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ACCEPTED 02-16-00128-CV SECOND COURT OF APPEALS FORT WORTH, TEXAS 4/20/2016 11:31:42 AM DEBRA SPISAK CLERK No. ___________________ _______________________________________________________________ IN THE SECOND DISTRICT COURT OF APPEALS OF TEXAS AT FORT WORTH _______________________________________________________________ In re MIDWESTERN CATTLE MARKETING, LLC, RELATOR, _______________________________________________________________ FROM THE ST 271 JUDICIAL DISTRICT COURT OF JACK COUNTY, TEXAS THE HONORABLE JOHN FOSTEL PRESIDING _______________________________________________________________ RECORD IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS _______________________________________________________________ Christopher B. Trowbridge Texas Bar No. 24008182 Beverly A. Whitley Texas Bar No. 21374500 R. Heath Cheek Texas Bar No. 24053141 Gregory D. Kelminson Texas Bar No. 24070045 BELL NUNNALLY & MARTIN LLP 3232 McKinney Avenue, Suite 1400 Dallas, Texas 75204-2429 Telephone: (214) 740-1400 Telecopy: (214) 740-1499 ATTORNEYS FOR RELATOR MIDWESTERN CATTLE MARKETING, LLC INDEX TO RECORD PAGE A. Affidavit of Christopher B. Trowbridge (signed April 18, 2016) ................... 1 Exhibit 1: Plaintiff’s Original Petition (filed July 6, 2015) ......................... 2 Exhibit 2: Petition in Intervention (filed November 24, 2015) ................. 15 Exhibit 3: Plaintiff’s Motion to Strike Petition in Intervention, and Alternative Motion to Sever (filed December 18, 2015) .......... 27 Exhibit 4: Tony Lyon’s Statement in Opposition of Plaintiff’s Motion to Strike Petition in Intervention, and Alternative Motion to Sever (filed February 4, 2016) ................................ 33 Exhibit 5: Owen Lyon’s and Monna Lyons’ Statement in Opposition to Plaintiffs’ Motion to Strike Petition in Intervention, and Alternative Motion to Sever (filed February 4, 2016) ..................................................................... 36 Exhibit 6: First Amended Petition in Intervention (filed February 26, 2016) .................................................................................. 40 Exhibit 7: Intervenor’s Response to Motion to Strike Petition in Intervention, and Alternative Motion to Sever (filed February 26, 2016) .................................................................... 57 Exhibit 8: Order Denying Plaintiff’s Motion to Strike Petition in Intervention, and Alternative Motion to Sever (signed March 21, 2016) ........................................................................ 80 Exhibit 9: Transcript of Hearing (held March 4, 2016) ............................. 81 Exhibits ..................................................................................... 93 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing was served upon the persons listed below in the manner and on the date indicated. VIA E-MAIL VIA E-MAIL Steven C. Bankhead, Esq. James S. Robertson, Esq. 8111 Preston Road, Suite 500 Eric S. Weber, Esq. Dallas, Texas 75225-6377 Glast, Phillips & Murray, P.C. 14801 Quorum Drive, Suite 500 Attorney for Tony E. Lyon Dallas, Texas 75254 d/b/a Lyon Farms Attorneys for Monna and Owen Lyon VIA E-MAIL VIA CM,RRR #9414 7266 9904 2058 5801 64 Derrick S. Boyd, Esq. Michael A. Simpson, Esq. Judge John Fostel Kristy P. Campbell, Esq. 271st Judicial District Simpson, Boyd, Powers 100 N. Main, Suite 308 & Williamson Jacksboro, Texas 76458 P.O. Box 957 105 N. State Street, Suite B Respondent Decatur, Texas 76234 Attorneys for Northwest Cattle Feeders, L.L.C. and Riley Livestock, Inc. DATED this the 20th day of April, 2016. /s/ Beverly A. Whitley Beverly A. Whitley 09964.00002/2610385_1.DOC AFFIDAVIT OF CHRISTOPHER B. TROWBRIDGE STATE OF TEXAS § § COUNTY OF DALLAS § BEFORE ME, the undersigned notary public, on this day appeared CHRISTOPHER B. TROWBRIDGE, who, after being duly sworn by me, deposed and said: 1. "My name is Christopher B. Trowbridge. I have personal knowledge of the facts set forth in this Affidavit. I am duly authorized to make this Affidavit and am competent to testify to the matters contained in this Affidavit. I swear that every statement made in this Affidavit is made on my personal knowledge and is true and correct. 2. "I am an attorney licensed to practice law in the State of Texas. I am counsel of record for the plaintiff, Midwestern Cattle Marketing, Inc. in the case styled Midwestern Cattle Marketing, LLC v. Tony E. Lyon dlb/a Lyon Farms, Individually, et al., Cause No. 15-07-061, in the 271 st District Court, Jack County, Texas. 3. "Attached hereto as Exhibits 1 through 8 are true and correct copies of pleadings and orders in Cause No. 15-07-061. 4. "Attached hereto as Exhibit 9 is a true and correct copy of the transcript of a hearing held March 4, 2016, and Exhibits A through D introduced in evidence during that hearing." FURTHER AFFIANT SAYETH NAUGHT. Christopher B. Trowbridge SUBSCRIBED AND SWORN TO BEFORE ME on this the 18th day of April, 2016. ~9v`` NOTARY PUBLIC in and for the State of TEXAS 09964.00002/26 10428_1 .DOC AFFIDAVIT OF CHRISTOPHER B. TROWBRIDGE PAGE i R001 CAUSENO. t :::>- 01 -o {p( MIDWESTERN CATTLE MARKETING, § IN THE DISTRICT COURT LLC, § § Plaintiff, § § v. § § TONYE. LYON d/b/a LYON FARMS, § 271 51 JUDICIAL DISTRICT individually, OWEN LYON, individually § and MONNA LYON, individually, § § Defundanb. § § JACK COUNTY, TEXAS PLAINTIFF'S ORIGINAL PETITION TO THE HONORABLE JUDGE OF SAID COURT : Plaintiff Midwestern Cattle Marketing, LLC ("MWC") complains of Defendants Tony E. Lyon d/b/ a Lyon Farms ("Tony Lyon"), individually, Owen Lyon ("Owen Lyon"), individually, and Monna Lyon, individually ("Monna Lyon") (together "Defenda nts") and respectfully shows the Court the following: I. DISCOVERY CONTROL PLAN & MONETARY RELIEF 1. Discovery is intended to be conducted under Level 2, pursuant to Rule 190.3 of the Texas Rules of Civil Procedure. MWC reserves the ri ght to request reassigmnent to a different discovery control plan level. 2. MWC seeks monetary relief greater than $ 1,000,000.00. FIL- - - - - A.M I : ,;i._() P.M. JUL 6 2015 TRACIE PIPPIN DIST. CLERK ~CK COUNTY, -rEJ273 S.W.3d 152, 155 (Tex. 2008). 4. No Justiciable Interest. An intervening party must have a justiciable interest in the pending suit in order to have a right to intervene under Rule 60 of the Texas Rules of Civil Procedure.
Id. at 154-55;Guaranty Fed. Sav. Bank v. Horseshoe Operating Co.,
793 S.W.2d 652, 658 (Tex. 1990). “[T]he intervenor’s interest must be such that if the original action had never been commenced, and he had first brought it as the sole plaintiff, he would have been entitled to recover in his own name to the extent of at least a part of the relief sought in the original suit.” In re Union Carbide
Corp., 273 S.W.3d at 155(internal citations omitted). 5. The justiciable interest requirement was designed to protect “pending cases from having interlopers disrupt the proceedings.”
Id. In thiscase, that is exactly what we have. The interlopers (i.e., the Intervenors) are seeking to unnecessarily complicate the pending action by injecting unrelated claims that do not arise from and have no relation to the transaction forming the basis of this lawsuit. The Intervention relates to an agreement to sell specified cattle. It PL.’S MOTION TO STRIKE PET. IN INTERVENTION, ETC. PAGE 2 R028 contains no allegations that relate to the George Cattle Company scheme, nor do Intervenors have any claims for relief that deal in any way with the money Plaintiff is seeking related to the George Cattle Company scheme. 6. The only commonality between the Lyon Defendants and Intervenors appears to be they each occupy a position adverse to Plaintiff. Such a tenuous relationship does not establish a justiciable interest sufficient to support intervention by the interloping Intervenors. See
id. at 154-55(stating that the mere fact that plaintiff and intervenor each sought a recovery from a common defendant did not give intervenor a justiciable interest in the original lawsuit filed by plaintiff). 7. Multiplication of Issues. The Intervention will multiply the issues and complicate this case. See Guaranty Fed. Sav.
Bank, 793 S.W.2d at 657. The Intervention would add two new parties, new claims, an additional $800,000 transaction involving an otherwise non- involved party, and completely new fact issues, none of which involve the George Cattle Company. The Intervention would require new depositions of the three Lyon Defendants, who Plaintiff has already deposed. The Intervention could delay and lengthen the trial. And, importantly, the intervention could cause jury confusion in that Intervenors seek to associate Plaintiff with the Lyon Defendants, who both Plaintiff and Intervenors have alleged to be untrustworthy. 8. The Intervention is Not Essential. The Intervention is not essential to effectively protect Intervenors’ interests. See Guaranty Fed. Sav.
