Oakland,County of et al v. Federal National Mortgage Association et al

Filing 29

OPINION AND ORDER granting 13 Motion to Intervene. Signed by Magistrate Judge Laurie J. Michelson. (JJoh)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

OAKLAND COUNTY, and
ANDREW E. MEISNER,
Plaintiffs,
v.

Civil Action No. 11-12666
District Judge Victoria A. Roberts
Magistrate Judge Laurie J. Michelson

FEDERAL NATIONAL MORTGAGE
ASSOCIATION, and
FEDERAL HOME LOAN MORTGAGE
CORPORATION,
Defendants.
________________________________/
OPINION AND ORDER GRANTING
FEDERAL HOUSING FINANCE AGENCY’S MOTION TO INTERVENE [13]
Oakland County and Andrew E. Meisner, the Oakland County Treasurer, (“Plaintiffs”)
brought this action against Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation (“Defendants”) asserting that Defendants recorded real estate transactions
with the County Register of Deeds without paying the accompanying transfer tax. (Dkt. 1, Compl.
¶¶ 4-5.) Presently before this Court for Hearing and Determination (Dkt. 26) is Federal Housing
Finance Agency’s Motion to Intervene (Dkt. 13). For the following reasons, this Court GRANTS
Federal Housing Finance Agency’s Motion to Intervene.1

1

The Court notes that there is a split in authority as to whether intervention is a nondispositive matter, and it does not appear that the Sixth Circuit Court of Appeals has addressed the
issue. Compare Washington Mut. Bank v. Chiapetta, No. 1:07CV00683, 2011 WL 1743389, at *1
(N.D. Ohio May 6, 2011) (treating order on motion to intervene as report and recommendation) with
U.S. v. Marsten Apartments, Inc., 175 F.R.D. 265, 267 n.1 (E.D. Mich. 1997) (“A motion to
intervene is a nondispositive motion which may be heard and determined by a magistrate judge
pursuant to 28 U.S.C. § 636(b)(1)(A).” (citing cases)).
This Court views a motion to intervene as similar to one for joinder to add parties or to

I. BACKGROUND
The Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan
Mortgage Corporation (“Freddie Mac”) are government-sponsored enterprises (“GSEs”): private,
shareholder-owned corporations with federal government charters. See Mark Jickling, Cong.
Research Serv., RS22950, Fannie Mae and Freddie Mac in Conservatorship 1 (2008); see also (Dkt.
22, Pls.’ Resp. to Mot. Intervene, Ex. A at 8 (Fannie Mae and Freddie Mac remain private
companies post-conservatorship)). Generally speaking, the GSEs buy home mortgages from the
original lenders, “repackage them as mortgage-backed securities, and either sell them or hold them
in their own investment portfolios.” Jickling, supra at 1.
On July 30, 2008, Congress passed the Housing and Economic Recovery Act of 2008, (“Act”
or “HERA”) and established the Federal Housing Finance Agency (“Agency” or “FHFA”). See id.
at 2. Pursuant to the Act, on September 6, 2008, the Agency’s Director appointed the Agency as

