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IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION

NUECES COUNTY, TEXAS, Plaintiff, vs. MERSCORP HOLDINGS, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; AND BANK OF AMERICA, 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 IS SUBSTANTIALLY 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

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mortgage loans amongst members of the industry through the unlawful use of Plaintiff’s 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 Court’s determination of the Motion to Dismiss (D.E. 66). On July 3, 2013, the Court granted in part and denied in part BOA’s 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 clerk’s 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

The Counties have a combined population of approximately 1.4 million. See U.S. Department of Commerce, United State Census Bureau, American Fact Finder at http://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 Bend County; Exhibit 2 at 1, December 30, 2009 MERS Deed of Trust recorded in Williamson County; .

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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) (2) timely move for intervention; and demonstrate that: (a) it “has a claim or defense that shares with the main action a common question of law or fact;” and it will not “unduly delay or prejudice the adjudication of the original parties’ rights.”4

(b)

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

See, 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 Bend County; 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. Nat’l Collegiate Athletic Ass’n, 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; prejudice to existing parties caused by applicants’ delay; prejudice to applicants if their motion is denied; and any unusual circumstances.”7

(2) (3) (4)

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 court’s 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 Court’s 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,

R&G Mortg. Corp. v. Federal Home Loan Mortg. Corp., 584 F.3d 1, 7-8 (1st Cir. 2009). Ruiz v. Estelle, 161 F.3d 814, 827 (5th Cir. 1998). 8 NAACP 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). 9 See 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 Commissioner’s 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 County’s 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 audit period 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 See Exhibit 13, Declaration of Roy Cordes, Fort Bend County Attorney. at 1. 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 Division of the Williamson County Attorney’s Office, at ¶ 2. 12 See Exhibit 10, Declaration of Henry Prejean, Chief of the Civil Division of the Williamson County Attorney’s Office, at ¶ 3; see also Exhibit 6 at 1, February 5, 2013 Open Letter 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 of unread documents) Wholesale document fabrication Mortgage assignment issues a. Use of MERS as nominee for lender and lender’s successors without naming the lender of record or the lender claiming an interest in the property Use of MERS for signors to assign an interest in the property to themselves 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 or fatally flawed warranty and trustee’s deeds and to appear to appoint themselves as substitute trustees.13

2. 3.

b.

c.

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 Exhibit 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 Registration Systems, Inc. and MERSCORP Holdings, Inc. to the Williamson County Commissioners’ Court. 15 See id.
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MERSCORP, MERS, and BOA; 2) on January 25, 2013, this Court stayed all deadlines in this action pending the Court’s 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 Attorney’s 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.

See Exhibit 10, Declaration of Henry Prejean, Chief of the Civil Division of the Williamson County Attorney’s 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 Court’s

Order lifting the stay (D.E. 71) and within twenty-one days of the Court’s Amended Scheduling Order (D.E. 75). Subject to the Court’s granting the Counties leave to intervene, the Counties will: 1) move forward without delay; 2) comply with the deadlines contained in the Court’s Amended Scheduling Order; and 3) stipulate that they will be bound by the Court’s 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 LLP Stephen F. Malouf SBN 12888100 Jeremy Martin SBN 24033611 Jonathan Nockels SBN 24056047 Sarah Shulkin SBN 24057720 3811 Turtle Creek Blvd., Suite 800 Dallas, Texas 75219 214-969-7373 (Telephone) 214-969-7648 (Facsimile)

CAMERON COUNTY COMMISSIONERS COURT - CIVIL LEGAL DIVISION Juan A. Gonzalez Attorney in Charge Southern District No. 3472 Texas State Bar No. 08129310 Bruce W. Hodge Of Counsel Southern District No. 4003 Texas State Bar No. 09751700 1100 East Monroe Street Brownsville, Texas 78520 956-550-1345 (Telephone) 956-550-1348 (Fax)

HILL & HILL, P.C. J. Marcus Hill SBN 09638150 1770 St. James, Ste. 115 Houston, Texas 77056 713-688-6318 (Telephone) 713-688-2817 (Facsimile)

FLEMING & ASSOCIATES, P.C. Michael P. Fleming SBN 07130600 440 Louisiana, Suite 1920 Houston, Texas 77002 713-221-6800 (Telephone) 713-221-6806 (Facsimile)

BARON & BLUE Lisa Blue SBN 02510500 3811 Turtle Creek Blvd., Suite 800 Dallas, Texas 75219 214-969-7373 (Telephone) 214-969-7648 (Facsimile)

KAESKE LAW FIRM Mike Kaeske SBN 00794061 1301 W. 25th St., Suite 406 Austin, TX 78705 512-366-7300 (Telephone) 512-366-7767 (Facsimile)

THE LAW OFFICES OF TERRI MOORE Terri Moore SBN 14377780 1407 Texas St., Suite 102 Ft Worth, Texas 76102 817-877-4700 (Telephone)

Barbara Radnofsky SBN 16457000 303 Timber Terrace Rd. Houston Texas 77024 713- 858-8509 (Telephone)

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Mark White SBN 21318000 72 E. Briar Oaks Dr. Houston, Texas 77056 713-906-6848 (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 COUNTY ATTORNEY’S OFFICE Henry W. Prejean Civil Chief/Of Counsel SBN 16245850 Shannon C. Francis Assistant County Attorney SBN 24045894 405 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 was served 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 for Defendants 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

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