Documents in the ongoing legal battle between the Otto Bremer Trust and Bremer Financial Corporation and BFC directors have been unsealed, revealing more details of what has been a drawn-out disagreement.
At the heart of debate is the trust’s ability to sell Bremer Bank, of which it owns 86 percent, over the wishes of the non-OBT directors of the St. Paul, Minn.-based BFC.
The documents from OBT’s amended counterclaim include a prospectus from Bremer Bank’s reorganization in 1989, and a 1988 memorandum from Terry Cummins, former president, CEO and chair of Bremer, apparently acknowledging the Trust’s power to sell. Since the trust owned most of the bank, “they have the power to vote whether to accept or decline such an offer,” Cummins wrote.
“The documents show that the bank has known for decades that OBT’s trustees have the right, in fact the responsibility, to sell if they believe a sale enhances the trust’s charitable purposes,” the trust said in a statement.
The trust accused the directors of thwarting sales plans until the opportunity disappeared in the midst of the COVID-19 pandemic. “Individual defendants should now be held personally liable for the hundreds of millions of dollars in damages they have caused” from obstructing the OBT’s charitable mission, the counterclaim said.
OBT was founded in 1944 by Otto Bremer, who included a provision in the trust instrument that directs trustees to retain all Bremer shares until it becomes “necessary or proper” to sell them due to “unforeseen circumstances.”
The three OBT directors — Daniel Reardon, Brian Lipschults and Charlotte Johnson — originally proposed sale of the bank last fall.
The $12 billion holding company responded with a lawsuit against the OBT after it purportedly transferred 37 percent of the voting stock to out-of-state hedge funds, calling the move “an attempt to seize control,” from the company’s employee shareholders.
The trust’s counterclaim on Dec. 9, 2019 said that Bremer Financial didn’t have the legal right to reject its decision to sell the company. The 16 employee-shareholders of BFC filed a complaint in January against the three OBT trustees. Minnesota’s Attorney General Keith Ellison said he would investigate the circumstances of the proposed sale..
OBT filed the amended counterclaim earlier this year seeking damages against Bremer’s seven non-trust directors: Bremer Bank President/CEO Jeanne Crain, Ron James, Mary Brainerd, Glenn McCoy, Kevin Rhein, Wendy Schoppert and Charles Westling. The trust said the seven had a “personal interest” in continuing to receive directors’ fees.
The $12 billion Bremer Bank has offices in North Dakota, Minnesota and Wisconsin.