amend to add claims, both of which have been considered non-dispositive by courts in this Circuit.
E.g., Hudson v. Caruso, No. 1:10-CV-58, 2011 WL 1042286, at *2 (W.D. Mich. Mar. 18, 2011)
(“Plaintiffs also appeal the Magistrate Judge’s order denying motions for intervention and joinder.
In considering an appeal of a Magistrate Judge’s ruling on a nondispositive pre-trial motion, the
Court applies a ‘clearly erroneous or contrary to law’ standard of review.” (internal citation
omitted)); Turner v. Farmer Jack, No. 05-40292, 2006 WL 1235759, at *1 (E.D. Mich. May 8,
2006) (“A motion for leave to amend complaint . . . [is a] nondispositive motion[]. . . .
Nondispositive orders, such as [the] Magistrate Judge[’s] . . . order . . . are governed by the terms
of 28 U.S.C. § 636(b)(1)(A).”).
Further, in its August 22, 2011 Order, the District Court referred FHFA’s Motion to
Intervene to this Court for hearing and determination pursuant to 28 U.S.C. § 636(b)(1)(A) rather
than for report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). See Shultz v. Berrios,
No. 10-10486, 2011 WL 721303, at *1 n.1 (E.D. Mich. Feb. 23, 2011) (“Plaintiff’s non-dispositive
motions for leave for joinder and for sanctions were referred to [the] Magistrate Judge . . . for
determination as opposed to a recommendation for disposition. . . . In light of the authority this
Court conferred upon [the] Magistrate Judge . . . in the April 22 order, the Court is treating [the
Magistrate’s] ‘recommendations’ on those non-dispositive matters as determinations and reviewing
those determinations based on the standard set forth in § 636(b)(1)(A) . . . .”).
Accordingly, this Court issues this Opinion and Order on FHFA’s motion.
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conservator of Fannie Mae and Freddie Mac. (Dkt. 13, FHFA’s Mot. Intervene at ECF 11; see also
Dkt. 22, Pls.’ Resp. to Mot. Intervene at 1.) Under HERA, the Agency “succeed[ed] to all rights,
titles, powers, and privileges of [Fannie Mae and Freddie Mac], and of any stockholder, officer, or
director of [Fannie Mae and Freddie Mac] with respect to [Fannie Mae and Freddie Mac] and [their]
assets.” 12 U.S.C. § 4617(b)(2)(A)(i). “In other words, FHFA completely controls Fannie Mae and
Freddie Mac.” (Pls.’ Resp. to Mot. Intervene at 1.)
Oakland County and the Oakland County Treasurer (collectively, “County”) assert that
through the foreclosure process Fannie Mae and Freddie Mac became the owners of certain
properties. (Dkt. 5, Pls.’ Mot. Summ. J. at 1-3.) Defendants then conveyed those properties and
recorded the accompanying deeds with the Oakland County Register of Deeds. (Dkt. 1, Compl. ¶ 5.)
But, Plaintiffs claim, Defendants did so without paying the requisite transfer tax. (Compl. ¶¶ 5-6.)
Accordingly, on June 20, 2011, the County filed this suit to recover the unpaid transfer taxes.
(Dkt. 1.)
On July 20, 2011, the Agency, as conservator of Fannie Mae and Freddie Mac, filed a motion
to intervene in this case. (Dkt. 13.) The motion is fully briefed (Dkts. 22, 25), and on September
15, 2011, this Court heard oral argument (see Dkt. 28).
II. ANALYSIS
A. Congress Has Granted FHFA a Statutory Right to Intervene Pursuant to Fed. R.
Civ. P. 24(a)(1)
“On timely motion, the court must permit anyone to intervene who is given an unconditional
right to intervene by a federal statute.” Fed. R. Civ. P. 24(a)(1). “[A]n intervenor possesses a
statutory right to intervene only when a federal statute unambiguously grants the applicant an
unconditional right to participate in litigation. . . . If the intervenor must fulfill conditions, such as
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proving an ‘interest’ that has been impaired or impeded, then the legislation is conditional, not
unconditional, and Rule 24(a)(1) is not applicable.” 6 James Wm. Moore et al., Moore’s Federal
Practice § 24.02 (3d ed. 2011).
The Agency asserts that the Act makes plain that Congress granted it an unconditional
statutory right to intervene. (FHFA’s Mot. Intervene at ECF 13-14; FHFA’s Reply for Mot. to
Intervene at 1-2.) The Agency also asserts that “Federal courts have consistently recognized
FHFA’s statutory right to intervene under 12 U.S.C. § 4617(b)(2)(A)(i) in cases involving Fannie
Mae or Freddie Mac.” (Id. at ECF 14 (citing cases).)
The County responds by asserting that HERA contains no provision explicitly granting the
Agency a right to intervene, and the Act’s silence is notable given that in other statutes Congress
has explicitly provided for the right. (Pls.’ Resp. to Mot. Intervene at 3-4.) The County further
explains that the cases relied upon by the Agency are not persuasive authority because they involved
intervention motions that were stipulated to or unopposed, and/or present little or no justification
for granting Agency intervention. (Id. at 5-6.)
While both parties have presented strong arguments in support of their respective positions,
this Court concludes that the Agency’s position is better supported by both the text of the Act and
the limited case law on point.
The starting place for interpreting a statute is its text. See Rubin v. United States, 449 U.S.
424, 430 (1981). If an act’s “language at issue has a plain and unambiguous meaning with regard
to the particular dispute in the case,” further inquiry is unnecessary. Robinson v. Shell Oil Co., 519
U.S. 337, 340 (1997); accord Roberts ex rel. Wipfel v. Hamer, — F.3d —, 2011 WL 3768254, at
*4 (6th Cir. Aug. 26, 2011) (“We begin with the cardinal rule of statutory interpretation: ‘[T]he

