First Amended Motion to Intervene f 8-21-13

7/30/2019 First Amended Motion to Intervene f 8-21-13

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FIRST AMENDED RULE 24 MOTION FOR LEAVE TO INTERVENE Page 1

IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

CORPUS CHRISTI DIVISION

NUECESCOUNTY,TEXAS,

Plaintiff,

vs.

MERSCORPHOLDINGS,INC.;MORTGAGE

ELECTRONICREGISTRATIONSYSTEMS,INC.;

AND BANKOFAMERICA,NATIONAL

ASSOCIATION,

Defendants.

CIVIL ACTION NO.

2:12-CV-00131

FIRST AMENDED RULE 24 MOTION FOR LEAVE TO INTERVENE

COME NOW Cameron County, Texas, Fort Bend County, Texas, and Williamson

County, Texas (together the Counties) and file this Rule 24 Motion for Leave to Intervene and

would show the Court as follows:

THIS AMENDED RULE 24 MOTION FOR LEAVE TO INTERVENE ISSUBSTANTIALLY THE SAME AS THE ORIGINAL AUGUST 8, 2013

RULE 24 MOTION FOR LEAVE TO INTERVENE (D.E. 80) EXCEPT

THAT IT ADDS FORT BEND COUNTY AS A PROPOSED

INTERVENOR.

I.

BACKGROUND

This action was commenced by Plaintiff Nueces County (Plaintiff) on April 30, 2012.

Plaintiff alleges, inter alia, that MERSCORP Holdings, Inc. f/k/a MERSCORP, Inc.

(MERSCORP) and its wholly-owned subsidiary, Mortgage Electronic Registration Systems,

Inc. (MERS), were created by Defendant Bank of America, National Association (BOA),

together with other members of the mortgage banking industry, to facilitate the rapid transfer of

Case 2:12-cv-00131 Document 92 Filed in TXSD on 08/21/13 Page 1 of 11


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mortgage loans amongst members of the industry through the unlawful use of Plaintiffs real

property records, and to avoid recording mortgage assignments and paying the associated fees.

Defendant BOA filed its Motion to Dismiss on July 27, 2012 (the Motion to Dismiss)

(D.E. 26). On January 25, 2013, the Court stayed all deadlines in this action pending the Courts

determination of the Motion to Dismiss (D.E. 66). On July 3, 2013, the Court granted in part and

denied in part BOAs Motion to Dismiss (D.E. 70). On July 18, 2013, the Court entered an

Amended Scheduling Order setting this matter for trial on September 15, 2014 (D.E. 75).

II.

THE COUNTIES1

Section 11.004 of the Texas Property Code requires that every county clerk in the State of

Texas correctly record, as required by law, within a reasonable time after delivery, any

instrument authorized or required to be recorded in that clerks office that is proved,

acknowledged, or sworn to according to law. Section 193.003 of the Texas Local Government

Code requires that a county clerk maintain a well-bound alphabetical index to all recorded

deeds, powers of attorney, mortgages, and other instruments relating to real property with a

cross-index that contains the names of the grantors and grantees in alphabetical order. Each of

the Counties records and maintains real property records and indexes as required by statute.

Deeds of trust falsely identifying MERS as a or the beneficiary of such deeds of trust

have been recorded in each of the Counties.2

Releases or assignments of lien falsely identifying

1The Counties have a combined population of approximately 1.4 million. See U.S.

Department of Commerce, United State Census Bureau, American Fact Finder athttp://factfinder2.census.gov/.

2 See, e.g., Exhibit 1 at 3, June 28, 2013 MERS Deed of Trust recorded in Cameron

County (excerpt); Exhibit 11, March 24, 2003 MERS Deed of Trust recorded in Fort BendCounty; Exhibit 2 at 1, December 30, 2009 MERS Deed of Trust recorded in Williamson

County; .

http://factfinder2.census.gov/http://factfinder2.census.gov/http://factfinder2.census.gov/


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MERS as having an interest in real property have also been recorded in each of the Counties.3

Each of the Counties seeks leave to intervene in this action pursuant to Rule 24 of the Federal

Rules of Civil Procedure.

III.

