Bank of New York Mellon v. City of Richmond, California et al

Filing 47

RESPONSE to re 44 Certificate of Interested Entities or Persons by Defendants Mortgage Resolution Partners L.L.C. and Gordian Sword LLC by Bank of New York Mellon, Bank of New York Mellon Trust Company, N.A.. (Pollock, Bronwyn) (Filed on 10/31/2013)

1
2
3
4
5
6
7
8
9
10
11
12
13
14

MAYER BROWN LLP
DONALD M. FALK (SBN 150256)
[e-mail]
Two Palo Alto Square, Suite 300
3000 El Camino Real
Palo Alto, CA 94306-2112
Tel: [phone]
Fax: [phone]
BRONWYN F. POLLOCK (SBN 210912)
[e-mail]
NOAH B. STEINSAPIR (SBN 252715)
[e-mail]
MICHAEL D. SHAPIRO (SBN 271912)
[e-mail]
350 S. Grand Ave., 25th Floor
Los Angeles, CA 90071-1503
Tel: [phone]
Fax: [phone]
Attorneys for Plaintiffs
THE BANK OF NEW YORK MELLON
(f/k/a The Bank of New York) and
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A. (f/k/a The Bank of New York Trust
Company, N.A.) as Trustees for the Trusts listed on
Exhibit A to the Second Amended Complaint
[Additional counsel listed on signature page.]

15

UNITED STATES DISTRICT COURT

16

NORTHERN DISTRICT OF CALIFORNIA

17
18

THE BANK OF NEW YORK MELLON (f/k/a
The Bank of New York) et al.

19
20

Plaintiffs,
v.

21
22
23
24

CITY OF RICHMOND, CALIFORNIA, a
municipality; RICHMOND CITY COUNCIL;
MORTGAGE RESOLUTION PARTNERS
L.L.C., a Delaware limited liability company;
and GORDIAN SWORD LLC, a Delaware
limited liability company;

25

Case No. 3:13-cv-3664-CRB
PLAINTIFFS’ RESPONSE TO
CERTIFICATION OF INTERESTED
ENTITIES OR PERSONS BY
DEFENDANTS MORTGAGE
RESOLUTION PARTNERS L.L.C. AND
GORDIAN SWORD LLC (DKT. 44)
Judge: Hon. Charles R. Breyer
Complaint filed: August 7, 2013

Defendants.

26
27
28
PLAINTIFFS’ RESPONSE TO DEFENDANTS’ CERTIFICATION OF INTERESTED ENTITIES;
CASE NO. 13-cv-3664-CRB
707860856.1

1

Plaintiffs The Bank of New York Mellon (f/k/a The Bank of New York), as trustee, The

2

Bank of New York Mellon Trust Company, N.A. (f/k/a The Bank of New York Trust Company,

3

N.A.), as trustee, U.S. Bank National Association, as trustee, Wilmington Trust Company, as

4

trustee, and Wilmington Trust, National Association, as trustee (collectively, “Plaintiffs”),

5

respond to the Certification of Interested Entities or Persons submitted by Defendants Mortgage

6

Resolution Partners L.L.C. (“MRP”) and Gordian Sword LLC (“Gordian”) (Dkt. 44).

7

MRP and Gordian disclose that the two LLCs have about 60 members but intentionally

8

withhold the identities of those members, and fail to disclose other individuals or entities that

9

have a financial interest in MRP or Gordian, or an interest in the outcome of the case. Local

10

Rule 3-16 requires MRP and Gordian to disclose any persons or entities that have “a financial

11

interest (of any kind) in the subject matter in controversy or in a party to the proceeding” or “any

12

kind of interest that could be substantially affected by the outcome of the proceeding.” L.R. 3-

13

16(b)(1). “Financial interest” means “ownership of a legal or equitable interest, however small,”

14

or “a relationship as director, advisor, or other active participant in the affairs of a party.” 28

15

U.S.C. 455(d)(4); L.R. 3-16(b)(2). Defendants suggest that because they could not locate case

16

law specific to LLCs that they somehow are exempt from full disclosure. But that turns the rule

17

on its head—the rule requires broad disclosure unless exempted (e.g., expressly exempted from

18

the definition of “financial interest” is “[o]wnership in a mutual or common investment fund that

19

holds securities . . . unless the judge participates in the management of the fund”). 28 U.S.C.

20

§ 455(d)(4)(i); L.R. 3-16(b)(2). Further, Delaware law, under which MRP and Gordian are

21

incorporated, provides that a member’s interest in an LLC is the member’s personal property.

22

Del. Code Ann. tit. 6, § 18-701. Members of MRP and Gordian therefore “own[] . . . a legal or

23

equitable interest, however small” in MRP or Gordian and thus possess a financial interest that

24

must be disclosed.

25

In addition, “the management of a limited liability company shall be vested in [all] its

26

members.” Del. Code Ann. tit. 6, § 18-402. Managers of LLCs are analogous to directors.