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meaning of a statute must, in the first instance, be sought in the language in which the act is framed,
and if that is plain . . . the sole function of the courts is to enforce it according to its terms. If the
words are plain . . . it is neither the duty nor the privilege of the courts to enter speculative fields in
search of a different meaning.’” (quoting Caminetti v. United States, 242 U.S. 470, 485 (1917))).
An examination of HERA as a whole reveals that Congress granted FHFA an unconditional
right to intervene in this case. The Act makes the Agency, as conservator, the immediate successor
to “all rights, titles, powers, and privileges of the regulated entity, and of any stockholder, officer,
or director of such regulated entity with respect to the regulated entity and the assets of the regulated
entity.” 12 U.S.C. § 4617(b)(2)(A)(i). Similarly, the Act provides that the Agency has the right to
“take over the assets of and operate the regulated entity with all the powers of the shareholders, the
directors, and the officers of the regulated entity and conduct all business of the regulated entity.”
12 U.S.C. § 4617(b)(2)(B)(i). These provisions make clear that Congress intended to grant the
Agency the right to exercise plenary control over Fannie Mae and Freddie Mac. Cf. In re Federal
Home Loan Mortg. Corp. Derivative Litig., 643 F. Supp. 2d 790, 797 (E.D. Va. 2009) (holding that
the language of 12 U.S.C. §§ 4617(b)(2)(A)(i), (f) “clearly demonstrates Congressional intent to
transfer as much control of Freddie Mac as possible to the FHFA, including any right to sue on
behalf of the corporation.”); Esther Sadowsky Testamentary Trust v. Syron, 639 F. Supp. 2d 347, 350
(S.D.N.Y. 2009) (“The Court finds that under the plain language of HERA, ‘all rights, titles, powers,
and privileges’ of Freddie Mac’s shareholders are now vested in the FHFA. 12 U.S.C. §
4617(b)(2)(A). These include the right to bring an action on Freddie Mac’s behalf. The FHFA is
therefore the true party at interest in this case and should be substituted [as Plaintiff in this derivative
action].”). This Court views Congress’s broad grant of authority to the Agency under 12 U.S.C.

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§§ 4617(b)(2)(A)(i), (b)(2)(B)(i) to include the right to participate in the defense of Fannie Mae and
Freddie Mac’s assets.
To the extent that the County demands something more explicit in this regard, the Act
provides that the Agency as conservator has the power to (1) “preserve and conserve the assets and
property of the regulated entity,” 12 U.S.C. § 4617(b)(2)(B)(iv), (2) take such action as may be
“necessary to put the regulated entity in a sound an solvent condition,” 12 U.S.C. § 4617(b)(2)(D)(i),
and (3) take such action as “appropriate to carry on the business of the regulated entity and preserve
and conserve the assets and property of the regulated entity,” 12 U.S.C. § 4617(b)(2)(D)(ii). And
the Court notes that a suit such as the present one could significantly affect the conservation and
management of Fannie Mae and Freddie Mac’s assets and alter their future business practices. As
such, the Court disagrees with the County that “there is no connection between [the Agency’s] right
to operate Fannie Mae and Freddie Mac and ‘an unconditional right to intervene.’”2
Yet the Act still does not use the word “intervene,” and the County asserts that
notwithstanding the foregoing statutory provisions, “Congress knows how to confer the right to
intervene and, when it does, it does so explicitly.” (Pls.’ Resp. to Mot. Intervene at 5.) The Court
does not quarrel with the general rule – more applicable in some situations than others – that when
Congress intends a particular result, it says so explicitly. See, e.g., Meghrig v. KFC Western, Inc.,