Bank, 793 S.W.2d at 657; Surgitek, Bristol-Meyers Corp. v.
Abel, 997 S.W.2d at 598, 604 (Tex. 1999) (defining “essential” to mean “indispensably necessary” and “necessary, such that one cannot do without it”). Intervenors’ claims are alleged to have occurred in 2015, and are in no danger of being barred by PL.’S MOTION TO STRIKE PET. IN INTERVENTION, ETC. PAGE 3 R029 limitations. Intervenors do not seek any relief related to the money Plaintiff is seeking from Defendants. In short, Intervenors have neither pled nor established that their participation in this lawsuit is so necessary to the protection of their interests that they will be left without recourse if their Intervention is not allowed. ALTERNATIVE MOTION TO SEVER AND REALIGN 9. The Court has broad authority over petitions in intervention, including the authority to order that the petition in intervention be severed from the existing lawsuit. Saldana v. Saldana,
791 S.W.2d 316, 320 (Tex. App. — Corpus Christi 1990, no pet.) A claim is severable if (1) the controversy involves more than one cause of action, (2) the severed claim is one that would be the proper subject of a lawsuit if independently asserted, and (3) the severed claim is not so interwoven with the remaining action that they involve the same facts and issues. Guaranty Fed. Sav.
Bank, 793 S.W.2d at 658. 10. Intervenors’ claims satisfy these three prongs. Intervenors seek to add five causes of action, all of which depend on different facts from the causes of action asserted by Plaintiff in the original lawsuit. Intervenors’ claims are capable of being asserted in an independent lawsuit. Each of Intervenors’ claims arises out of a transaction related to 554 head of cattle, a transaction that has no relation to the transactions at issue in the underlying lawsuit — the George Cattle Company scheme. Thus, the claims to be severed are not interwoven with the claims asserted in the original lawsuit and are properly severable if not stricken by the Court. 11. Finally, if the Court severs the Intervenors’ claims against Plaintiff into a separately numbered cause, Plaintiff requests that the parties be realigned in the new cause to place the Intervenors as plaintiffs because Plaintiff has not asserted counterclaim against Intervenors at this time. PL.’S MOTION TO STRIKE PET. IN INTERVENTION, ETC. PAGE 4 R030 WHEREFORE, Plaintiff prays that the Court strike the Intervention, or, in the alternative, sever the Intervenors’ claims into a separately numbered cause and realign the parties, and grant Plaintiff such other or further relief, legal or equitable, to which Plaintiff may be justly entitled or the Court deems proper. Respectfully submitted, BELL NUNNALLY & MARTIN LLP By: /s/ Christopher B. Trowbridge Christopher B. Trowbridge ctrowbridge@bellnunnally.com Texas Bar No. 24008182 R. Heath Cheek hcheek@bellnunnally.com Texas Bar No. 24053141 Gregory D. Kelminson gkelminson@bellnunnally.com State Bar No. 24070045 3232 McKinney Avenue, Suite 1400 Dallas, Texas 75204-2429 (214) 740-1400 Telephone (214) 740-1499 Facsimile ATTORNEYS FOR PLAINTIFF MIDWESTERN CATTLE MARKETING, LLC PL.’S MOTION TO STRIKE PET. IN INTERVENTION, ETC. PAGE 5 R031 CERTIFICATE OF CONFERENCE A conference was held on December 18, 2015 with Kristy P. Campbell, attorney for Intervenors, on the merits of this motion. Agreement could not be reached; therefore, it is presented to the Court for determination. /s/ Christopher B. Trowbridge Christopher B. Trowbridge CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing instrument was served by delivering the same to the person listed below in the manner and on the date indicated. VIA TXCOURTS.GOV VIA TXCOURTS.GOV Steven C. Bankhead, Esq. James S. Robertson, III, Esq. 8111 Preston Road, Suite 500 Eric S. Weber, Esq. Dallas, Texas 75225-6377 Glast, Phillips & Murray, P.C. 14801 Quorum Drive, Suite 500 Dallas, Texas 75254-1449 VIA TXCOURTS.GOV Derrick S. Boyd, Esq. Michael A. Simpson, Esq. Kristy P. Campbell, Esq. Simpson, Boyd, Powers & Williamson P.O. Box 957 105 N. State Street, Suite B Decatur, Texas 76234 DATED this 18th day of December, 2015. /s/ Christopher B. Trowbridge 2451781_1.DOCX / 9964.1 PL.’S MOTION TO STRIKE PET. IN INTERVENTION, ETC. PAGE 6 R032 E-Filed for Record 2/4/2016 1:10:38 PM Jack County District Clerk , TX By: Tracie Pippin CAUSE NO. 15-07-061 MIDWESTERN CATTLE MARKETING, § IN THE DISTRICT COURT LLC, § § Plaintiff, § § vs. § 271ST JUDICIAL DISTRICT § TONY E. LYON D/B/A LYON FARMS, § INDIVIDUALLY, OWEN LYON, § INDIVIDUALLY AND MONNA LYON, § INDIVIDUALLY, § § Defendants, § § and § § NORTHWEST CATTLE FEEDERS, L.L.C., § and RILEY LIVESTOCK, INC., § § Intervenors. § JACK COUNTY, TEXAS TONY LYON’S STATEMENT IN OPPOSITION TO PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION, AND ALTERNATIVE MOTION TO SEVER TONY LYON, defendant in the above-numbered and entitled cause and herein called the “Lyon”, files this statement in opposition to the motion to strike petition in intervention and alternative motion to sever filed by Plaintiff, MIDWESTERN CATTLE MARKETING, LLC, and would show the Court the following: 1. The Lyon has been sued in this case by Plaintiff and by Intervenors and the claims against the Lyons, these claims against the Lyon are wholly without merit but that’s for another day — overlap and are interwoven. ____________________________________________________________________________________________ TONY LYON’S STATEMENT IN OPPOSITION TO PAGE 1 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER R033 2. Dismissal of Intervenors’ claims in response to Plaintiff’s motion at hand will undoubtedly result in a second case being filed against Lyon (and the Plaintiff). An order of severance likewise will result in a separate proceeding against Lyon. Either result would lead to unnecessary extra expense to Lyon, an expense he can ill afford. Since Lyons has to defend himself against the Plaintiff’s and Intervenors’ allegations made in this lawsuit, Lyon would prefer to do so in one forum, in one case, under one scheduling order, at one trial, before one jury. It is bad enough defending one lawsuit; it is doubly bad defending a second lawsuit over claims related to, and part of, the first lawsuit and that could be litigated in the first lawsuit, more efficiently and more economically. FOR THESE REASONS, Lyon request the Court to deny Plaintiff’s motion to strike Intervenors’ plea in intervention and Plaintiff’s alternative motion to sever, unless the Court were to dismiss with prejudice Intervenors’ claims against the Lyons, in which case, the Lyons of course would support an order dismissing Intervenors’ claims. Lyon also request such other and further relief to which they may be justly entitled. Respectfully submitted: /s/ Steven C. Bankhead Steven C. Bankhead State Bar No. 01676700 8111 Preston Rd., Suite 500 Dallas, Texas 75225 214-750-8555 214-750-8001 (Facsimile) stevebankhead@sbcglobal.net ATTORNEY FOR DEFENDANT TONY LYON ____________________________________________________________________________________________ TONY LYON’S STATEMENT IN OPPOSITION TO PAGE 2 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER R034 CERTIFICATE OF SERVICE I certify that on February 4, 2016, I served a true and correct copy of the foregoing document on the following person(s) by ELECTRONIC SERVICE in accordance with Texas Rule of Civil Procedure 21a: Christopher B. Trowbridge James S. Robertson R. Heath Cheek Glast, Phillips & Murray Gregory D. Kelminson 14801 Quorum Driver, Suite 500 BELL, NUNNALLY & MARTIN, LLP Dallas, Texas 75254 3232 McKinney Avenue, Suite 1400 Dallas, TX 75204-2429 Attorneys for Plaintiff Attorneys for Owen and Monna Lyon Derrick S. Boyd Michael A. Simpson Kristy P. Campbell SIMPSON, BOYD, POWERS & WILLIAMSON P.O. Box 957 Decatur, TX 76234 Attorneys for Intervenors /s/ Steven C. Bankhead Steven C. Bankhead ____________________________________________________________________________________________ TONY LYON’S STATEMENT IN OPPOSITION TO PAGE 3 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER R035 E-Filed for Record 2/4/2016 1:41:12 PM Jack County District Clerk , TX By: Tracie Pippin CAUSE NO. 15-07-061 MIDWESTERN CATTLE MARKETING, § IN THE DISTRICT COURT LLC, § § Plaintiff, § § vs. § 271ST JUDICIAL DISTRICT § TONY E. LYON D/B/A LYON FARMS, § INDIVIDUALLY, OWEN LYON, § INDIVIDUALLY AND MONNA LYON, § INDIVIDUALLY, § § Defendants, § § and § § NORTHWEST CATTLE FEEDERS, L.L.C., § and RILEY LIVESTOCK, INC., § § Intervenors. § JACK COUNTY, TEXAS OWEN LYON’S AND MONNA LYON’S STATEMENT IN OPPOSITION TO PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION, AND ALTERNATIVE MOTION TO SEVER OWEN LYON and MONNA LYON, defendants in the above-numbered and entitled cause and herein called the “Lyons”, file this statement in opposition to the motion to strike petition in intervention and alternative motion to sever filed by Plaintiff, MIDWESTERN CATTLE MARKETING, LLC, and would show the Court the following: 1. The Lyons have been sued in this case by Plaintiff and by Intervenors and the claims against the Lyons — the claims against the Lyons are wholly without merit but that’s for another day — overlap and are interwoven. ____________________________________________________________________________________________ OWEN LYON’S AND MONNA LYON’S STATEMENT IN OPPOSITION TO PAGE 1 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER 