Wells Fargo Bank, National Association et al v. City of Richmond, California et al

Filing 50

MOTION for Leave to File Memorandum of Law as Amici Curiae filed by California Bankers Association, American Bankers Association, California Mortgage Bankers Association, California Credit Union League. (Attachments: # 1 Exhibit [Proposed] Memorandum, # 2 Proposed Order)(Hall, Paul) (Filed on 8/29/2013)

2
3
4
5
6
7
8
9

PAUL J. HALL (State Bar No. 66085)
[e-mail]
ISABELLE L. ORD (State Bar No. 198224)
[e-mail]
MATTHEW COVINGTON (State Bar No. 154429)
[e-mail]
DLA PIPER LLP(US)
555 Mission Street, Suite 2400
San Francisco, CA 94105-2933
Tel: [phone]
Fax: [phone]
Attorneys for Amici Curiae
California Bankers Association,
American Bankers Association,
California Mortgage Bankers Association,
and California Credit Union League

10

UNITED STATES DISTRICT COURT

11

NORTHERN DISTRICT OF CALIFORNIA

12

SAN FRANCISCO DIVISION

13
14

WELLS FARGO BANK,NATIONAL
ASSOCIATION,as Trustee, et al.,

15

Plaintiffs,

16

v.

18

CITY OF RICHMOND,CALIFORNIA,a
municipality; and MORTGAGE
RESOLUTION PARTNERS,L.L.C.,

19

Defendants.

17

CASE NO. CV-13-03663-CRB
NOTICE OF MOTION AND MOTION OF ,
CALIFORNIA BANKERS ASSOCIATION,
AMERICAN BANKERS ASSOCIATION,
CALIFORNIA MORTGAGE BANKERS
ASSOCIATION,AND CALIFORNIA
CREDIT UNION LEAGUE FOR LEAVE
TO PARTICIPATE AS AMICI CURIAE,
AND TO FILE MEMORANDUM AS AMICI
CURIAE,IN SUPPORT OF PLAINTIFFS'
MOTION FOR PRELIMINARY
INJUNCTION;

20
[PROPOSED]ORDER;
21
[PROPOSED] MEMORANDUM OF LAW
AS AMICI CURIAE IN SUPPORT OF
PLAINTIFFS MOTION FOR A
PRELIMINARY INJUNCTION; AND

22
23

[PROPOSED]REQUEST FOR JUDICIAL
NOTICE

24
25

Date:
Time:
Judge:

26

September 13, 2013
10:00 a.m.
Hon. Charles R. Breyer

27
28
DLA PIPER LLP (US)
SAN FRANCISCO

WEST\24I 907306.2

MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-13-3663-CRB

1

TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

2

PLEASE TAKE NOTICE that the California Bankers Association, American Bankers

3

Association, California Mortgage Bankers Association, and California Credit Union League (the

4

"Amici Curiae")respectfully request that the Court grant them leave to participate as amici curiae

5

in this action, and to file the accompanying Memorandum and Request for Judicial Notice in

6

support of Plaintiffs' Motion for a Preliminary Injunction and in opposition to Defendants'

7

Motion to Dismiss. This Motion is based on this Notice of Motion and Motion, the
_

8

accompanying Memorandum ofthe Amici Curiae and Request for Judicial Notice, and such oral

9

argument as the Court may allow.

10

I.

DISCLOSURES
The Amici Curiae are non-profit trade associations. None of them are more than 10%

11
12

owned by any public corporation. The Plaintiffs in this case are members of one or more of the

13

Amici Curiae, but only in the capacity of dues-paying members, with no special ownership

14

interest nor dues-paying beyond that of other members. No party to this case, nor its counsel,

15

authored this brief in whole or in part, nor contributed money intended to fund the preparation or

16

submission ofthis brief. No other person contributed money intended to fund the preparation or

17

submission of this brief.

18

II.

STANDARD FOR MOTION FOR LEAVE TO PARTICIPATE AS AMICI CURIAE

19

In Perry v. Schwarzenegger, No. 9-cv-2292-JW (N.D. Cal.)(Dkt. 630, Apr. 21, 2010),

20

then-Chief Judge Walker granted leave in the Proposition 8 case for the filing of more than 20

21

separate amicus briefs by more than 40 amici:

22

24

The court may welcome amicus curiae submissions "concerning legal issues that
have potential ramifications beyond the parties directly involved or if the amicus
has unique information or perspective that can help the court beyond the help that
the lawyers for the parties are able to provide."

25

Id. at p.2, quoting NGV Gaming, Ltd. v. Upstream Point Molate, LLC,355 F.Supp.2d 1061, 1067

26

(N.D. Cal. 2005); see also Sonoma Falls Devs. LLC v. Nev. Gold & Casinos, Inc., 272 F.Supp.2d

27

919,925(N.D. Cal. 2003); Craigslist, Inc. v. 3Taps, Inc., No. 12-cv-3816-CRB (N.D. Cal.)