2

The Court further notes that the Act also explicitly contemplates that the Agency will appear
on behalf of Fannie Mae and Freddie Mac in litigation. It provides that “In the event of any
appealable judgment, the Agency as conservator . . . shall have all of the rights and remedies
available to the regulated entity (before the appointment of such conservator or receiver) and the
Agency, including removal to Federal court and all appellate rights.” 12 U.S.C. § 4617(b)(11)(B)(i);
see also 12 U.S.C. § 4617(b)(12)(A) (“Notwithstanding any provision of any contract, the applicable
statute of limitations with regard to any action brought by the Agency as conservator . . . shall be
. . . .” (emphasis added)).
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516 U.S. 479, 484-85 (1996) (“[A] comparison between the relief available under RCRA’s citizen
suit provision and that which Congress has provided in the analogous, but not parallel, provisions
of CERCLA is telling. . . . Congress . . . demonstrated in CERCLA that it knew how to provide for
the recovery of cleanup costs, and . . . the language used to define the remedies under RCRA does
not provide that remedy”); FCC v. NextWave Personal Commc’ns, Inc., 537 U.S. 293, 302 (2003)
(“[W]here Congress has intended to provide regulatory exceptions to provisions of the Bankruptcy
Code, it has done so clearly and expressly . . . .”). But this Court is not persuaded that this principle
means that the scope and purpose of HERA do not grant the Agency an unconditional right to
intervene.
The statutes cited by the County grant a right to intervene to an entity that may have little
or no control over one of the original parties to the action. See 15 U.S.C. § 1071(b)(2) (Director of
the U.S. Patent and Trademark Office (intervenor) and an applicant for, or opposer of, a registration
of a trademark (original parties)); 28 U.S.C. § 2323 (“Communities, associations, firms, and
individuals interested in the controversy” before the Surface Transportation Board (intervenors) and
the United States and non-agency entities (e.g., private businesses, local government) (original
parties)); 28 U.S.C. § 2403(a) (United States (intervenor) and entities that are not the “United States
or any agency, officer or employee” of the United States (original parties)); 33 U.S.C. § 1365(c)(2)
(Environmental Protection Agency Administrator (intervenor) and a “citizen” and “any person”
alleged to be in violation of an effluent standard or related order (original parties)); 42 U.S.C. §
2000h-2 (focusing on type of action commenced – one “seeking relief from the denial of equal
protection of the laws under the fourteenth amendment to the Constitution on account of race, color,
religion, sex or national origin” – instead of the relationship between original parties and the U.S.

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Attorney General (intervenor)); 42 U.S.C. § 2000e-5(f)(1) (persons aggrieved by an alleged unlawful
employment practice (intervenors) and Equal Employment Opportunity Commission, U.S. Attorney
General, and “government, governmental agency, or political subdivision” (original parties)).
In contrast, Congress granted the Agency the power to operate Fannie Mae and Freddie Mac
with “all” the powers of those two GSEs’ directors, officers, and shareholders. See 12 U.S.C.
§ 4617(b)(2)(B)(i), (iii). The Agency also succeeded to all rights, titles, powers, and privileges of
Fannie Mae and Freddie Mac (28 U.S.C. § 12 U.S.C. § 4617(b)(2)(A)(i)) – which includes the right
to sue and be sued. Given the Agency’s all-encompassing ability to control the operations and
business decisions of a regulated entity under the Act, it would have been surplusage for Congress
to include an explicit right to intervene in lawsuits that could affect the GSEs’ assets, liabilities, and
future course of doing business (e.g., paying certain taxes). But the same cannot be said for the
statutes cited by the County: those statutes ensure that certain entities may intervene even if those
entities may have limited or no control over one of the original parties to the suit.
The Court recognizes that the above argument appears susceptible to the following rejoinder:
if the Agency has all-encompassing control over Fannie Mae and Freddie Mac, did Congress view
Agency intervention as unnecessary? Indeed, the County makes such an argument (albeit in a
different context):
Fannie Mae and Freddie Mac are operated by FHFA – it has the
authority to select and control counsel for Fannie Mae and Freddie
Mac and to make strategic decisions relating to this litigation through
them. If allowed to intervene, what would FHFA say in this case that
will not be said by Fannie Mae and Freddie Mac – more
fundamentally – that FHFA could [not] instruct Fannie Mae and
Freddie Mac to say?
(Pls.’ Resp. to Mot. Intervene at 6-7.) But this counter-argument is reconcilable with this Court’s