6189165_1 – GPM File No. 12798.20 R036 2. Dismissal of Intervenors’ claims in response to Plaintiff’s motion at hand will undoubtedly result in a second case being filed against the Lyons (and the Plaintiff). An order of severance likewise will result in a separate proceeding against the Lyons. Either result would lead to unnecessary extra expense to the Lyons, an expense they can ill afford. Since the Lyons have to defend themselves against the Plaintiff’s and Intervenors’ allegations made in this lawsuit, the Lyons would prefer to do so in one forum, in one case, under one scheduling order, at one trial, before one jury. It is bad enough defending one lawsuit; it is doubly bad defending a second lawsuit over claims related to, and part of, the first lawsuit and that could be litigated in the first lawsuit, more efficiently and more economically. FOR THESE REASONS, the Lyons request the Court to deny Plaintiff’s motion to strike Intervenors’ plea in intervention and Plaintiff’s alternative motion to sever, unless the Court were to dismiss with prejudice Intervenors’ claims against the Lyons, in which case, the Lyons of course would support an order dismissing Intervenors’ claims. The Lyons also request such other and further relief to which they may be justly entitled. ____________________________________________________________________________________________ OWEN LYON’S AND MONNA LYON’S STATEMENT IN OPPOSITION TO PAGE 2 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER 6189165_1 – GPM File No. 12798.20 R037 Respectfully submitted: /s/ James S. Robertson, III James S. Robertson, III State Bar No. 17061075 Direct Dial: 972-419-7136 Direct Fax: 469-206-5048 jrobertson@gpm-law.com Eric S. Weber State Bar No. 24071835 Direct Dial: 972-419-7138 Direct Fax: 469- 206-5065 eweber@gpm-law.com GLAST, PHILLIPS & MURRAY, P.C. 14801 Quorum Drive, Suite 500 Dallas, TX 75254-1449 ATTORNEYS FOR DEFENDANTS, OWEN LYON AND MONNA LYON ____________________________________________________________________________________________ OWEN LYON’S AND MONNA LYON’S STATEMENT IN OPPOSITION TO PAGE 3 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER 6189165_1 – GPM File No. 12798.20 R038 CERTIFICATE OF SERVICE I certify that on February 4, 2016, I served a true and correct copy of the foregoing document on the following person(s) by ELECTRONIC SERVICE in accordance with Texas Rule of Civil Procedure 21a: Christopher B. Trowbridge Steven C. Bankhead R. Heath Cheek 8111 Preston Rd., Suite 500 Gregory D. Kelminson Dallas, TX 75225 BELL, NUNNALLY & MARTIN, LLP 3232 McKinney Avenue, Suite 1400 Attorney for Tony E. Lyon d/b/a Lyon Farms Dallas, TX 75204-2429 Attorneys for Plaintiff Derrick S. Boyd Michael A. Simpson Kristy P. Campbell SIMPSON, BOYD, POWERS & WILLIAMSON P.O. Box 957 Decatur, TX 76234 Attorneys for Intervenors /s/ James S. Robertson, III James S. Robertson, III ____________________________________________________________________________________________ OWEN LYON’S AND MONNA LYON’S STATEMENT IN OPPOSITION TO PAGE 4 PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION AND ALTERNATIVE MOTION TO SEVER 6189165_1 – GPM File No. 12798.20 R039 CAUSE NO. 15-07-061 MIDWESTERN CATTLE § IN THE DISTRICT COURT MARKETING, LLC § § Plaintiff § § vs. § § TONYE. LYONdjb/aLYONFARMS, § OWENLYONandMONNALYON § § JACK COUNTY, TEXAS Defendant § § and § § NORTHWEST CATTLE FEEDERS, § L.L.C. and RILEY LIVESTOCK, INC. § § Intervenors § 271ST JUDICIAL DISTRICT FIRST AMENDED PETITION IN INTERVENTION TO THE HONORABLE JUDGE OF THE COURT: Northwest Cattle Feeders, LLC and Riley Livestock, Inc. (hereinafter collectively "Intervenors") file this First Amended Petition in Intervention, and in support of same would respectfully show as follows: 1.0 Discovery Level 1.1 Pursuant to TRCP 190.1, Intervenors respectfully requests that discovery in this case be conducted under Level 3 by further order of this Court, as set forth in 2.0 Grounds for Intervention 2.1 Midwestern Cattle Marketing, LLC (hereinafter Midwestern Cattle) filed the present lawsuit against Defendants Tony E. Lyon d/b/a Lyon Farms, Owen Lyon and Monna Lyon for what it calls a "deplorable scheme" by its agent to defraud others. FlRST AMENDED PETITION IN INTERVENTION - PAGE 1 R040 Intervenors are victims of that scheme committed by Midwestern Cattle's agent. In addition, Midwestern Cattle retained the benefits of the fraudulent scheme committed by its agent. As such, Midwestern Cattle is liable and responsible for the harm caused by its agents in defrauding Intervenors. 2.2 This litigation arises out of a scheme perpetuated by Tony E. Lyon to defraud purchases of cattle. Intervenors were purchasers victimized by this fraudulent scheme. Lyon committed this scheme while acting as an agent for Midwestern Cattle. Midwestern Cattle also alleges that Owen Lyon and Monna Lyon were also participants in the scheme involving the alleged purchase and sell of cattle. 2 .3 On or about July 6, 2015, Midwestern Cattle filed this suit against Tony E. Lyon d/b/a Lyon Farms, Owen Lyon and Monna Lyon (hereafter sometimes collectively referred to as "Defendants") seeking damages arising from Lyon's conduct as Midwestern Cattle's agent. 2-4 As set forth below, Intervenors are entitled to recover legal and equitable relief against Midwestern Cattle and Defendants. As such, Intervenors have a justiciable interest in this suit, and are proper parties to the present suit. Intervention will not unnecessarily or unreasonably complicate the case by an excessive multiplication of issues, and is essential to protect Intervenors' interest. 2.5 Intervenors claims will be affected by resolution of the present case. Among other things, the resolution of Intervenors claims will be affected by resolution of the pending case because the same scheme by the same parties that victimized Intervenors is alleged by Plaintiff. Moreover, there is a joint interest in the cattle Plaintiff seized from Defendants, or proceeds from sale of that cattle. FIRST AM ENDED PETITION IN INTERVENTION - PAGE 2 R041 2.6 Intervenors, in their own right, are entitled to assert the causes of action set forth herein. Intervenors, in their own right, were entitled to assert this action in their own name against Plaintiff and Defendants, and any cross-claims or counterclaims between Plaintiff and Defendants would be properly before the Court in that suit. 2.7 Intervention will not unduly complicate or confuse any of the issues in this case. To the contrary, there is substantial overlap between the issues raised by Plaintiff's claims and the issues raised by Intervenors' claims, and such claims are interwoven and arise from the same operative set of facts - namely the same cattle fraud scheme. 2.8 Adjudication and disposition of this case without intervention could reasonably impair or impede Intervenors' ability to protect their interest in recovering damages incurred as a result of the cattle fraud scheme, and in recovering whatever interest Intervenors held in the cattle Plaintiff seized from Defendants before filing suit. 3 .0 Venue 3.1 Venue is proper in Jack County for the claims asserted by Northwest Cattle Feeders pursuant to Texas Civil Practice & Remedies Code §i5.002(a)(2) because one or more parties are residents of Jack County, Texas. Additionally, venue is proper under Texas Civil Practice & Remedies Code §i5.002(a)(1) because a substantial part of the acts and omissions giving rise to Intervenors' claims occurred in Jack County, Texas. Venue is also proper in Jack County, Texas under Texas Civil Practice & Remedies Code §15.062. 3.2 Venue is proper in Wise County for the claims asserted by Riley Livestock, Inc. pursuant to Texas Civil Practice & Remedies Code §15.002(a)(2) because Lyon Defendants are residents of Jack County, Texas. Additionally, venue is proper under Texas Civil Practice & Remedies Code §15.002(a)(1) because a substantial part of the FIRST AMENDED P ETITION IN INTERVENTION - PAGE 3 R042 acts and omissions giving rise to Intervenors' claims occurred in Jack County, Texas. Venue is also proper in Jack County, Texas under Texas Civil Practice & Remedies Code §15.062. 4.0 Factual Background 4.1 Midwestern Cattle admits that it acts as cattle brokers. Midwestern Cattle buys cattle from a seller and then sells the cattle to a buyer. Intervenors operate a feed lot and otherwise trade in cattle. Prior to 2015, Intervenors were introduced by Jason O'Connell of Midwestern Cattle to Tony Lyon d/b/a Lyon Farms (hereinafter "Lyon"). Lyon was represented to Intervenors to be a cattle order buyer for Midwestern Cattle operating in Texas. From that introduction, a business relationship developed between lntervenors and Midwestern Cattle (through its agent Tony Lyon) for the purchase and sale of cattle. 4.2 In March 2015, after multiple transactions that appeared to be successful, Intervenors entered into an agreement with Midwestern Cattle through Lyon to purchase 554 head of cattle. Before entering into this agreement, Jeff Cox (on behalf of lntervenors) met with Lyon in Jack County to discuss the purchase. Lyon represented that cattle in a pasture he showed Cox were the 554 head of cattle Intervenors were purchasing. At all times relevant herein in his dealings with Cox (on behalf of Intervenors), Lyon was acting as an agent and representative of Midwestern Cattle. 