23

28
DLA PIPER LLP (US)
SAN FRANCISCO

WEST\24I907306.2

-1 MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-I3-3663-CRB

1

(Dkt. 93, June 20, 2013)(Order granting leave to file amicus brief).
This is a "modest standard" which is readily satisfied in this case, which involves

2
3

fundamental constitutional issues and potential material adverse economic effects on most

4

residents of California. Perry v. Schwarzenegger, No. 9-cv-2292-JW (Dkt. 630),supra at p. 2.

5

III.

RESPONSE OF THE PARTIES TO REQUESTS FOR CONSENT

6

Plaintiffs have consented to.amicus participation and filing of the accompanying

7

Memorandum by the Amici Curiae in support of Plaintiffs' Motion for a Preliminary Injunction,

8

provided that the filing does not cause a delay in the hearing on that motion (which it should not).

9

On August 27, 2013, the undersigned counsel, and counsel for the other proposed amici curiae,

10

spoke by telephone with Scott A. Kronland, Esq., counsel for Defendants, and requested

11

Defendants' consent to the filing of amicus briefs by the following amici represented by the

12

following counsel:

13

• Structured Finance Industry Group, Inc., represented by Dentons US LLP;

14

• Securities Industry and Financial Markets Association and the United States Chamber

15
16

of Commerce,represented by Sidley Austin LLP; and
• California Bankers Association, American Bankers Association, and California

17

Mortgage Bankers Association, represented by DLA Piper LLP (US). DLA Piper also

18

represents proposed amicus California Credit Union League, who joined the existing

19

group of amici after the initial telephonic request to Defendants' counsel.

20

These requests were confirmed by counsel to Mr. Kronland by e-mail, also on August 23,

21

2013. On August 28, 2013, Defendants' counsel sent an e-mail declining to consent, stating:

22

"Defendants do not consent to the filing of amicus briefs. They would be untimely and unfair

23

because Defendants already filed their opposition to the preliminary injunction motion."

24

In response, on August 29, 2013, the undersigned counsel suggested by e-mail to Mr.

25

Kronland:"Your concern about timing may be resolved by a stipulation, subject to the approval

26

ofthe Court, that Defendants may have one week, to September 4(or September 5, if that works

27

for the Court)to reply to the short amicus brief."

28
-2-

DLA PIPER LLP (US)
SAN FRANCISCO

WEST\24 I 907306.2

MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-I3-3663-CRB

1
2

Defendants' counsel replied just 8 minutes later, without any attempt to negotiate a
schedule, that "Defendants' position re amicus briefs remains unchanged."

3

The accompanying proposed Order includes a provision granting Defendants until

4

September 5, 2013 to reply to the Amici Curiae's brief. That schedule, if acceptable to the Court,

5

will ensure that the date of the preliminary injunction hearing is not affected. The proposed Amici

6

Curiae submit that their proposed schedule would give Defendants ample time to reply, comport

7

with due process, and would allow the present hearing schedule (which the Amici Curiae do not

8

seek to change)to remain in place.

9

IV.

STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIAE:

10

THE CALIFORNIA BANKERS ASSOCIATION

11

California Bankers Association ("CBA")is a non-profit association established in 1891

12

that represents most of the federally insured depository financial institutions in California. The

13

CBA's members are California-based banks, mortgage lenders, loan originators and loan

14

servicers whose primary interest is in the economic health of California. All of CBA's members

15

are affected or will be affected by the City of Richmond's Home Preservation Program (the

16

"Taking Program"), if it were not enjoined by this Court.

17

CBA is a leading voice for mortgage relief legislation in California, and has consistently

18

supported tax relief and other legislation to benefit California homeowners. In 2013, the CBA co-

19

sponsored (with the California Association of Realtors("CAR"))a bill currently pending before

20

the California state legislature, S.B. 30, which would re-extend California tax relief for residential

21

mortgage debt forgiveness. The CBA and CAR co-sponsored a companion bill, A.B. 42, in the

22

state Assembly.

23

The CBA has also actively participated in discussions on the use of eminent domain by

24

California cities as a solution to the foreclosure crisis, as asserted by defendant Mortgage

25

Resolution Partners, LLC("MRP"). Representatives ofthe CBA have attended meetings and

26

MRP presentations in cities throughout California and have dialogued with principals of MRP

27

regarding the concerns discussed in the moving and reply papers ofthe Plaintiff bank trustees.

28
-3-

DLA PIPER LLP (US)
SAN FRANCISCO

WEST\241907306.2

MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-13-3663-CRB

1

THE AMERICAN BANKERS ASSOCIATION

2

The American Bankers Association("ABA")is the largest national trade association of

3

the banking industry in the United States. It represents banks and bank holding companies of all

4

sizes in each of the fifty states and the District of Columbia, including community, regional, and

5

large money center banks. The ABA also represents savings associations, trust companies, and

6

savings banks. ABA members hold approximately 95% of the United States banking industry's

7

domestic assets. The ABA frequently appears in litigation, either as a party or amicus curiae, to

8

protect and promote the interests of the banking industry and its members.