8

reasoning. While Congress may have enabled the Agency to coach this litigation from the sidelines
by directing Fannie Mae and Freddie Mac’s decision-making, and therefore the Agency may not
need to intervene here, this does not necessarily mean that Congress did not grant the Agency the
right to do so. Restated, the County’s argument may be accounted for by recognizing that the Act
grants the Agency more than one way to participate in a lawsuit brought against Fannie Mae or
Freddie Mac.
Finally, although the County disagrees with the case law holding that the Agency has a
statutory right to intervene in cases where Fannie Mae or Freddie Mac are parties, and asserts that
they lacked opposition and are short on explanation, this does not change the fact that courts have
relied upon the broad language of the Act in granting intervention. See State of Nevada v.
Countrywide Home Loans Servicing, LP, No. 3:10-cv-00419 (D. Nev. Aug. 3, 2010) (Jones, J.)
(order granting FHFA’s unopposed motion to intervene based only on Rule 24(a)(1)); Lopez v.
Executive Trustee Servs., LLC, No. 3:09-cv-00180 (D. Nev. Jan. 13, 2010) (Reed, J.) (order granting
FHFA’s motion to intervene based only on Rule 24(a), and holding, “Under 12 U.S.C.
§ 4617(b)(2)(A)(1) the FHFA succeeded to all rights, titles, powers, and privileges of Fannie Mae
and Fredd[ie] Mac, giving FHFA a right to intervene in this matter.”); Goodwin v. v. Executive
Trustee Servs., LLC, No. 3:09-cv-00306 (D. Nev. Jan 11, 2010) (Reed, J.) (similar); Kuriakose v.
Federal Home Loan Mortgage Co., No. 1:08-cv-7281, 2009 U.S. Dist. Lexis 10218, at *3 (S.D.N.Y.
Feb. 6, 2009) (noting that the Act “established the FHFA and authorized its intervention in this case
as conservator for Freddie Mac.”). In fact, the Agency asserts that no court has denied an Agency
motion to intervene in a case involving Fannie Mae or Freddie Mac. (FHFA’s Mot. Intervene at

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ECF 14 n.1; FHFA’s Reply for Mot. Intervene at 2.).3 And Plaintiffs have cited no exception to this
general practice. (See Pls.’ Resp. to Mot. Intervene at 3-6.)
In short, the County would have the Court read the Act’s grant of “all” of Fannie Mae and
Freddie Mac’s rights and powers to the Agency as something less than its plain language indicates,
and the Agency’s statutory authority to conserve the two GSEs’ assets as less than plenary.
Especially because no court has denied on the merits a request by FHFA to intervene as conservator
of the GSEs (see FHFA’s Mot. Intervene at 14 n.1), the Court declines this invitation. Congress,
pursuant to HERA, has granted FHFA a statutory right to intervene under Rule 24(a)(1).
B. Alternatively, FHFA Has a Right to Intervene Pursuant to Fed. R. Civ. P. 24(a)(2)
Under Rule 24(a)(2),
On timely motion, the court must permit anyone to intervene who . . .
claims an interest relating to the property or transaction that is the
subject of the action, and is so situated that disposing of the action
may as a practical matter impair or impede the movant’s ability to
protect its interest, unless existing parties adequately represent that
interest.
Fed. R. Civ. P. 24(a)(2). Rule 24(a)(2) translates to four required elements: “(1) timeliness of the
application to intervene, (2) the applicant’s substantial legal interest in the case, (3) impairment of
the applicant’s ability to protect that interest in the absence of intervention, and (4) inadequate
representation of that interest by parties already before the court.” Michigan State AFL-CIO v.
Miller, 103 F.3d 1240, 1245 (6th Cir. 1997). This Court must also be mindful that “Rule 24 should