4.3 Midwestern Cattle admits that Tony Lyon was its agent. Midwestern Cattle provided Tony Lyon with a Midwestern Cattle checkbook and signature stamp enabling him to conduct the business of Midwestern Cattle. This permitted Lyon to buy and sell cattle on a "float" basis. At no time did Midwestern Cattle investigate Lyon's background to determine whether he was fit for such authority to act on behalf of Midwestern Cattle. FIRST AMENDED PETITION IN INTERVENTION - PAGE 4 R043 4-4 After Intervenors agreed to purchase the cattle in question, Midwestern Cattle sent an invoice to Intervenors dated March 31, 2015. The recipient of the invoice was Northwest Cattle Feeders, LLC. The amount of the invoice was $798,35i.19. The invoice was specifically for 554 head of cattle with the description "Steers sold from Perrin, TX." This invoice relates to the specific cattle Cox discussed with Lyon in Jack County. 4.5 Upon receipt of the invoice, Riley Livestock, Inc. \vrote a check dated March 31, 2015 in the amount of $798,319.08. This check was made payable to Midwestern Cattle. At the request of Midwestern Cattle, the check was delivered Points West Community Bank for deposit into Midwestern Cattle's bank account. Midwestern specifically attested that the "livestock referenced by this document or other communications specific to the transaction and transferred are of US origin (born & raised)." 4.6 After receiving and depositing the check, Intervenors never saw the cattle. The cattle were to be delivered to Francis Farms for feeding and delivery for sale 60-90 days later. However, when it came time to se11the554 head of cattle, Midwestern Cattle failed to deliver the 554 head of cattle to Intervenors. 4.7 Midwestern Cattle paid itself a commission of $5,335.10 for the sale of the 554 head of cattle. Midwestern Cattle received and retained this commission despite failing to deliver the cattle. 4.8 To date, Midwestern Cattle and its agent (Tony Lyon) have failed to deliver the 554 head of cattle to Intervenors. To date, Midwestern Cattle and its agent (Tony Lyon) have failed to return the $798,319.08 that Intervenors paid. FIRST AMENDED PETITION IN INTERVENTION - PAGE 5 R044 4.9 In June 2015, shortly before time for the cattle to be sold, Midwestern Cattle informed Jeff Cox that there was "a problem" with Lyon. At no time before this conversation did Midwestern Cattle ever indicate any problems with Lyon or his operations on behalf of Midwestern Cattle in Texas. 4.10 Jeff Cox travelled to Texas to speak with Tony Lyon. When he arrived, Cox learned that other Midwestern Cattle representatives (Jason O'Connell and Tim Correll) had been present on the Lyon property. Midwestern Cattle seized approximately 892 head of cattle from Lyon Farms, and represented to Cox that the seized cattle would be used to try to "make whole" both Cox and Midwestern Cattle. 4.11 Later in 2015, 41 head of cattle were delivered to Intervenors' business location in Nebraska. These head of cattle were represented to be from the seized cattle. Intervenors liquidated the 41 head and had checks for the proceeds made out jointly to Midwestern Cattle and Northwest Cattle Feeders. 4.12 Midwestern Cattle has not disclosed what happened with the remaining seized cattle despite requests by Intervenors for this information, Upon information and belief, Midwestern Cattle has liquidated some or all of the seized cattle and retained the proceeds from those sales for its use to the exclusion of Intervenors. 5.0 Conditions Precedent 5.1 With respect to Intervenors' claims, all conditions precedent have been performed or have occurred. TRCP 54. 6.o Constructive Trust and Accounting 6.1 Intervenors are entitled to a constructive trust over cattle or proceeds from the sale of cattle seized by Plaintiff or on behalf of Plaintiff. FIRST AMENDED PETITION IN INTERVENTION -PAGE 6 R045 6 .2 A constructive trust is appropriate because of the actual fraud or constructive fraud committed by Plaintiff and Defendants. 6.3 Plaintiff would be unjustly enriched by retaining benefits from the cattle seized or sold. Specifically, upon information and belief, Plaintiff took possession of 892 head of cattle to its exclusive possession, sold the cattle, and retained the proceeds from such sale to the exclusion of Intervenors. 6.4 A constructive trust over any and all cattle, proceeds from the sale of seized cattle, or other funds recovered by Plaintiff from others as a result of the wrongful conduct of its agent is appropriate and necessary to prevent unjust enrichment by Plaintiff. 6.5 Intervenors also seek an accounting for the seized cattle or any proceeds from the sale of the seized cattle. 7.0 Cause of Action for Breach of Contract 7.1 Intervenors incorporate the allegations contained in Section 4 above as if fully set forth herein. 7.2 The agreement between Midwestern Cattle and Intervenors to purchase 554 head of cattle was a contract. The contract is evidenced in writing by the invoice dated March 31, 2015. 7.3 Intervenors performed by tendering payment of the amount set forth in the invoice. 7-4 Midwestern Cattle failed to perform by (a) failing to deliver the 554 head of cattle. At time of sale, the 554 head of cattle were not available for Intervenors to sell; or (b) failing to return the funds paid by Intervenors when it became clear to Midwestern Cattle that the 554 head were not delivered to Intervenors to be resold. FIRST AMENDED PETITION IN INTERVENTION- PAGE 7 R046 7.5 Midwestern Cattle breached its contractual obligation by failing to provide the 554 head of cattle after Intervenors made payment; and by failing to return the funds paid by Intervenors when it became clear the 554 head of cattle were not delivered to Intervenors to be resold. 7.6 This is a breach of contract and has resulted in damages to Intervenors more fully set forth below. 8.o Cause of Action for Fraud (Misrepresentation) 8.1 Intervenors incorporate the allegations contained in Section 4 above as if fully set forth herein. Based on the foregoing allegations, Intervenors assert claims for fraud by misrepresentation against Tony Lyon. This claim includes a claim of fraud in the inducement that induced Intervenors to enter into the agreement to purchase the 554 head of cattle. 8.2 Tony E. Lyon d/b/a Lyon Farms ("Lyon"), as Midwestern Cattle's agent, made representations that were false and material that he knew were false or made recklessly without knowledge of its truth. The false representations include a representation that Intervenors would receive the cattle shown to Jeff Cox in March 2015 and invoiced by Midwestern Cattle on March 31, 2015, and that the 554 head of cattle identified in the March 31, 2015 invoice would be delivered and available to be resold by Intervenors after the feeding and grazing period. 8.3 Lyon, as Midwestern Cattle's agent, made these representations with the intent that Intervenors act upon them by sending the check for $798,319.08 for the purchase of the 554 head of cattle to Midwestern Cattle. Intervenors relied upon those false representations by writing the check and sending it to Midwestern Cattle Marketing, LLC for the 554 head of cattle. FIRST AMENDED PETITION IN INTERVENTION - PAGE 8 R047 8-4 These representations caused injury to Intervenors and were a proximate cause of damages to Intervenors more fully set forth below. 8.5 Midwestern Cattle is liable for the fraud by misrepresentation and fraudulent inducement committed by Lyon because at all times relevant Lyon was acting as Midwestern Cattle's agent or otherwise aided and abetted such conduct as set forth in Section 14 below. To the extent necessary, Intervenors invoke the doctrine set forth in Restatement (Second) of Torts §876. Midwestern Cattle is also liable for the fraud by misrepresentation and fraudulent inducement committed by Lyon under the doctrine of ratification as set forth in Section 16 below. 8.6 Owen Lyon and Monna Lyon knowingly aided and abetted Lyon's fraud (including fraudulent inducement). As such, Owen Lyon and Monna Lyon are jointly and severally liable to Intervenors for the harm resulting from this fraud. To the extent necessary, Intervenors invoke the doctrine set forth in Restatement (Second) of Torts §876. 8.7 Intervenors are entitled to recover damages more fully set forth below. 9.0 Cause of Action for Fraud (Non-Disclosure) 9.1 Intervenors assert claims against Midwestern Cattle and Tony E. Lyon d/b/a Lyon Farm ("Lyon") for fraud by non-disclosure. This claim includes a claim of fraud in the inducement that induced Intervenors to enter into the agreement to purchase the 554 head of cattle. 9.2 Midwestern Cattle and Lyon concealed from and failed to disclose certain material facts to Intervenors that Midwestern Cattle and Lyon had a duty to disclose. The information concealed includes the fact that Lyon was given access to the Midwestern Cattle checkbook to write checks on behalf of Midwestern Cattle to himself FIRST AMENDED PETITION IN INTERVENTION-PAGE 9 R048 or his business interest or his family without any supervision or review by others at Midwestern Cattle; and the fact that Midwestern Cattle and Defendants were operating the cattle sales on a "float" that did not involve sales of existing cattle or actual sellers as represented. In addition, Midwestern Cattle and Lyon never disclosed prior criminal convictions of Tony Lyon related to his cattle business operations. 