on whether to liquidate the company’s assets or defer liquidation to pursue an alternate strategy. The court also mandated that Silver Star provide at least 45 days’ notice of the meeting and include clear disclosure, as defined by the court, about the choice facing investors. If the stockholders do not approve of the liquidation deferral or Silver Star does not hold an annual meeting within the next six months, Silver Star must proceed with the liquidation of its assets.

While Hartman scored a partial victory, the court ruled against him on other issues. Most notably, the court upheld Silver Star’s stockholder rights plan, also known as a “poison pill.” The court stated that the plan was “enacted in good faith” in response to Hartman’s “series of actions that reasonably led the Defendant Directors to believe that he intended a hostile takeover and liquidation of the company.” The court found that Hartman and other members of the Hartman Group “all but admitted that they were ‘acting in concert’ to force the liquidation of Silver Star” in a Form 13-D/A filed on Nov. 29, 2023.

The court also found Hartman to have “general credibility issues” and instances in which he “had been shown to be dishonest,” including the inclusion of Hartman XXI as a party in litigation without the approval of the board of directors; his filing of lis pendens without legal cause; and intentional misrepresentations that Hartman made in an August 2023 email when the email was sent under counsel’s name but actually written by Hartman. The court further cited Hartman’s “general credibility issues” in reference to a meeting held between Hartman and Silver Star in March 2023 where the court stated that Hartman “essentially admitted no wrong” and his version of the story “shifted during the two depositions and his testimony at trial.”

For his part, Hartman stated that the court’s ruling “is a resounding affirmation that shareholders deserve a voice and a clear path forward after years of financial erosion under [Silver Star CEO Gerald] Haddock’s failed leadership” and “represents a powerful moment of accountability for [Silver Star Properties] and shareholders.” Hartman also reported that he has filed a proxy providing shareholders the option to replace the existing board of directors.

Hartman further claimed that Silver Star has lost an estimated $278 million in net asset value attributable to common shareholders since his “forced departure” in October 2022. Hartman cited an 8-K filed on Jan. 28, 2021, in which Silver Star reported a net asset value of approximately $412 million as of Dec. 31, 2020, as compared to an 8-K on Dec. 18, 2024, displaying an estimated NAV of approximately $134 million as of June 30, 2024.

Silver Star responded to the ruling with its own video statement from CEO Gerald Haddock. According to a transcript of the video, the court “recognized that Hartman’s credibility is amiss” and that while “Hartman claims he prevailed … the judge’s memorandum paints a very, very different picture.” Haddock also highlighted the court’s ruling that the stockholder rights plan was “legally adopted.”

This mixed ruling is just the latest development in what has been a hotly contested war between the two sides. After Hartman initiated legal proceedings in 2023, Silver Star responded with a lawsuit of its own against Hartman in December 2023, accusing Hartman of mismanagement.

In January 2024, Silver Star’s executive committee alleged that Hartman was seeking “personal control” of the company. Hartman quickly responded with a shareholder address video, doubling down on his previous claims. In July 2024, Silver Star overcame a major litigation hurdle when the Circuit Court for Baltimore City signed an order denying Hartman’s motion for partial summary judgment, which sought to liquidate Silver Star. In September 2024, Silver Star continued to refute Hartman’s claims and defend the company’s shift toward self-storage.

In March 2025, Silver Star eliminated nearly 90% of its workforce for operations restructuring and what it called a “comprehensive strategic turnaround plan” with self-storage investments.

With the shareholder vote upcoming, it seems that this dispute may be far from over.

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