27

Members having “a relationship as a director, advisor” or who are otherwise an “active

28

1
PLAINTIFFS’ RESPONSE TO DEFENDANTS’ CERTIFICATION OF INTERESTED ENTITIES;
CASE NO. 13-cv-3664-CRB
707860856.1

1

participant in the affairs of” MRP or Gordian have a financial interest that must be disclosed.

2

Other individuals or entities also have an “interest that could be substantially affected by

3

the outcome of the proceeding.” L.R. 3-16(b)(1). For instance, MRP has secured at least $46

4

million of financing to implement Defendants’ loan seizure program. Dkt. 34-7 at 34 of 57. The

5

investors providing this financing certainly have an interest that could be substantially affected

6

by the outcome of this case. Yet MRP and Gordian have not disclosed these investors.

7

MRP and Gordian have intentionally failed to disclose the identities of their members, the

8

loan seizure program’s investors, and anyone else who has a financial interest in MRP or

9

Gordian, or an interest that could be substantially affected by the outcome of this case. At a

10

minimum, their members have an ownership interest in the LLC and must be disclosed. L.R. 3-

11

16(b); 28 U.S.C. § 455(d)(4); Del. Code Ann. tit. 6, § 18-701. The Court should require that they

12

provide complete certifications.

13
14

Dated: October 31, 2013

MAYER BROWN LLP
DONALD M. FALK
BRONWYN F. POLLOCK
NOAH B. STEINSAPIR
MICHAEL D. SHAPIRO

15
16
17
18

By: /s/ Bronwyn F. Pollock
Bronwyn F. Pollock
Attorneys for Plaintiffs
THE BANK OF NEW YORK MELLON
(f/k/a The Bank of New York) and
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.(f/k/a The Bank of New York
Trust Company, N.A.), as Trustees for the trusts
listed on Exhibit A of the Second Amended
Complaint

19
20
21
22
23
24

Respectfully submitted,

Dated: October 31, 2013

25
26

JONES DAY
BRIAN D. HERSHMAN (SBN 168175)
[e-mail]
555 South Flower Street, 50th Floor
Los Angeles, CA 90071-2300
Tel: [phone]
Fax: [phone]

27
28

2
PLAINTIFFS’ RESPONSE TO DEFENDANTS’ CERTIFICATION OF INTERESTED ENTITIES;
CASE NO. 13-cv-3664-CRB
707860856.1

JONES DAY
MATTHEW A. MARTEL
(pro hac vice)
[e-mail]
JOSEPH B. SCONYERS
(pro hac vice)
[e-mail]
100 High Street, 21st Floor
Boston, MA 02110
Telephone: [phone]
Facsimile: 617-449-6999

1
2
3
4
5
6
7

By: /s/ Brian D. Hershman
Brian D. Hershman
Attorneys for Plaintiff
U.S. BANK NATIONAL ASSOCIATION,
as Trustee

8
9
10

Dated: October 31, 2013

11
12
13
14
15

ALSTON & BIRD LLP
KURT OSENBAUGH (SBN 106132)
[e-mail]
WHITNEY CHELGREN (SBN 285362)
[e-mail]
333 South Hope Street, Sixteenth Floor
Los Angeles, California 90071
Telephone:
213-576-1000
Facsimile:
213-576-1100
By: /s/ Kurt Osenbaugh
Kurt Osenbaugh
Attorneys for Plaintiff
WILMINGTON TRUST COMPANY and
WILMINGTON TRUST, NATIONAL
ASSOCIATION, as Trustees

16
17
18
19
20
21
22
23
24
25
26
27
28

3
PLAINTIFFS’ RESPONSE TO DEFENDANTS’ CERTIFICATION OF INTERESTED ENTITIES;
CASE NO. 13-cv-3664-CRB
707860856.1

1
2

SIGNATURE ATTESTATION
I, Bronwyn F. Pollock, attest that the concurrence in the filing of this Plaintiffs’ response

3

to Certification of Interested Entities or Persons by Defendants Mortgage Resolution Partners

4

L.L.C. and Gordian Sword LLC (Dkt. 44) has been obtained from Brian D. Hershman and Kurt

5

Osenbaugh.

6
7

By: /s/ Bronwyn F. Pollock_____________
Bronwyn F. Pollock
Attorneys for Plaintiffs
THE BANK OF NEW YORK MELLON
(f/k/a The Bank of New York) and THE BANK
OF NEW YORK MELLON TRUST
COMPANY, N.A. (f/k/a The Bank of New York
Trust Company, N.A.), as Trustees for the Trusts
listed in Exhibit A to the Second Amended
Complaint

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

4
PLAINTIFFS’ RESPONSE TO DEFENDANTS’ CERTIFICATION OF INTERESTED ENTITIES;
CASE NO. 13-cv-3664-CRB
707860856.1