ARGUMENT AND AUTHORITIES

Rule 24 of the Federal Rules of Civil Procedure provides a non-party with two available

avenues for intervention: intervention as of right under subsection (a) and permissive

intervention under subsection (b). A non-party seeking leave to intervene under Rule 24(b)

must:

(1) timely move for intervention; and

(2) demonstrate that:

(a) it has a claim or defense that shares with the main

action a common question of law or fact; and

(b) it will not unduly delay or prejudice the

adjudication of the original parties rights.4

Permissive intervention is wholly discretionary with the district court, even where there is a

common question of law or fact, or the requirements of Rule 24(b) are otherwise satisfied.5

A. This Motion is Timely

There is no bright-line rule about how quickly an applicant must move to intervene;

rather, the inquiry focuses on how diligently the applicant acted once he or she received actual or

3See, e.g., Exhibit 3 at 1, April 3, 2002 MERS Release of Lien recorded in Cameron

County; Exhibit 12, January 27, 2009 MERS Release of Mortgage recorded in Fort BendCounty; Exhibit 4 at 1, September 28, 1998 MERS Deed of Release recorded in Williamson

County.4

Fed. R. Civ. P. 24(b).5

Fed. R. Civ. P. 24(b)(1)(B);Kneeland v. Natl Collegiate Athletic Assn, 806 F.2d 1285,

1289 (5th Cir. 1987) (quotation marks, alterations, ellipses, and citations omitted).



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constructive notice of the impending threat.6 There are four factors by which to evaluate the

timeliness of a motion for leave to intervene:

(1) the length of time applicants knew or should have known of

their interest in the case;

(2) prejudice to existing parties caused by applicants delay;

(3) prejudice to applicants if their motion is denied; and

(4) any unusual circumstances.7

And as stated by the Supreme Court:

Although the point to which the suit has progressed is one factor in

the determination of timeliness, it is not solely dispositive.Timeliness is to be determined from all the circumstances. And it

is to be determined by the court in the exercise of its sound

discretion; unless that discretion is abused, the courts ruling will

not be disturbed on review.8

The circumstances here demonstrate that this motion is timely.

Cameron County retained Malouf & Nockels LLP and others (collectively M&N) on or

about March 12, 2013.9

M&N is also counsel for Brazoria County, Dallas County, and Harris

County in the Dallas Action. At the time of the retention, M&N was aware of the pendency of

this action, but was also aware that the deadlines in this action had been stayed pending the

Courts disposition of the Motion to Dismiss (D.E. 26). At the same time, M&N was engaged in

ongoing discussions with BOA, MERSCORP, and MERS for a partial settlement of the Dallas

Action. In an effort to include Cameron County in those discussions, M&N inquired of BOA,

6R&G Mortg. Corp. v. Federal Home Loan Mortg. Corp., 584 F.3d 1, 7-8 (1st Cir. 2009).7Ruiz v. Estelle, 161 F.3d 814, 827 (5th Cir. 1998).

8NAACP v. New York, 413 U.S. 345, 365-66 (1973); see Jones v. Caddo Parish School

Board, 735 F.2d 923, 927 (5th Cir. 1984).9See Exhibit 7, Contingent Fee Agreement If Section 2254 of the Texas Government

Code is Inapplicable at 7; Exhibit 8, Contingent Fee Agreement If Section 2254 of the Texas

Government Code is Applicable.



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MERSCORP, and MERS whether they would permit Cameron County to participate in the

partial settlement of the Dallas Action. M&N was advised by BOA, MERSCORP, and MERS

that they wished to conclude the partial settlement with Brazoria County, Dallas County, and

Harris County before considering whether to engage in settlement discussions with Cameron

County. The partial settlement of the Dallas Action remains pending, subject to approval of the

partial settlement by the Dallas County Commissioners Court.

The Fort Bend County Attorney first learned of the pendency of this action on July 2,

2013. On July 12, 2013, he conferred with counsel in the Dallas Action and on July 15, 2013

began an internal evaluation of the potential claims that Fort Bend County might make in this

action. On August 13, 2013 the Fort Bend County Attorney presented his recommendations to

the Fort Bend County Commissioners Court. The Commissioners Court voted that day to

approve Fort Bend County seeking leave to intervene in this action.10

In October 2012, Williamson County commissioned an audit of its real property records

to determine the effect of MERS practices on Williamson Countys real property recording

system.11 The report was presented to the Williamson County Commissioners Court on January

29, 2013.12

The report found, inter alia:

There were 5,782 MERS-related assignments filed in the real

property records of Williamson County during the target auditperiod from October 9, 2010 through October 9, 2012. The audit

involved the detailed review of 1,576 assignments and associated

documents. Problems found with MERS practices have been

10See Exhibit 13, Declaration of Roy Cordes, Fort Bend County Attorney. at 1.11

Exhibit 5 at 2, January 29, 2013 Williamson County, Texas Real Property Records

Audit Report (excerpt);see Exhibit 10, Declaration of Henry Prejean, Chief of the Civil Divisionof the Williamson County Attorneys Office, at 2.

