Posts tagged "Income"

Western Investment LLC v. Deutsche Multi-Market Income Trust, et al. (Lawyers Weekly No. 12-009-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION No. 2016-3082 BLS 1 WESTERN INVESTMENT LLC vs. DEUTSCHE MULTI-MARKET INCOME TRUST, DEUTSCHE STRATEGIC INCOME TRUST and the individual trustees thereof1 MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION TO DISMISS This case presents a paradoxical claim by a shareholder against the trustees of two companies for strictly adhering to the plain provisions of the companies’ by-laws with respect to the election of board members. Plaintiff, Western Investment LLC, alleges that the application by the trustees of a duly adopted by-law, in existence for seven years, was a breach of fiduciary duty. For the reasons described below, Western’s complaint fails to state a valid claim. Defendants’ motion to dismiss must be granted. BACKGROUND The following facts are taken from the complaint, supplemented by documents referred to in the complaint such as the declarations of trust and the by-laws of the two defendant companies.2 1 Kenneth C. Froewiss, John W. Ballantine, Henry P. Becton, Jr., Dawn-Marie Driscoll, Keith R. Fox, Paul K. Freemen, Richard J. Herring, William McClayton, Rebecca W. Rimel, William N. Searcy, Jr., Jean Gleason Stromberg 2 Upon a motion to dismiss, the court is entitled to consider materials not appended to the complaint, but referenced or relied upon in the complaint. See Harhen v. Brown, 431 Mass. 838, 1 Western is a long-time shareholder in two closed-end investment funds, defendants Duetsche Multi-Market Income Trust (“KMM”) and Duetsche Strategic Income Trust (“KST”). Western purchased shares in KMM in 1997 and in KST in 2002. Western brings this action to challenge the action of the trustees of the trusts in connection with the September 30, 2016, vote of shareholders for the election of trustees. KMM and KST are organized as Massachusetts business trusts. They are governed by declarations of trust and by-laws that for all purposes relevant to this litigation are substantively identical. The eleven individual defendants are trustees of the two trusts. They constitute the board of trustees of both KMM and KST. The boards are divided into three classes of trustees. Each class is elected for a three year term and the elections are staggered so that only one class of trustees is up for election per year. In 2016, four seats on the board were up for election. In the 2016 election, Western nominated a slate of four individuals to run against four incumbent members of the board. With respect to both KMM and KST, the Western nominees obtained more votes than the incumbent trustees. For the KMM election, in which 11.97 million, or 53.47% of the 22.39 million outstanding shares were present and voting, the Western nominees each obtained the vote of approximately 6.2 million shares, while the incumbents […]

Read more...

Posted by Massachusetts Legal Resources - February 15, 2017 at 3:12 am

Categories: News   Tags: , , , , , , , ,

Western Investment LLC v. Deutsche Multi-Market Income Trust, et al. (Lawyers Weekly No. 12-009-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION No. 2016-3082 BLS 1 WESTERN INVESTMENT LLC vs. DEUTSCHE MULTI-MARKET INCOME TRUST, DEUTSCHE STRATEGIC INCOME TRUST and the individual trustees thereof1 MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION TO DISMISS This case presents a paradoxical claim by a shareholder against the trustees of two companies for strictly adhering to the plain provisions of the companies’ by-laws with respect to the election of board members. Plaintiff, Western Investment LLC, alleges that the application by the trustees of a duly adopted by-law, in existence for seven years, was a breach of fiduciary duty. For the reasons described below, Western’s complaint fails to state a valid claim. Defendants’ motion to dismiss must be granted. BACKGROUND The following facts are taken from the complaint, supplemented by documents referred to in the complaint such as the declarations of trust and the by-laws of the two defendant companies.2 1 Kenneth C. Froewiss, John W. Ballantine, Henry P. Becton, Jr., Dawn-Marie Driscoll, Keith R. Fox, Paul K. Freemen, Richard J. Herring, William McClayton, Rebecca W. Rimel, William N. Searcy, Jr., Jean Gleason Stromberg 2 Upon a motion to dismiss, the court is entitled to consider materials not appended to the complaint, but referenced or relied upon in the complaint. See Harhen v. Brown, 431 Mass. 838, 1 Western is a long-time shareholder in two closed-end investment funds, defendants Duetsche Multi-Market Income Trust (“KMM”) and Duetsche Strategic Income Trust (“KST”). Western purchased shares in KMM in 1997 and in KST in 2002. Western brings this action to challenge the action of the trustees of the trusts in connection with the September 30, 2016, vote of shareholders for the election of trustees. KMM and KST are organized as Massachusetts business trusts. They are governed by declarations of trust and by-laws that for all purposes relevant to this litigation are substantively identical. The eleven individual defendants are trustees of the two trusts. They constitute the board of trustees of both KMM and KST. The boards are divided into three classes of trustees. Each class is elected for a three year term and the elections are staggered so that only one class of trustees is up for election per year. In 2016, four seats on the board were up for election. In the 2016 election, Western nominated a slate of four individuals to run against four incumbent members of the board. With respect to both KMM and KST, the Western nominees obtained more votes than the incumbent trustees. For the KMM election, in which 11.97 million, or 53.47% of the 22.39 million outstanding shares were present and voting, the Western nominees each obtained the vote of approximately 6.2 million shares, while the incumbents […]

Read more...