9
10

THE CALIFORNIA MORTGAGE BANKERS ASSOCIATION
The California Mortgage Bankers Association("CMBA"),founded in 1955, is a non-

11

profit trade association dedicated to representing the interests of California mortgage bankers and

12

real estate finance professionals and companies whose primary business is the origination and

13

servicing of residential and commercial mortgage loans in California. The CMBA represents

14

over 220 member companies and the thousands of employees that run those entities. In 2012,

15

CMBA's residential members originated over $80 billion and serviced over $37 billion in home

16

mortgages. Its commercial members originated over $9 billion and serviced over $20 billion in

17

commercial mortgages.

18

The CMBA seeks to promote a business, economic and legal environment conducive to

19

the efficient and ethical conduct of all aspects of mortgage banking and real estate finance. It

20

regularly advocates for its members before the California Legislature, with California regulators,

21

and in California courts. It is a periodic contributor of amicus curiae briefs in state and federal

22

courts on matters that have a significant impact on mortgage bankers and the California real estate

23

finance industry.

24

THE CALIFORNIA CREDIT UNION LEAGUE

25

The California Credit Union League("CCUL")is the largest state trade association for

26

credit unions in the United States and for more than 75 years has played an important role in

27

ensuring the sustained health of credit unions. The CCUL represents almost 300 credit unions

28

with over $120 billion in assets and nine million members in California. Credit unions are
-4-

DLA PIPER LLP (US)
SAN FRANCISCO

WEST\24I907306.2

MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-13-3663-CRB

1

financial cooperatives that are not-for-profit institutions, owned by the members ofthe credit

2

union.

3

V.

4

REASONS WHY THE EXPERTISE OF THESE AMICI CURIAE ARE
BENEFICIAL TO THIS COURT

5

The Amici Curiae are, quite literally, the voice of the mortgage lending and banking

6

industries in California and nationally. Their expertise in the areas of mortgage lending and real

7

estate transactions, and their status as the largest and most established mortgage lending and

8

banking industry groups in California and in the United States, makes them uniquely situated to

9

address the potential effects of the Taking Program.

10

The attached proposed brief of the Amici Curiae will provide analysis not otherwise

11

available to the Court regarding the economic effects of uncertainty created by the Taking

12

Program, which will chill or prevent mortgage lending in Richmond and in California generally,

13

depress property values and stifle economic recovery, and create ruinous tax consequences for

14

participant homeowners. In particular, the proposed brief explains:

15

1.

The Federal Housing Finance Agency,the conservator of Fannie Mae, Freddie

16

Mac, and the Federal Home Loan Banks has issued a detailed General Counsel

17

Memorandum explaining that, for both constitutional and safety and soundness

18

reasons, it may be required to direct its conservatees and regulated institutions to

19

refuse to buy new mortgages potentially subject to the Taking Program.

20

2.

While the legal uncertainty based on constitutional challenges to the Taking

21

Program exists, title insurance companies will refuse to insure New Loans

22

refinanced under the Taking Program, leaving Richmond with a portfolio of seized

23

loans that it cannot afford to keep, and homeowners with homes that are

24

impossible to sell.

25

3.

Loan principal reductions under the Taking Program may—and likely will—leave

26

affected homeowners with ruinous tax liability because there is no exception to

27

taxation for such loan forgiveness in California (despite the CBA's efforts), and

28

the Federal exemption expires in three months. Thus, homeowners who opted-in
-5-

DLA PIPER LLP (US)
SAN FRANCISCO

WEST\24 I 907306.2

MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-13-3663-CRB

1

to the Taking Program, which does not provide for cash-out proceeds to the

2

homeowners, would have tax liabilities that most ofthem could not pay.

3

4.

The mass revaluation of more than 600 homes in Richmond would depress

4

neighboring real estate values throughout that City, to the detriment of all

5

Richmond homeowners, and would result in downward tax reassessments that

6

would drastically reduce Richmond's tax base, to the detriment of all Richmond

7

residents.
5.

8

Historical experience, including the 1978 decision of Wellenkamp v. Bank of
America, 21 Cal. 3d 943 (1978), shows that interference in real estate contract

9
10

temis will decrease availability and increase costs of home loan credit, causing real

11

estate illiquidity.

12
13

VI.

CONCLUSION
The Amici Curiae respectfully request that the Court grant their motion for leave to

14

participate as amici curiae, and to file the accompanying Memorandum and Request for Judicial

15

Notice in support of Plaintiffs' Motion for a Preliminary Injunction.

16

Respectfully submitted,

17
18

Dated: August 29, 2013

DLA PIPER LLP(US)

19
20

By

21
22
23
24
25
26

/s/ Paul J. Hall
PAUL J. HALL
ISABELLE L. ORD
MATTHEW COVINGTON
Attorneys for Amici Curiae
CALIFORNIA BANKERS
ASSOCIATION, AMERICAN
BANKERS ASSOCIATION,
CALIFORNIA MORTGAGE
BANKERS ASSOCIATION, AND
CALIFORNIA CREDIT UNION
LEAGUE

27
28
-6-

DLA PIPER LLP (US)
SAN

FRANCISCO

WEST\241907306.2

MTN FOR LEAVE TO FILE AMICUS MEMO IN SUPPORT OF PLTS' MTN FOR PRELIM INJUNCTION
CASE NO. CV-13-3663-CRB