{"url_path":"/sec/strw/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Legal Proceedings**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1782430/0001493152-26-021823-index.html","accession_number":"0001493152-26-021823","cik":"0001782430","ticker":"STRW","issuer_name":"Strawberry Fields REIT, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1782430/0001493152-26-021823-index.html","primary_entity_key":"0001782430","primary_entity_name":"Strawberry Fields REIT, Inc."},"word_count":1012,"has_tables":true,"body_markdown":"**Item\n1. Legal Proceedings** \n\n \n\nWe\nare not currently a party to any material legal proceedings, that are not covered by insurance and expected to be resolved within policy\nlimits, other than the following:\n\n \n\nIn\nMarch 2020, Joseph Schwartz, Rosie Schwartz and certain companies owned by them filed a complaint in the U.S. District Court for the\nNorthern District of Illinois against Moishe Gubin, Michael Blisko, the Predecessor Company and 21 of its subsidiaries, as well as the\noperators of 17 of the facilities operated at our properties. The complaint was related to the Predecessor Company’s acquisition\nof 16 properties located in Arkansas and Kentucky that were completed between May 2018 and April 2019 and the attempt to purchase an\nadditional five properties located in Massachusetts. The complaint was dismissed by the Court in 2020 on jurisdictional grounds. The\nplaintiffs did not file an appeal with respect to this action, and the time for an appeal has expired.\n\n \n\nIn\nAugust 2020, Joseph Schwartz, Rosie Schwartz and several companies controlled by them filed a second complaint in the Circuit Court in\nPulaski County, Arkansas. The second complaint had nearly identical claims as the federal case but was limited to matters related to\nthe Predecessor Company’s acquisition of properties located in Arkansas. The sellers, which were affiliates of Skyline Health Care,\nhad encountered financial difficulties and requested the Predecessor Company to acquire these properties. The defendants have filed an\nanswer denying the plaintiffs’ claims and asserting counterclaims based on breach of contract. This case has been dismissed without\nprejudice.\n\n \n\nIn\nApril 2024, they filed yet another complaint in Arkansas, and this time dealing with the properties located in Arkansas, Kentucky and\nMassachusetts. There has been some motion practice where the Court dismissed some of the Plaintiff’s remedies and claims.\n\n \n\nIn\nJanuary 2021, Joseph Schwartz, Rosie Schwartz and certain companies owned by them filed a third complaint in Illinois state court in\nCook County, Illinois, which has nearly identical claims to the initial federal case, but was limited to claims related to the Kentucky\nand Massachusetts properties. The complaint has not been properly served on any of the defendants, and, accordingly, the defendants did\nnot respond to the complaint. Instead, the defendants filed a motion to quash service of process. On January 11, 2023, the Cook County\nCircuit Court entered an order granting such motion, quashing service of process on all defendants. In March 2023, the plaintiffs filed\na new complaint and again attempted to serve it on the defendants. It is the defendants’ position that service was (once again,\npotentially) defective and sought a dismissal of the matter for want of prosecution by Joseph Schwartz, Rosie Schwartz and certain companies\nowned by them. The dismissal was granted, but has been appealed to the Illinois Appellate Court, with no substantive movement on the\nmatter to date. In April of 2024, Joseph Schwartz, Rosie Schwartz and several companies controlled by them filed a fourth complaint in\nthe Circuit Court in Pulaski County, Arkansas. This fourth complaint had nearly identical claims as the federal case and the Illinois\nstate court matter. In November 2024, the court dismissed all rescission claims, finding plaintiffs had an adequate remedy at law in\nthe form of monetary damages, ordered dissolution of a lis pendens plaintiffs had filed against certain properties, and identified additional\npleading deficiencies in the complaint. The court granted plaintiffs leave to amend, and plaintiffs filed a second amended complaint.\nOn March 10, 2026, the court dismissed the second amended complaint with prejudice as to all defendants, finding that plaintiffs failed\nto cure the previously identified deficiencies. The court also denied plaintiffs’ motion for a temporary and permanent restraining\norder, finding no irreparable harm, an adequate remedy at law, and no likelihood of success on the merits. The dismissal with prejudice\nbars plaintiffs from refiling these claims, subject to any appeal. The Plaintiffs have filed an appeal.\n\n \n\nIn\neach of these complaints, the plaintiffs asserted claims for fraud, breach of contract and rescission arising out of the defendants’\nalleged failure to perform certain post-closing obligations under the purchase contracts. We had potential direct exposure for these\nclaims because the subsidiaries of the Predecessor Company that were named as defendants are now subsidiaries of the Operating Partnership.\nAdditionally, the Operating Partnership was potentially liable for the claims made against Moishe Gubin, Michael Blisko and the Predecessor\nCompany pursuant to the provisions of the contribution agreement, under which the Operating Partnership assumed all the liabilities of\nthe Predecessor Company and agreed to indemnify the Predecessor Company and its affiliates for such liabilities. As described above,\nthe federal action was dismissed for lack of subject matter jurisdiction, the first Arkansas action was dismissed without prejudice,\nthe Illinois state court action has been dismissed, and the second Arkansas action (filed April 2024) was dismissed with prejudice on\nMarch 10, 2026. The Plaintiffs have appealed the Arkansas trial court decision.\n\n \n\nAs\nnoted above, the March 2020 and January 2021 complaints also related to the Predecessor Company’s planned acquisition of five properties\nlocated in Massachusetts. A subsidiary of the Predecessor Company purchased loans related to these properties in 2018 for a price of\n$7.74 million with the expectation that the subsidiaries would acquire title to the properties and the loans would be retired. The subsidiary\nsubsequently advanced $3.1 million under the loans to satisfy other liabilities related to the properties. The planned acquisition/settlement\nwith the sellers/owners and/borrowers was not consummated because the underlying tenants of the properties surrendered their licenses\nto operate healthcare facilities on these properties.\n\n \n\nThe\nPredecessor Company has instituted legal proceedings to collect the outstanding amount of these loans and to assert related claims against\nthe sellers and their principals for the unpaid principal balances as well as protective advances and collection costs. In connection\nwith enforcing their rights, in July 2022, the Company foreclosed, and (as lender) sold four of the five properties at auction for the\ntotal amount of $4.4 million. In December 2022, the Company took title on the fifth property with an estimated fair value of $1.2 million. \n\n \n\n48"}