9.3 Midwestern Cattle and Lyon knew Intervenors did not know these facts and did not have an equal opportunity to discover those facts. 9-4 Midwestern Cattle and Lyon remained deliberately silent when they had a duty to speak. By remaining silent, Midwestern Cattle and Lyon intended to induce Intervenors to pay for the 554 head of cattle they never received. For example, Midwestern Cattle had a duty to disclose this information in response to inquiry by Jeff Cox in December 2014 concerning the business practices of Tony Lyon. Instead, Midwestern Cattle representatives stated that there was nothing improper about the business practices of Tony Lyon. 9.5 Intervenors relied on the non-disclosure of these facts by Midwestern Cattle and Lyon and sustained injury as a result of this non-disclosure. 9.6 Midwestern Cattle is liable for the fraud by non-disclosure and fraudulent inducement committed by Lyon because at all times relevant Lyon was acting as Midwestern Cattle's agent or otherwise aided and abetted such conduct as set forth in Section 14 below. To the extent necessary, Intervenors invoke the doctrine set forth in Restatement (Second) of Torts §876. Midwestern Cattle is also liable for the fraud by non-disclosure and fraudulent inducement committed by Lyon under the doctrine of ratification as set forth in Section 16 below. FIRST AMENDED PETITION IN INTERVENTION- PAGE 10 R049 9.7 Owen Lyon and Monna Lyon knowingly aided and abetted Lyon's fraud (including fraudulent inducement). As such, Owen Lyon and Monna Lyon are jointly and severally liable to Intervenors for the harm resulting from this fraud. To the extent necessary, Intervenors invoke the doctrine set forth in Restatement (Second) of Torts §876. 9.8 Intervenors are entitled to recover damages more fully set forth below,. 10.0 Cause of Action for Money Had and Received 10.1 Intervenors assert claims against Midwestern Cattle and Defendants for money had and received. 10.2 As set forth above, Intervenors paid $798,35i.19, which included a $5,335.10 commission for 554 head of cattle. These funds were received and deposited by Midwestern Cattle. The 554 head of cattle was never delivered for resale. 10.3 As a result, Midwestern Cattle and Defendants hold funds that in equity and good conscience belong to Intervenors, and Intervenors are entitled to recover from Midwestern Cattle and Defendants for money had and received. 10-4 Intervenors are entitled to damages in the amount of funds had and received by Midwestern Cattle and Defendants that in equity and good conscience belong to lntervenors. 11.0 Conversion 11.1 Upon information and belief, the 554 head of cattle (if they ever existed) were in the possession of the Lyon Defendants. At some point, upon information and belief, Plaintiff seized approximately 892 head of cattle from the Lyon Defendants. FIRST AMENDED PETITION IN INTERVENTION - PAGE 11 R050 11.2 The 554 head of cattle (if they ever existed) are the rightful property of Intervenors by virtue of Intervenors' payment of the invoice received from Midwestern Cattle on March 31, 2015. The 554 head of cattle were personal property. 11.3 To the extent some or all of the 554 head of cattle Intervenors paid for were among the 892 head of cattle seized by Plaintiff from the Lyon Defendants, Intervenors assert an action for conversion against Plaintiff. By seizing the cattle from the Lyon Defendants and/or selling the cattle after seizure, Plaintiff wrongfully exercised dominion or control over the cattle. 11.4 To the extent some or none of the 554 head of cattle Intervenors paid for were not among the 892 bead of cattle seized by Plaintiff from the Lyon Defendants, Intervenors assert an action for conversion against Tony Lyon d/b/a Lyon Farms. Tony Lyon d/b/a Lyon Farms wrongfully exercised dominion or control over the cattle by retaining the cattle and/ or selling the cattle prior to seizure by Plaintiff. 11.5 Plaintiff is liable for any acts of conversion by Tony Lyon d/b/a Lyon Farms for the reasons set forth in Section 15 below. 11.6 Owen Lyon and Monna Lyon are liable for any acts of conversion by Tony Lyon d/b/a Lyon Farms for aiding and abetting such conduct. 11. 7 Intervenors suffered injury from the conversion of the 554 head of cattle. Intervenors are entitled to damages in the form of a return of the cattle, the proceeds received from the sale of such cattle, or damages as more fully set forth below. 12.0 Damages 12.1 As a result of the acts and omissions set forth above, Intervenors have sustained actual damages. These damages include direct damages and consequential damages resulting from wrongful conduct by Midwestern Cattle and Defendants FIRST AMENDED PETITION IN INTERVENTION - PAGE 12 R051 12.2 The acts and omissions more fully described above by Intervenors, singularly or in combination thereof, have been a direct, proximate and/or producing cause of damages to Intervenors in an amount that exceeds the jurisdictional limits of this Court. The damages sustained by Intervenors are general and specific, as well as direct and consequential. Intervenors' damages include, but are not limited to, out-of- pocket losses, benefit of the bargain losses, loss of use damages, lost opportunity damages, lost profits, and all other losses reasonably flowing fro~ the conduct of lntervenors. 12.3 Intervenors are entitled to recover reasonable and necessary attorney fees pursuant to Texas Civil Practice & Remedies Code §38.ooi. 12-4 lntervenors are entitled to pre-judgment and post-judgment interest at the highest rate allowed by law. Intervenors are also entitled to recover all costs of court. 12.5 Intervenors are also entitled to equitable relief in the form of a constructive trust and/or an accounting pertaining to the cattle seized by Midwestern Cattle from Defendants. 13.0 Exemplary Damages 13.1 The acts and omissions of Tony Lyon more fully set forth above evidence a specific intent to enrich himself by causing substantial harm to Intervenors. As such, the imposition of exemplary damages in a sufficient amount to be determined by the jury against Tony Lyon is warranted to make an example of Tony Lyon and to deter others from engaging in similar conduct. 13.2 Midwestern Cattle is liable for exemplary damages based on the wrongful conduct of its agent (Tony Lyon). Tony Lyon had a prior history of fraudulent conduct with respect to cattle sales. Tony Lyon was unfit to serve as the agent for Midwestern FIRST AMENDED PETITION IN INTERVENTION - PAGE 13 R052 Cattle in the role and with the responsibilities Midwestern Cattle bestowed upon him. Midwestern Cattle was reckless in employing Tony Lyon in that capacity. Additionally and alternatively, Midwestern Cattle ratified or approved the acts of Tony Lyon with respect to the specific sale made to Intervenors. Among other things, Midwestern Cattle retained the commission charged with respect to that sale. 13.3 Midwestern Cattle is also liable for exemplary damages for the wrongful conduct of Tony Lyon under Texas Civil Practice & Remedies Code §41.005(c). 13-4 The statutory cap on exemplary damages does not apply in this case pursuant to Texas Civil Practice & Remedies Code §41.008(c)(9); §41.008(c)(n), or §41.008(c)(13). 14.0 Midwestern Cattle is liable for the wrongful conduct of Tony Lyon 14.1 Midwestern Cattle is liable for the wrongful conduct of Tony Lyon d/b/a Lyon Farms ("Lyon") under the doctrine of agency or apparent authority. Midwestern Cattle admitted and recognized that Lyon was their agent. Midwestern Cattle provided Tony Lyon with actual or apparent authority to act as its agent by providing Lyon with a Midwestern Cattle checkbook and signature stamp to conduct Midwestern Cattle business. Midwestern Cattle affirmatively represented Lyon to be its representative to Intervenors. He was Midwestern Cattle's order buyer and part of their group in Texas. Midwestern Cattle clothed Lyon with authority and ability to buy and sell cattle on Midwestern Cattle's behalf with no oversight. 14.2 Alternatively, Midwestern Cattle is liable for the wrongful conduct of Lyon under the doctrine of apparent authority because it took affirmative steps to clothe Lyon with authority to act on its behalf, and Intervenors relied on those acts in dealing ·with Lyon as an agent of Midwestern Cattle. FIRST AMENDED PETITION IN INTERVENTION- PAGE 14 R053 14.3 Midwestern Cattle is jointly and severally liable for the damages caused by Lyon's fraud by misrepresentation (including fraudulent inducement) for aiding and abetting such conduct set forth in Section 8 above. 14-4 Midwestern Cattle is jointly and severally liable for the damages caused by Lyon's fraud by non-disclosure (including fraudulent inducement) for aiding and abetting such conduct set forth in Section 9 above. 15.0 Civil Conspiracy 15.1 Intervenors assert that Tony Lyon d/ b/a Lyon Farms; Owen Lyon; and Monna Lyon engaged in a civil conspiracy to defraud Intervenors. 15.2 The members of the conspiracy included Tony Lyon d/ b/a Lyon Farms; Owen Lyon; and Monna Lyon. 15.3 The object of the conspiracy was to induce Intervenors to pay for cattle that they would never receive. 15-4 The members of the conspiracy had a meeting of the minds on the object or course of action, and one or more members committed an unlawful overt act to further the object or course of action as more fully set forth above. 