Grand Acquisition, LLC v. Passco Indian Springs DST, C.A. No. 12003-VCMR (Del. Ch. August 26, 2016) (Revised: September 7, 2016)

The Delaware Court of Chancery was asked to determine whether the beneficial owner (the “LLC”) of a statutory trust (the “Trust”) had the right to inspect the books and records of the trust. The answer depended upon whether the Trust Agreement of the Trust incorporated the terms of 12 Del. C. § 3819, which authorizes restriction to access under certain circumstances. The Court determined that the Trust Agreement did not incorporate the restrictions permissible under § 3819, and, as a result, access could not be restricted. In so doing, the Court relied upon judicial precedent holding that a contractual books and records right in a limited liability company or limited partnership is independent of the relevant statutory right.

BOTTOM LINE: Like Delaware LLCs and LPs, Delaware statutory trusts may create rights under their Trust Agreements separate and apart from their statutory rights. In such instances, the relevant statutory rights will be inapplicable, assuming the Delaware Statutory Trust Act permits modification.