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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 […]

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

Abate v. Fremont Investment & Loan, et al. (Lawyers Weekly No. 10-040-15)

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-11638 THOMAS C. ABATE vs. FREMONT INVESTMENT & LOAN & others.[1] Suffolk. November 4, 2014. – March 9, 2015. Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ. Real Property, Record title, Mortgage. Mortgage, Assignment, Foreclosure. Jurisdiction, Land Court. Land Court, Jurisdiction. Practice, Civil, Parties, Standing, Dismissal. Civil action commenced in the Land Court Department on May 25, 2012. Motions to dismiss were heard by Robert B. Foster, J. The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court. Thomas B. Vawter for the petitioner. James L. Rogal for Deutsche Bank National Trust Company & another. Robert M. Brochin for Mortgage Electronic Registration Systems, Inc. James P. Long, pro se, amicus curiae, submitted a brief. HINES, J. In this appeal, we determine whether a respondent in a try title action brought pursuant to G. L. c. 240, §§ 1-5, may test the substantive merits of a petitioner’s claims in the “first step” of such an action. The issue arises because the try title statute, in keeping with its purpose to allow a person holding record title to compel an adverse claimant to prove the merits of the adverse claimant’s interest in the property, contemplates a two-step procedure in which the substantive merits of the parties’ claims are determined at a trial. Under our interpretation of the statute, the “first step” requires that the petitioner must satisfy the jurisdictional elements[2] of the statute and, if satisfied, the “second step” requires the adverse claimant either to bring an action to assert the claim to title, or to disclaim an interest in the property. Bevilacqua v. Rodriguez, 460 Mass. 762, 766 (2011), citing G. L. c. 240, § 1. Recognizing the potential conflict between jurisdictional determinations and a petitioner’s right under the statute to compel an adverse claimant to bring his or her own action to assert that claim, we transferred the petitioner’s appeal to this court on our own motion. For the reasons explained below, we affirm the Land Court judgment dismissing his petition. Background. 1. Procedural history. The petitioner, Thomas C. Abate, brought this action in the Land Court asserting that a purported assignment of a mortgage was invalid and, thereby, indirectly challenging a foreclosure by Deutsche Bank National Trust Company, as trustee for Carrington Mortgage Loan Trust, […]