15.5 lntervenors suffered injury and sustained damages based upon this conduct. 16.0 Ratification 16.1 Midwestern Cattle is also liable for the acts and omissions of Tony Lyon d/b/a Lyon Farms ("Lyon") under the doctrine of Ratification. 16.2 As set forth above, Lyon was an agent for Midwestern Cattle. Intervenors entered into a transaction with this agent. Midwestern Cattle approved by word, act or conduct after acquiring full knowledge of the act that gave validity to their acts including FIRST AM ENDED PETITION IN [NTERV ENTION - PAGE 15 R054 but not limited to allowing Lyon to solicit funds for the 554 head of cattle and taking a commission for cattle that were never provided to Intervenors. 16.3 Even after admitting full knowledge of the fraudulent conduct committed by Tony Lyon, Midwestern Cattle retained the benefits of the transaction involving the 554 head of cattle and, as such, ratified the transaction. 17.0 Demand for Jury 17.1 lntervenors demand their right to a jury trial afforded by the Texas Constitution and the United States Constitution. Intervenors have previously tendered the requisite fee to the district clerk. WHEREFORE, Intervenors requests that Midwestern Cattle and Lyon Defendants be cited to appear and answer, and that on final trial Intervenors have: (a) Judgment against Midwestern Cattle Marketing, LLC, Tony E. Lyon d/b/ a Lyon Farms, Owen Lyon and Monna Lyon for actual and compensatory damages in an amount in excess of the minimum jurisdictional limits of the Court more fully set forth above; (b) Judgment against Midwestern Cattle Marketing, LLC, Tony E. Lyon d/b/a Lyon Farms, Owen Lyon and Monna Lyon for exemplary damages as set forth above; (c) A constructive trust over cattle Plaintiff seized from Lyon Farms in 2015 or proceeds from the sale of cattle seized from Lyon Farms by Plaintiff; (d) An accounting for the cattle Plaintiff seized from Lyon Farms in 2015 or proceeds from the sale of cattle seized from Lyon Farms by Plaintiff; (e) Reasonable and necessary attorney fees as set forth above; (f) Pre-judgment interest and post-judgment interest at the highest rates allowed by law; and (g) Costs of suit; and (h) Such other and further relief to which Intervenors may be justly entitled. FIRST AMENDED PETITION IN INTERVENTION-PAGE 16 R055 Respectfully submitted, SIMPSON, BOYD, POWERS & WILLIAMSON Derrick S. Boyd State Bar No. 00790350 Michael A. Simpson State Bar No. 18403650 Kristy P. Campbell State Bar No. 24041684 P.O. Box957 105 N. State Street, Suite B Decatur, Texas 76234 Telephone No. (940) 627-8308 Facsimile No. (940) 627-8092 ATTORNEYS FOR IN CERTIFICATE OF SERVICE By my signature above, I hereby certify that a true and correct copy of Intervenor's First Amended Petition in Intervention was delivered via fax and/ or certified mail return receipt requested to all counsel of record on this 26th day of February, 2016. FIRST AM ENDED PETITION IN INTERVENTION - PAGE 17 R056 CAUSE NO. 15-07-061 MIDWESTERN CATILE § IN THE DISTRICT COURT MARKETING, LLC § § Plaintiff § § vs. § § TONYE. LYON dfb/a LYON FARMS, § OWENLYONandMONNALYON § § JACK COUNTY, TEXAS Defendant § § and § § NORTHWEST CATTLE FEEDERS, § L.L.C. and RILEY LIVESTOCK, INC. § § Intervenors § 271ST JUDICIAL DISTRICT INTERVENORS' RESPONSE TO PLAINTIFF'S MOTION TO STRIKE PETITION IN INTERVENTION, AND ALTERNATIVE MOTION TO SEVER Summary of Response Plaintiff alleges it was a victim of a "deplorable" scheme regarding the fraudulent sale of cattle by its agent - Tony Lyon. Intervenors seek damages based on that same scheme. Intervenors also seek to recover damages from identifiable cattle that Plaintiff seized from Lyon in 2015. As such, Intervenors share an equitable interest in the accounting for the proceeds of the sale of the seized cattle by Plaintiff. In summary, Intervenors have a justiciable interest in this lawsuit. The issues are not multiplied or unnecessarily complicated by intervention because the same witnesses and the same issues will be addressed by the Court and the Jury as to the claims asserted by Plaintiff and Intervenors. Judicial economy supports intervention "in order to avoid a multiplicity of lengthy lawsuits" concerning the same issues. Guaranty Federal Savings Bank v. Horseshoe Operating Co.,793 S.W.2d 652, 658 (Tex. 1990). INTERVENORS RESPONSE TO MOTION TO STRIKE - PAGE 1 R057 The intervention is essential to Intervenors' interest in recovering damages for the cattle that were not delivered and converted by Plaintiff and Defendants. For these reasons, Intervenors respectfully request that Plaintiffs Motion to Strike be denied. Factual Background Plaintiff buys cattle from a seller and then sells the cattle to a buyer. Intervenors operate a feed lot and otherwise trade in cattle. Prior to 2015, Intervenors were introduced by Plaintiff to Tony Lyon d/b/a Lyon Farms (hereinafter "Lyon"). Lyon was represented to Intervenors to be a cattle order buyer for Plaintiff operating in Texas. From that introduction, a business relationship developed between Intervenors and Plaintiff (through its agent Tony Lyon) for the purchase and sale of cattle. In March 2015, after multiple apparently successful transactions, Intervenors entered into an agreement with Plaintiff through Lyon to purchase 554 head of cattle. Before entering into this agreement, Jeff Cox (on behalf of Intervenors) met with Lyon in Jack County to discuss the purchase. Lyon represented that cattle in a pasture he showed Cox were the 554 head of cattle Intervenors were purchasing. After Intervenors agreed to purchase the cattle in question, Plaintiff sent an invoice to Intervenors dated March 31, 2015.1 The recipient of the invoice was Northwest Cattle Feeders. The amount of the invoice was $798,35i.19. The invoice was specifically for 554 head of cattle with the description "Steers sold from Perrin, TX." This invoice relates to the specific cattle Cox discussed with Lyon in Jack County. Upon receipt of the invoice, Riley Livestock wrote a check dated March 31, 2015 in the amount of $798,319.08. 2 This check was made payable to Plaintiff. The cattle 1 See Exhibit A 2 See Exhibit B INTERVENORS RESPONSE TO MOTION TO STRIKE - PAGE 2 R058 were to be delivered to Francis Farms for feeding and delivery for sale 60-90 days later. However, when it came time to sell the 554 head of cattle, Plaintiff failed to deliver the 554 head of cattle to Intervenors. In June 2015, shortly before time for the cattle to be sold, Plaintiff informed Jeff Cox that there was "a problem" with Lyon. After receiving that call, Jeff Cox travelled to Texas to speak with Lyon. When he arrived, Cox learned that other representatives of Plaintiff (Jason O'Connell and Tim Correll) had been present on the Lyon property. Plaintiff seized approximately 892 head of cattle from Lyon Farms, and represented to Cox that the seized cattle would be used to try to "make whole" both Cox and Plaintiff. Later in 2015, 41 head of cattle were delivered to Intervenors' business location in Nebraska. These were represented to be from the seized cattle. Intervenors liquidated the 41 head and had checks for the proceeds made out jointly to Midwestern Cattle and Northwest Cattle Feeders.3 Plaintiff has not disclosed what happened with the remaining seized cattle despite requests by Intervenors for this information. Upon information and belief, Plaintiff has liquidated some or all of the seized cattle and retained the proceeds from those sales for its use to the exclusion of Intervenors. Procedural Background Without providing any notice to Intervenors, Plaintiff filed the present lawsuit in July 2015. The Lyon scheme is also under current investigation by state and federal agencies. Intervenors learned of this lawsuit through hearing about the state and federal criminal investigations. As victims of the scheme, Intervenors filed their Petition in Intervention on November 24, 2015. Intervenors assert claims against both Plaintiff and Defendants. 3 See Exhibit C INTERVENORS RESPONSE TO MOTION TO STRIKE - PAGE 3 R059 Plaintiff filed a Motion to Strike on December 18, 2015. Defendants filed a response in opposition to Plaintiffs Motion to Strike on February 4, 2016. Since November, Intervenors have participated in discovery and depositions taken in this case. The case is set for Second Scheduling Conference on May 16, 2016. Argument & Authorities TRCP 60 provides that a "party may intervene, subject to being stricken out by the court for sufficient cause on the motion of any party." The party opposing intervention "has the burden to challenge it by a motion to strike." Guaranty Federal Savings Bank v. Horseshoe Operating Co.,
793 S.W.2d 652, 657 (Tex. 1990). Here, only Plaintiff seeks to strike the intervention. Defendants do not oppose intervention. In response to such a motion, an intervenor is entitled to present the basis for intervening at a hearing. Prototype Machine Co. v. Boulware,
292 S.W.3d 169, 172 (Tex.App.-San Antonio 2009, no pet.). Under TRCP 60, "a person or entity has the right to intervene if the intervenor could have brought the same action, or any part thereof, in his own name, or, if the action had been brought against him, he would be able to defeat recovery, or some part thereof." Guaranty Federal Savings
Bank, 793 S.W.2d at 657(emphasis added). "The interest asse1ted by the intervenor may be legal or equitable."