3

See, e.g., Herron v. Fannie Mae, No. 10-00943 (D.D.C. May 23, 2011) (Minute Order); In
re Mortgage Elec. Registration Sys. (MERS) Litig., No. 09-2119-JAT (D. Ariz. May 17, 2010)
(Order, unopposed); Remington v. Fed. Nat’l Mortgage Ass’n, No. 1:09-cv-03230 (D. Md. Mar. 16,
2010) (Paperless Order, unopposed); In re Fannie Mae 2008 Securities Litig., Nos. 08Civ.7831,
09Civ.1352 (S.D.N.Y. Oct. 13, 2009) (Order, unopposed); Ohio Pub. Employees Ret. Sys. v. Freddie
Mac, No. 4:08-cv-00160 (N.D. Ohio Nov. 19, 2008) (Order, stipulated).
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be ‘broadly construed in favor of potential intervenors.’” Coalition to Defend Affirmative Action
v. Granholm, 501 F.3d 775, 779 (6th Cir. 2007) (quoting Purnell v. City of Akron, 925 F.2d 941, 950
(6th Cir. 1991)); Fed. R. Civ. P. 24(a)(2), advisory committee’s note (1966) (“[I]f an [applicant]
would be substantially affected in a practical sense by the determination made in an action, he
should, as a general rule, be entitled to intervene . . . .”). The timeliness of the Agency’s motion is
not disputed, and the Court finds that the Agency has established each of the remaining three
requirements.
Regarding the second element, the Sixth Circuit interprets the fact-specific “concept of legal
interest liberally.” Pride v. Allstate Ins. Co., No. 10-13988, 2011 WL 692299, at *3 (E.D. Mich.
Feb. 18, 2011) (citing Mich. State AFL-CIO v. Miller, 103 F.3d 1240, 1245 (6th Cir. 1997); Bradley
v. Milliken, 828 F.2d 1186, 1192 (6th Cir. 1987)). The County seeks damages from Fannie Mae and
Freddie Mac for unpaid transfer taxes. The County also seeks injunctive relief that could alter
whether those GSEs’ will pay transfer taxes in the future. As explained above, the Agency has a
statutory right to “put [Fannie Mae and Freddie Mac] in a sound and solvent condition” and
“preserve and conserve” those GSEs’ assets. 12 U.S.C. § 4617(b)(2)(D). The Agency therefore has
a legal interest in minimizing the impact of this suit on those assets. Indeed, because of Fannie Mae
and Freddie Mac’s financial difficulties, Congress made the Agency solely responsible for
preserving Fannie Mae and Freddie Mac’s assets. (See FHFA’s Reply for Mot. Intervene at 3.)
Accordingly, under the Sixth Circuit’s “rather expansive notion of the interest sufficient to invoke
intervention of right,” Miller, 103 F.3d at 1245, the Agency has demonstrated the requisite legal

11

interest.4
Turning to the third element, “the intervenor has a minimal burden [of] show[ing] that the
ability to protect its interest may be impaired without intervention.” Pride, 2011 WL 692299, at *3
(citing Miller, 103 F.3d at 1247). Further, “Rule 24(a) does not require the intervenor to show that
the interest will be impaired; it only has to demonstrate that it is possible.” Id. (citing Purnell v. City
of Akron, 925 F.2d 941, 948 (6th Cir. 1991)). Here, intervention allows the Agency the opportunity
to protect its interest in Fannie Mae and Freddie Mac’s assets. Absent the Agency’s participation,
that interest may be impaired because of Fannie Mae and Freddie Mac’s inability to assert certain
statutory defenses unique to the Agency. (See FHFA’s Reply for Mot. Intervene at 3 (citing 12
U.S.C. §§ 4617(j)(2), (j)(4), (f)).) Moreover, as argued by the Agency, a judgment that Fannie Mae
and Freddie Mac are liable to the County for unpaid transfer taxes could impair the Agency’s present
plans for returning the GSEs to a “sound and solvent condition.” (See FHFA’s Reply for Mot.