Posted by Massachusetts Legal Resources - February 13, 2017 at 10:35 pm

Categories: News   Tags: , , , , , , , ,

Fletcher Fixed Income Alpha Fund, Ltd., et al. v. Grant Thornton LLP, et al. (Lawyers Weekly No. 11-085-16)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us   15-P-830                                        Appeals Court   FLETCHER FIXED INCOME ALPHA FUND, LTD., & another[1]  vs.  GRANT THORNTON LLP & others.[2]     No. 15-P-830.   Suffolk.     January 6, 2016. – July 14, 2016.   Present:  Cypher, Grainger, & Meade, JJ.     Auditor.  Practice, Civil, Motion to dismiss.  Jurisdiction, Nonresident, Long-arm statute.  Due Process of Law, Jurisdiction over nonresident.  Negligence, Misrepresentation, Proximate cause.  Proximate Cause.     Civil action commenced in the Superior Court Department on January 17, 2014.   Motions to dismiss were heard by Janet L. Sanders, J.     Rachel S. Fleishman, of New York (Philip Y. Brown with her) for the plaintiffs. Grant J. Esposito, of New York, for Grant Thornton LLP. William M. Connolly, of Pennsylvania, for EisnerAmper LLP & another. Jonathan D. Cogan, of New York, for SS&C Technologies, Inc.     MEADE, J.  The plaintiffs, Fletcher Fixed Income Alpha Fund, Ltd. (Alpha), and Massachusetts Bay Transportation Authority Retirement Fund (MBTARF), Alpha’s sole shareholder, appeal from the dismissal of their claims for accounting malpractice and negligent misrepresentation against certain entities that audited and administered Alpha, for failing to discover the fund manager’s fraud.  The claims against the defendants, Grant Thornton LLP (Grant Thornton), and EisnerAmper LLP and EisnerAmper (Cayman) Ltd. (collectively, EisnerAmper), who served as auditors, were dismissed for lack of personal jurisdiction, a Superior Court judge ruling that the plaintiffs failed to show that their claims arose from the defendants’ transaction of business in Massachusetts.  The claims brought by MBTARF against SS&C Technologies, Inc. (SS&C), a former Alpha administrator, were dismissed for failure to state a claim upon which relief can be granted, the judge reasoning that Alpha was insolvent by the time SS&C was hired, thereby negating the element of proximate cause. Pending their appeal to this court, the plaintiffs settled with EisnerAmper.  As to the remaining defendants, the plaintiffs principally argue that in deciding the issue of specific jurisdiction, the judge should have taken into account a broader range of contacts between Grant Thornton and Massachusetts, and should have considered Grant Thornton’s knowledge that the audit reports would be sent to a Massachusetts entity.  MBTARF also maintains that the judge held it to an incorrect pleading standard in dismissing its claims against SS&C for failure to allege facts to support causation.  We affirm. Background.  We summarize the undisputed facts from the judge’s February 23, […]

Read more...

Posted by Massachusetts Legal Resources - July 18, 2016 at 2:20 pm

Categories: News   Tags: , , , , , , , , , ,

Brigade Leverage Capital Structures Fund Ltd., et al. v. PIMCO Income Strategy Fund, et al. (Lawyers Weekly No. 10-167-13)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750;  (617) 557-1030; SJCReporter@sjc.state.ma.us     SJC‑11289   BRIGADE LEVERAGED CAPITAL STRUCTURES FUND LTD. & another[1]  vs. PIMCO INCOME STRATEGY FUND & another.[2]     Suffolk.     May 6, 2013.  ‑  September 11, 2013. Present:  Ireland, C.J., Spina, Cordy, Botsford, Gants, Duffly, & Lenk, JJ.       Business Trust.  Trust, Business trust.  Corporation, By‑laws, Stockholder, Board of directors.  Contract.  Words, “On at least an annual basis.”       Civil action commenced in the Superior Court Department on December 1, 2011.   The case was heard by Peter M. Lauriat, J., on motions for summary judgment.   The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.     John C. Ertman, of New York (C. Thomas Brown with him) for the defendants. Joseph S. Allerhand, of New York (Patrick J. O’Toole, Jr., with him) for the plaintiffs. The following submitted briefs for amici curiae: Peter H. Mixon, of California, for California Public Employees’ Retirement System. Jeff Mahoney, of the District of Columbia, for Council of Institutional Investors. Jesse M. Fried, pro se.     GANTS, J.  Under Section 10.2 of the bylaws of the defendants, PIMCO Income Strategy Fund and PIMCO Income Strategy Fund II (collectively, “Funds” or “defendants”), “regular meetings of the Shareholders for the election of Trustees . . . shall be held, so long as Common Shares are listed for trading on the New York Stock Exchange, on at least an annual basis.”  The issue on appeal is the meaning of “on at least an annual basis.”  The plaintiffs, Brigade Leveraged Capital Structures Fund Ltd. and Brigade Capital Management, LLC (collectively, “Brigade” or “plaintiffs”), contend that the bylaws require that an annual meeting of shareholders of each of the Funds be held in or within twelve months of the last annual shareholder meeting.  The defendants contend that the bylaws require only that one annual shareholders’ meeting be held each fiscal year for each of the Funds.  We conclude that “on at least an annual basis” means that an annual shareholders’ meeting for each of the Funds must be held no later than one year and thirty days (395 days) after the last annual shareholders’ meeting. Background.  The defendant Funds are closed-end investment companies registered under the Investment Company Act of 1940, as amended, 15 U.S.C. § 80a-5(a)(1)(2) (2006), that are organized as Massachusetts business trusts under G. L. c. 182.  […]

Read more...

Posted by Massachusetts Legal Resources - September 11, 2013 at 6:19 pm

Categories: News   Tags: , , , , , , , , , , ,