Id. The trialcourt "should determine the party's justiciable interest on the basis of the sufficiency of the petition in intervention." Caprock Investments Corp. v. F.D.l.C.,
17 S.W.3d 707, 711 (Tex.App.- Eastland 2000, pet. denied); Potash Corp. v. Mancias,
942 S.W.2d 61, 64 (Tex.App.- Corpus Christi 1997, orig. proc.). The trial comt has "broad discretion" to determine \·v hether intervention is proper. Guaranty Federal Savings
Bank, 793 S.W.2d at 657(emphasis added). lNTERVENORS RESPONSE TO MOTION TO STRIKE - PAGE 4 R060 However, "it is an abuse of discretion to strike a plea in intervention if (1) the intervenor meets the above test, (2) the intervention will not complicate the case by an excessive multiplication of the issues, and (3) the intervention is almost essential to effectively protect the intervenor's interest."
Id. See alsoIn re: Lumbermen's Mutual Cas. Co.,
184 S.W.3d 718(Tex. 2006)(finding that trial court abused discretion in denying intervention by insurer to appeal underlying judgment). In Guaranty Federal Savings Bank, the trial court struck the petition in intervention filed by a bank customer (Petrolife) concerning whether a teller check should or should not be paid by a bank. The Supreme Court found that "[j]udicial economy requires that Petrolife intervene and participate in the trial in order to avoid a multiplicity of lengthy lawsuits." Guaranty Federal Savings
Bank, 793 S.W.2d at 658. For this reason, the Supreme Court found that striking the petition in intervention was an abuse of discretion.
Id. That isthe same issue in the present case. Plaintiff seeks damages related to a "deplorable" scheme of Defendants to commit cattle fraud. lntervenors are victims of that same scheme. In fact, Intervenors bought the cattle from Plaintiff based on a sale produced by Plaintiffs agent, Tony Lyon (who is also one of the Defendants). Intervenors paid the money for the cattle to Plaintiff, who in turn issued a check to Owen Lyon (who is also one of the Defendants).4 The witnesses and issues are the same. The same issues to be decided by the jury as to Plaintiff's claims will be decided by the jury as to Intervenors' claims.s The 4 See Exhibit D (Exhibit 6 to Jeff Cox deposition) s The issue of whether Lyon was Plaintiffs agent is also raised in both cases. Plaintiff seeks to recover for breach of fiduciary duty based on its "business relationship" with Lyon. That relationship can only be one of agency. Similarly, Intervenors seek to hold Plaintiff liable for Lyon's conduct under agency principles. INTERVENORS RESPONSE TO MOTION TO STRIKE - PAGE 5 R061 procedural posture of the case is no different than if Intervenors had origina11y filed suit against Plaintiff and Defendants, and Plaintiff then asserted a cross-claim against Defendants. As such, there is no "excessive multiplication of the issues" raised by intervention in this case. For the same reasons, Intervenors have a justiciable interest in the present case. Intervenors could have brought the same action as the sole plaintiff against Plaintiff and Defendants. In part, Plaintiff seeks damages from Lyon for cattle fraud. Intervenor seeks the same relief based on the same conduct. As such, Intervenors "could have brought the same action, or any part thereof, in [their] own name." Guaranty Federal Savings
Bank, 793 S.W.2d at 657. See Acton Corp. v. Sabinske,
1995 WL 479671(Tex.App.- Dallas 1995, pet. denied).6 In Acton Corp., the Dallas Court of Appeals reversed a jury's verdict based on fraud, and remanded the case for a new trial with instructions to reinstate the intervention by NDC that the trial court had denied.
Id. at *i. The Dallas Court of Appeals explained its reasoning as fo11ows: It is undisputed that NDC was entitled, in its own right, to assert the causes of action contained in its plea in intervention. NDC's request for declaratory relief appears to be simple. Certainly, nothing in the record shows it would have appreciably affected the issues to be tried or the length of the trial. NDC's intervention would not have affected the complexity of the case. The interests of the Sabinskes, Acton, and NDC were interwoven. Disposition of the case could reasonably impair or impede NDC's ability to protect any interest it might have in the subject Severing the claims creates the risk of inconsistent findings based on Plaintiff wanting to take the position on its claims that Lyon was its agent, but with respect to Intervenors' claims seeking to deny any agency relationship. 6 See also Law Offices of Windle Turley u. Ghiasinejad,
109 S.W.3d 68, 71 (Tex.App.-Fort Worth 2003, no pet.)(finding that discharged law firm had justiciable interest in former client's personal injury lawsuit based on contingent fee agreement); Consumers County Mut. Ins. Co. u. Mendoza,
2007 WL 687157(TexApp.- Corpus Christi 2007, no pet.)(finding that insurer had justiciable interest to intervene in proceedings to protect assets subject to turnover order). INTERVENORS RESPONSE TO MOTION TO STRIKE- P AGE 6 R062 litigation. Thus, NDC's participation was almost essential to NDC's protecting its interests. 7 The same rationale applies here. Like NOC, there is no doubt Intervenors are "entitled, in its own right, to assert the causes of action contained in its plea in intervention." Acton Corp. at *g. Similarly, as it relates to the Defendants, the interests of Intervenors and Plaintiff are "interwoven" and the claims asserted by each against Defendants are similar and arise from the same "deplorable" cattle fraud scheme.
Id. Likewise, asset forth below, [d]isposition of the case could reasonable impair or impede [Intervenors'] ability to protect any interest it might have in the subject litigation."
Id. Lastly, interventionis necessary to protect Intervenors' interest. Approximately 892 head of cattle were seized by Plaintiff from Defendants upon revelations of the fraudulent conduct. Some or all of the 554 head may or may not have been part of the seized cattle. Plaintiff caused delivery of 41 cows to Intervenors' Nebraska location for care and maintenance following seizure. Intervenors have received proceeds from the sale of such cattle. Intervenors had checks for the proceeds made payable to Plaintiff and Intervenors based on a conversation between Jeff Cox (representative for Intervenors) and Jason O'Connell (representative for Plaintiff) that the cattle would be used to "make whole" both Plaintiff and Intervenors. However, after Plaintiffs representatives were interviewed by FBI agents concerning this scheme, Plaintiff ceased communications with Intervenors, and have provided no information concerning the whereabouts or sale of the seized cattle. Instead, Plaintiff apparently retained the proceeds from these sales, and now (after making exclusive use of those proceeds) seeks to pursue a judgment against 7 Acton Corp.,
1995 WL 479671at *9 lNTERVENORS RESPONSE TO MOTION TO STRIKE- PAGE 7 R063 Defendants. Intervention is "almost essential to effectively protect the intervenor's interest" in recovering the cattle or sale proceeds for the cattle Intervenors paid for in March 2015. Guaranty Federal Savings
Bank, 793 S.W.2d at 658. Cf Duke v. Wilson,
900 S.W.2d 881, 885 (Tex.App.-El Paso 1995, pet. denied)(permitting workers' compensation insurer to intervene in employee's third-party liability lawsuit "as it prevents the payment of the judgment in full to [employee] prior to [insurer's] recoupment of its subrogation interest); State Farm Mut. Auto Ins. Co. v. Perkins,
216 S.W.3d 396, 403 (Tex.App.-Eastland 2006, no pet.)(citing Duke and finding abuse of discretion in striking intervention); Texas Supply Center, Inc. v. Daon Corp. ,
641 S.W.2d 335, 337 (Tex.App.-Dallas 1982)(finding abuse of discretion in striking intervention '"'here intervenor had claim to funds at issue). The issue of whether the interest need protecting is judged by the circumstances that exist at the time of the hearing. In re: R.L.A.,
2009 WL 885881(Tex.App.-Fort Wo1th 2009, orig. proc.). Plaintiffs reliance on In re: Union Carbide Corp.,
273 S.W.3d 152(Tex. 2008) is misplaced. In that case, the intervenors made "no claim that their controversy will be affected or resolved by resolution of the Moffett case."