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At oral argument, the County asserted that because it could not state a cognizable claim
against FHFA (because it was not FHFA that recorded the deeds in question) that FHFA could not
intervene as a defendant. The Court does not read Rule 24(a) so narrowly – the Rule requires an
intervenor to have an “interest relating to the property or transaction that is the subject of the
action.” The text does not require that a plaintiff must be able to sue a putative defendantintervenor. See Mattel, Inc. v. Bryant, 441 F. Supp. 2d 1081, 1097 (C.D. Cal. 2005) (noting, in
discussing whether intervention would destroy diversity jurisdiction, “‘[W]hether the context is
removal or not, there can be persons who intervene on the side of the defendants . . . against whom
the plaintiff has no claim to assert. Indeed, the intervention of persons under Rule 24 typically will
be at the instigation of the intervenors, and not at the urging of the plaintiff, and will be precipitated
by the persons’ concern that disposition of the action in their absence will as a practical matter
impair or impede their ability to protect their interests.’” (quoting Joan Steinman, Supplemental
Jurisdiction in § 1441 Removed Cases: An Unsurveyed Frontier of Congress’ Handiwork, 35 Ariz.
L.Rev. 305, 344-45 (1993)); cf. Solid Waste Agency of Northern Cook County v. U.S. Army Corps
of Eng’rs, 101 F.3d 503, 507 (7th Cir. 1996) (“The strongest case for intervention is not where the
aspirant for intervention could file an independent suit, but where the intervenor-aspirant has no
claim against the defendant yet a legally protected interest that could be impaired by the suit. . . . For
it is here that intervention may be essential.”).
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Intervene at 3.)
The Agency has also satisfied the fourth requirement in this case. “[T]he burden for
establishing inadequate representation is . . . minimal. Under Rule 24(a), the intervenor does not
have to show that representation will be inadequate. The inadequate-representation requirement will
be satisfied if the intervenor shows that representation of its interest may be inadequate.” Pride,
2011 WL 692299, at *3 (citing Miller, 103 F.3d at 1247; Trbovich v. United Mine Workers of Am.,
404 U.S. 528, 538 n. 10 (1972)). As noted, the Agency has argued that there are certain statutory
tax-related defenses unique to it, and has asserted that these defenses cannot be invoked by Fannie
Mae or Freddie Mac. (See FHFA’s Reply for Mot. Intervene at 3 (citing 12 U.S.C. §§ 4617(j)(2),
(j)(4), (f)).) Although the viability of these defenses has not been established, it is plain that the
Agency may have avenues to shield the assets it has been given the statutory right to manage and
preserve that are closed to Fannie Mae and Freddie Mac. See Grutter v. Bollinger, 188 F.3d 394,
400-01 (6th Cir. 1999) (noting that to demonstrate inadequacy of interests, “‘[i]t may be enough to
show that the existing party who purports to seek the same outcome will not make all of the
prospective intervenor’s arguments.’” (quoting Miller, 103 F.3d at 1247); Natural Resources
Defense Council v. Norton, No. 1:05-CV-01207, 2006 WL 1319408, at *6-7 (E.D. Cal. May 13,
2006) (permitting intervention under Rule 24(a)(2) where intervenor would raise a “Commerce
Clause” defense that party to the suit would not raise).
Regarding this fourth element, the County responds that the Agency must satisfy three subelements before this Court may deem Fannie Mae and Freddie Mac’s representation inadequate.
(Pls.’ Resp. to Mot. Intervene at 7.) In particular, the County asserts that “a prospective intervener
‘fails to meet his burden of demonstrating inadequate representation when 1) no collusion is shown