12 See Exhibit 10, Declaration of Henry Prejean, Chief of the Civil Division of the

Williamson County Attorneys Office, at 3; see also Exhibit 6 at 1, February 5, 2013 OpenLetter from Mortgage Electronic Registration Systems, Inc. and MERSCORP Holdings, Inc. to

the Williamson County Commissioners Court.



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grouped into three main areas. Nearly every document reviewed by

the audit team involved one or more of the following:

1. Robosigning (fraudulent verifications of the contents ofunread documents)

2. Wholesale document fabrication3. Mortgage assignment issues

a. Use of MERS as nominee for lender and lenderssuccessors without naming the lender of record or

the lender claiming an interest in the property

b. Use of MERS for signors to assign an interest in theproperty to themselves

c. Use of MERS agents to slander title to property;impose potential double liability on property

owners; release and re-convey property through

document manufacturers; to issue potentially orfatally flawed warranty and trustees deeds and to

appear to appoint themselves as substitute

trustees.13

MERSCORP and MERS responded to the report on February 5, 2013 by publishing an

Open Letter to the Williamson County Commissioners Court to set the record straight.14

In

the Open Letter, MERSCORP and MERS assert that the report misrepresents the facts and

deny that any of their conduct in Williamson County is unlawful or contrary to Texas law.15

Following the January 29, 2013 presentation of the report to the Williamson County

Commissioners Court, Williamson County began consideration of whether to commence an

action against the Defendants and others. In exploring its options, Williamson County learned at

approximately the same time that: 1) Nueces County had commenced this action against

13Exhibit 5 at 2, January 29, 2013 Williamson County, Texas Real Property Records

Audit Report (excerpt).14

Exhibit 6 at 1, February 5, 2013 Open Letter from Mortgage Electronic RegistrationSystems, Inc. and MERSCORP Holdings, Inc. to the Williamson County Commissioners Court.

15See id.



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MERSCORP, MERS, and BOA; 2) on January 25, 2013, this Court stayed all deadlines in this

action pending the Courts determination of the Motion to Dismiss (D.E. 66); and 3) Brazoria

County, Dallas County, and Harris County were engaged in settlement discussions with

MERSCORP, MERS, and BOA in an action filed by those counties against Defendants in the

United States District Court of the Northern District of Texas (the Dallas Action).16

When the Williamson County Attorneys Office made inquiry as to whether

MERSCORP, MERS, and BOA would allow Williamson County to participate in the discussions

of a partial settlement in the Dallas Action, Williamson County was advised that MERSCORP,

MERS, and BOA wished to conclude the settlement with Brazoria County, Dallas County, and

Harris County before considering settlement with Williamson County.17

As of the date of this

motion, the partial settlement of the Dallas Action remains pending. When the Court lifted the

stay in the instant action, Williamson County concluded that its citizens would best be served by

seeking leave of this Honorable Court to intervene in this action.

B. The Claims Asserted by the Counties Share Questions of Law and Fact With

This Action

The proposed Complaint in Intervention mirrors the allegations and causes of action set

out in Plaintiffs Second Amended Complaint (D.E. 39).18

While the number of subject

instruments will be different from county to county, there will be no dispute that the types of

instrument of which complaint is made have been recorded in the Counties, just as they have

been in Nueces County.

16 See Exhibit 10, Declaration of Henry Prejean, Chief of the Civil Division of the

Williamson County Attorneys Office, at 5.17

See id. at 6.18

See Exhibit 9, [proposed] Complaint in Intervention.



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C. Intervention Will Not Unduly Delay or Prejudice the Adjudication of the

Original Parties Rights

This motion for leave to intervene is being filed within thirty (30) days of the Courts

Order lifting the stay (D.E. 71) and within twenty-one days of the Courts Amended Scheduling

Order (D.E. 75). Subject to the Courts granting the Counties leave to intervene, the Counties

will: 1) move forward without delay; 2) comply with the deadlines contained in the Courts

Amended Scheduling Order; and 3) stipulate that they will be bound by the Courts disposition

of the Motion to Dismiss (D.E. 26) and the recently-filed Defendants Motion for

Reconsideration (D.E. 76). Additionally, permissive intervention in this action would avoid the

need for the Counties to commence a new action which would itself require significant

expenditures by the parties and unnecessary consumption of judicial resources.

