Two Detroit-based pension funds sued Yahoo and its board today, the latest event in the escalating Microsoft-Yahoo buyout drama. Yahoo – who shocked investors by rejecting a $44.6 billion bid from Microsoft – frustrated the Detroit Police and Fire Retirement System, and General Retirement System organizations to the point where they are threatening litigation, because it is holding out on Microsoft’s astounding offer, according to Reuters.

Shareholder litigation firm Bernstein Litowitz Berger & Grossman filed the proposed class-action suit. In anticipation of Yahoo’s potential deals with AOL or News Corp, or implementation of fiscal defensive measures, the plaintiffs asked a Delaware Chancery Court to block the Yahoo board from making these decisions, and to force them to reconsider Microsoft’s offer.

Lawsuits against Yahoo have grown over the weeks after the company’s rejection of the bid, which investors blame on CEO Jerry Yang’s personal view of Microsoft. Yang defends his decision, citing that Yahoo’s half-million-strong user base and complex advertising network were undervalued in the deal.