13

between the existing party and the opposition; 2) the existing party does not have any interests
adverse to the intervener; and 3) the existing party has not failed in the fulfillment of its duty.’”
(Pls.’ Resp. to Mot. Intervene at 7 (quoting Jordan v. Michigan Conference of Teamsters Welfare
Fund, 207 F.3d 854, 863 (6th Cit. 2000).)
This Court disagrees that these are requirements in every case. Rather, it appears that the
three inadequacy sub-elements are factors that a court may consider when deciding whether
representation will be inadequate. Triax Co. v. TRW, Inc., 724 F.2d 1224, 1228 (6th Cir. 1984)
(“These three factors, however, cannot be said to be a comprehensive list of the circumstances where
intervention of right ought to be granted.”); see also Geier v. Sundquist, 94 F.3d 644 (Table), 1996
WL 464979, at *2 (6th Cir. 1996) (“Factors to be considered in determining the adequacy of
representation are: (1) if there is collusion between the representative and an opposing party . . . .”
(emphasis added)); Purnell v. City of Akron, 925 F.2d 941, 949 (6th Cir. 1991) (“Some of the factors
to be considered in determining whether representation is adequate are . . . (1) if there is collusion
between the representative and an opposing party . . . .” (emphasis added)). In fact, it appears that
some courts have mistakenly treated the factors as requirements:
In a familiar case pre-dating the amended [Rule 24] then-Judge
Blackmun wrote that inadequacy of representation is or may be
shown “by proof of collusion between the representative and an
opposing party, by the representative having or representing an
interest adverse to the intervener, or by the failure of the
representative in the fulfillment of his duty.” This was a wholly
accurate statement. . . . But in several cases the statement has been
turned around and it has been said:
The rule is that representation is adequate if no
collusion is shown between the representative and an
opposing party, if the representative does not have or
represent an interest adverse to the proposed
intervenor and if the representative does not fail in the
fulfillment of his duty.
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It is one thing to say that inadequate representation can be shown by
establishing one of three circumstances. It is quite another to say that
representation is adequate unless one of those three circumstances is
present. If Judge Blackmun had said that representation is inadequate
“only” if one of the circumstances he listed were present the
proposition would be reversible . . . . The wide variety of cases that
come to the courts make it unlikely that there are three and only three
circumstances that would make representation inadequate and
suggest that adequacy of representation is a very complex variable.
7C Charles Alan Wright et al., Federal Practice & Procedure, Civ. § 1909 at 392-93 (3d ed. 2007).5
In this particular case, although none of the three inadequate-representation sub-elements are
present, the Court finds them of little relevance to the fourth requirement for intervention under Rule
24(a)(2). Rather, as noted, the uniqueness of the Agency’s statutory defenses indicates that Fannie
Mae and Freddie Mac’s defense of its assets may be inadequate to protect the Agency’s statutory
interest in those assets.
Accordingly, this Court alternatively concludes that FHFA may intervene in this case
pursuant to Rule 24(a)(2).
III. CONCLUSION
For the foregoing reasons, this Court GRANTS the Federal Housing Finance Agency’s
Motion to Intervene.
IT IS SO ORDERED.
The attention of the parties is drawn to Fed. R. Civ. P. 72(a), which provides a period of

5

The Court notes that Jordan, the case cited by the County, itself cites Bradley v. Milliken,
828 F.2d 1186, 1192 (6th Cir. 1987) for the three-element “requirement.” But Bradley in turn relied
on cases that in turn relied on cases that “turned around” Judge Blackmun’s statement. See 7C
Charles Alan Wright et al., Federal Practice & Procedure, Civ. § 1909 at 392 n.11 (3d ed. 2007)
(citing Martin v. Kalvar Corp., 411 F.2d 552, 553 (5th Cir. 1969); Peterson v. U.S., 41 F.R.D. 131,
133 (D. Minn. 1966)).
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fourteen days from the date of receipt of a copy of this order to file objections for consideration by
the district judge under 28 U.S.C. § 636(b)(1).

S/Laurie J. Michelson
Laurie J. Michelson
United States Magistrate Judge

Dated: September 20, 2011

PROOF OF SERVICE
The undersigned certifies that the foregoing document was served upon the parties and/or counsel of record
via the Court’s ECF System and/or U. S. Mail on September 20, 2011.
s/J. Johnson
Case Manager to
Magistrate Judge Laurie J. Michelson

16