IV.

PRAYER

Wherefore, premises considered, Cameron County, Texas, Fort Bend County, Texas and

Williamson County, Texas, respectfully request leave to intervene in the instant action and for

such other and further relief, in law and in equity, to which they may be justly entitled.



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Respectfully submitted,

COUNSEL FOR INTERVENOR CAMERON COUNTY, TEXAS

/s/ Stephen F. Malouf

____________________________________MALOUF & NOCKELS LLPStephen F. Malouf

SBN 12888100

Jeremy MartinSBN 24033611

Jonathan Nockels

SBN 24056047

Sarah ShulkinSBN 24057720

3811 Turtle Creek Blvd., Suite 800

Dallas, Texas 75219214-969-7373 (Telephone)214-969-7648 (Facsimile)

CAMERON COUNTY COMMISSIONERSCOURT - CIVIL LEGAL DIVISION

Juan A. Gonzalez

Attorney in ChargeSouthern District No. 3472

Texas State Bar No. 08129310

Bruce W. Hodge

Of CounselSouthern District No. 4003

Texas State Bar No. 09751700

1100 East Monroe StreetBrownsville, Texas 78520956-550-1345 (Telephone)

956-550-1348 (Fax)

HILL & HILL, P.C.J. Marcus Hill

SBN 09638150

1770 St. James, Ste. 115Houston, Texas 77056

713-688-6318 (Telephone)713-688-2817 (Facsimile)

FLEMING & ASSOCIATES, P.C.Michael P. Fleming

SBN 07130600

440 Louisiana, Suite 1920Houston, Texas 77002

713-221-6800 (Telephone)713-221-6806 (Facsimile)

BARON & BLUELisa Blue

SBN 02510500

3811 Turtle Creek Blvd., Suite 800Dallas, Texas 75219

214-969-7373 (Telephone)

214-969-7648 (Facsimile)

KAESKE LAW FIRM

Mike Kaeske

SBN 00794061

1301 W. 25th St., Suite 406Austin, TX 78705

512-366-7300 (Telephone)

512-366-7767 (Facsimile)

THE LAW OFFICES OF TERRI MOORE

Terri Moore

SBN 14377780

1407 Texas St., Suite 102Ft Worth, Texas 76102

817-877-4700 (Telephone)

Barbara Radnofsky

SBN 16457000

303 Timber Terrace Rd.

Houston Texas 77024713- 858-8509 (Telephone)



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Mark WhiteSBN 2131800072 E. Briar Oaks Dr.Houston, Texas 77056713-906-6848 (Telephone)

COUNSEL FOR FORT BEND COUNTY, TEXAS

Roy L. Cordes, Jr.Fort Bend County Attorney

/s/ Randall W. Morse

_____________________________________

RANDALL W. MORSE

Assistant County Attorney

SBN: 14549700

301 Jackson Street, Suite 728

Richmond, Texas 77469

(281) 341-4555

(281) 341-4557 - Facsimile

COUNSEL FOR WILLIAMSON COUNTY, TEXAS

/s/ Henry W. Prejean

_____________________________________

WILLIAMSON COUNTYATTORNEYS OFFICE

Henry W. Prejean

Civil Chief/Of Counsel

SBN 16245850Shannon C. Francis

Assistant County Attorney

SBN 24045894405 Martin Luther King Street

Georgetown, TX 78626

(512) 943-1111 (Telephone)

(512) 943-1431 (Fax)



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CERTIFICATE OF SERVICE

I hereby certify on August 20, 2013, this Rule 24 Motion for Leave to Intervene wasserved on all counsel of record through electronic notification pursuant to Local Rule 5.1 of the

United States District Court for the Southern District of Texas.

/s/ Stephen F. Malouf______________________________________

Stephen F. Malouf

CERTIFICATE OF CONFERENCE

The undersigned hereby certifies that he has personally conferred with counsel forDefendants MERSCORP Holdings, Inc., Mortgage Electronic Registration Systems, Inc. and

Bank of America, National Association, and counsel expressed opposition for the relief

requested herein.

/s/ Stephen F. Malouf

______________________________________

Stephen F. Malouf


Documents

First Amended Motion to Intervene f 8-21-13