Editor’s note: This article appeared originally in Minnesota Lawyer’s sister publication, Finance & Commerce.
Even a global pandemic cannot stop the legal wrangling over ownership of Bremer Bank, but majority owner the Otto Bremer Trust has asked the courts to dismiss the outstanding lawsuits between trust and bank and allow the partial sale of Bremer Financial Corp. to proceed.
In a new motion and memorandum filed Friday, the trust argues that each count in the November 2019 lawsuit filed by seven members of the Bremer Financial board against the remaining three members, the trustees of Otto Bremer Trust, should be dismissed for lack of standing or injury, and failure to state a legally sufficient claim.
The lawsuit is one of several parallel cases pending in court over the future ownership of the bank, currently more than 90% owned by the Otto Bremer Trust. Bank officials have accused the three Otto Bremer trustees, who control only 20% of the bank’s voting stock, of trying to force a sale of the bank for personal profit, and of selling stock in violation of a provision set by founder Otto Bremer that such sales take place only when “necessary and proper” due to “unforeseen circumstances.”
The trustees, in their counterclaim, have argued the sale is necessary to ensure the trust remains in compliance with federal tax law, and that such a sale will benefit shareholders, employees and customers. Additional actions have been brought by Bremer Bank employees and several outside funds to whom the trust sold Bremer stock, and the Minnesota attorney general has launched his own investigation.
The trust states in its memorandum that only the attorney general has standing to act on behalf of beneficiaries of a trust, and that it is working directly with the Attorney General’s Office to address its concerns. For the rest, it says, the trust has the absolute right to decide when and how to sell the stock it owns to whomever it wishes.
“Under Minnesota trust law, trustees are responsible for managing trust assets,” the trustee argues in the court filing. “And under Minnesota corporate law, a corporation’s board answers to its shareholders, not the other way around.”
A spokesperson for the trustees issued a pointed statement invoking the coronavirus outbreak to urge the bank to drop what it claims is a baseless case.
“We hope that [Bremer Financial Corp.] remembers that its wasting of trust assets is playing out against the backdrop of the unimaginable economic calamity of the COVID-19 pandemic and that our resources are needed — and much better deployed — helping those less fortunate rather than being used to both advance and defend needless and wasteful lawsuits,” according to the statement.
A Bremer Bank spokesperson said in response to the new filings that it remains confident in its case, and that the trustees’ motion is unfounded. The bank also noted that a special master appointed to oversee the growing tangle of litigation recently ruled in its favor on a discovery dispute, requiring the trustees to produce documents predating 2019 dealing with interpretation of the trust’s governing documents and valuation of the bank.
A hearing has been scheduled for July 8 on the trustee’s motion to for judgment.