Id. at 155.Moreover, that case involved two separate and distinct personal injury cases that involved different diseases that occurred from exposure to different chemicals over differing time period.
Id. at 154.Here, Intervenors seek damages arising from the exact same "deplorable" scheme that Plaintiff alleges against Defendants. That scheme occurred during the same time period and involved the same parties. Both even include the fictitious George's Cattle Company as the invented party to the sale. Further, any judgment obtained by Plaintiff against Defendants will ce1tainly affect resolution of Intervenors' claims - especially INTERVENORS RESPONSE TO MOTION TO STRIKE- PAGE 8 R064 given the actions of Plaintiff in seizing pre-trial approximately 892 head of cattle from Defendants and liquidating those cattle to the exclusion of Intervenors. For the same reasons, Plaintiff is not entitled to severance. A severance is only appropriate when the "severed claim is not so intenvoven v.~tb the remaining action that they involve the same facts and issues." Guaranty Federal Savings
Bank, 793 S.W.2d at 658. "Severance of claims under the Texas Rules of Civil Procedure rests within the sound discretion of the trial court." In re: Liu,
290 S.W.3d 515, 520 (Tex.App.- Texarkana 2009, orig. proc.). As set forth above, Intervenors' clajms arise from the same scheme, involve the same pa1ties, and substantially the same claims. Clearly, the claims of Intervenors and Plaintiff involve the "same facts and issues" so as to make severance improper. Conclusion For the foregoing reasons, Intervenors respectfully request that Plaintiffs Motion to Strike and Alternative Motion to Sever be DENIED. Respectfully submitted, SIMPSON, BOYD, POWERS & WILLIAMSON Derrick S. Boyd State Bar No. 00790350 Kristy P. Campbell State Bar No. 24041684 P.O. Box 957 105 N. State Street, Suite B Decatur, Texas 76234 Telephone No. (940) 627-8308 imile No. (940 -8092 lNTERVENORS RESPONSE TO MOTION TO STRIKE - PAGE 9 R065 CERTIFICATE OF SERVICE By my signature above, I hereby certify that a true and correct copy of Intervenor's Petition in Intervention was delivered via fax and/or certified mail return receipt requested to all counsel of record on this 26th day of February, 2016. INTERVENORS RESPONSE TO MOTION TO STRJKE- PAGE 10 R066 Exhibit A R067 VAP-31-28 : 5 13: 37 ~ rcn : ;:· l ;i,::; P.C· 2 Midwestern Cattle Marketing, LLC P.O 6o~ 710 S 1dn~y. Ne 69162 '' Pho11c 306 H9 0079 \ Fa x 30B 2~11 i3 l \ \ Jll.VOICc ~ DEALER-FEEDE R C/ITTLC OAH :l/3 1/2015 " .. \ 10: Northwi>~: Ca"le Feerlers 675 Rd West F Sout~ Oruie, Ne 69 127 PAYMENT IS DUE WITHIN 24 HOURS OF RECEIPT OF THIS INVOICE .-- O-M' -1~0 - N ~ #- 1-:W ~lR -£7"" fU-N 07 ,...,... S``----· · OPTION •2: FEOEX FUNDS (OVERNIGHT) Poinh West Community Bank Points West Community Bank 809 f dlnols St 809 ll hno1~ St PO Box 157 PO Bo:r. 157 Sidney, Nf 69162 Sidney, NE 69162 M1dwc:stern Qltle Marketing, UC Midwestern <:ante Marketing, UC Custodial Account - Dealer Cu!>tcdlal Account - Dealer ABA
at all liv e~tock rt>fercncceations specific :.o the tran~a ct1011 d rtd trunsterrco ~·c of us oro91n (born&. ra1se<1) M1dwe. '' "check~ oavallle co Midwestern Cattle Marketing, LLC Thank you for your business! R068 Exhibit B R069 Page 1 of I The Front Image::: 2264 ue.oeA!'IX N». RILEY LIVESTOCK , INC, : AAJ1CVOOn.-.:<>!!.O. tlflfJ..C~ ~UITI\,t..,.\.'"'i V":LM).11" Y.\'tt~D '-Y "10'<-4'·-t ~ . • OATE •• Sl¥-'1 irJhO!U'' n .. ulCTY C1:"1HT''nl()IJ"';.M`` tf.:..~Ml> h:."1~ ~ AJQ ca a:HTS ... --- ,: ·-· The Back Image: r I l````i· : .. .. . : : ·. . . 5``)t``~r.a~H~r.~ 1 .1 mfiEi:.rii15 < ~a``~.. ~1 1_~1 c:l~"!~!u``·~ 3:J':i"l I .. ~ . . : '·' - ~' 1 · .· . . ./ ?~-~J ·.r " . I .. ._J https://www .rabo bank.weh-cashpl us.com/pub/product_ bra11ds//Rabo bank/h tm I/pt/Intl mg/br/... 7 /9/20 I 5 R070 Exhibit C R071 .;)CI I LCtVI CI~ I DWAYNE MAYS Owner/Manager Res. 308·284·2069 0 CARL.A DE KAY Otflce Manager SCOTT VAN WINKLE 308·284·2071 Owner/Manager Res. 308-874·2813 LIVESTOCK AUCTION MARKET, INC. DATE P.O. Box 30 Feb 4, 2016 Ogellala, Nebreska 69153 SELL-NO: 279 027517 308·284·2071 SOLO FOR JEFF cox 221 S JEFFERSON AVE NORTH PLATTE, NE 6910 H~ad · be~·ct.ip·t~c?µ:'·· .. · 1 ·13µy,~li !,1.(Y.{f? Wf:·1:; : 11903290< Legend Sa-"llc llO•a 2015-03-30 0041796836 ~ll!'b: ' ~·com. fnp;111cs .co111'1\ IG _I\ I<; 1151 l \ l(i 11 51 ...Jsh.\. .'. \ctimi=\ · i~" ·1r:in~::iction& ·1nJ..... 8' J -~ ~O l 5 R077 Imaging - View Transaction Page 1of1 CURRENCY COIN ... !%i . . J..~1' ~ :-:· l; ~ h i i~ I .. 11~5 `` ,·Z .``r.· ~4 ~B1 1 ~' ~s ~. ~}!. ~ ~J ~i! ~ ft-' l . ti.. ~( "~ UJ~ 5 t:i ' W • llU ,., , ' ·:.; I i ~ ..i I J . . ~: ~ -· .··."·'~ii ·.: ~ : ~t 1 https://ecom.fnbancs.com/IMG_IMGI 151/IMGI 151.ashx?Action=ViewTransaction&Tok... 8/13/2015 -~ R078 Page 1 of I Close windOw Get Rates & Transit nmes Details Amounts are shown in USO Services FodEx Priority FedEx Standard FedEx 2Day AM" FedEx 20ayc> FedEx Expreae Save,. delivery with Overnight- Overnight- date/time 12:00 Fri Apr 03, 2015 18:30 Fri Apr 03, 2015 18:30 Mon Apr 08, 12:00 ThuApr02. 2015 16:30 Thu Apr 02. 2015 2015 Base Rate 32.55 31 35 19.31 17.55 14.10 Addltlonal charges (+) •Fuel surcharge 0.47 0.46 0.30 0.27 0.23 •DAS Comm 2.35 2.35 2.35 2.35 2.35 Olacounta (-) ·Bonua discount 3.28 3.14 1.93 t.76 1.41 Total 32.tt 31.02 20.03 18.41 15.27 More information about your resuHs: • Riies shown here may be dillerent man the actual chargaa tor your shipment. Dllferences may occur based on actual weight dimensions, and other ladors. Consult the applicable FedEx Service Guide for details. • For more accurale rate and transit time quotas. view this Courteay Rate Quote alter aelecUng any addlUonal shipment opUons. - https ://www. fed ex .com/shippi ng/j sp/RatingDetai l.jsp?locale=en_US 4/1 /201 s R079 CAUSE NO. 15-07-061 MIDWESTERN CA'ITLE § IN THE DISTRICT COURT MARKETING, LLC § § Plaintiff § § vs. § § TONYE. LYON d/b/a LYON FARMS, § OWEN LYON and MONNA LYON § § JACK COUN'IY, TEXAS Defendant § § and § § NORTHWEST CAITLE FEEDERS, § L.L.C. and RILEY LIVESTOCK, INC. § § Intervenors § 271ST JUDICIAL DISTRICT ORDER DENYING PLAINTIFF'S MOTION TO STRIKE PETITION IN INTERVENTION, AND ALTERNATIVE MOTION TO SEVER The Court heard Plaintiffs Motion to Strike Petition in Inten·ention, and Alternative Motion to Sever on March 4, 2016. After the hearing, the Court took the matter under further consideration. After review of the Motion, the Response, the evidence offered at the hearing, and the arguments of counsel, the Court concludes that the Motion should be denied. Therefore, it is ordered that Plaintiffs Motion to Strike Petition in Intervention, and Alternative Motion to Sever is hereby DENIED. ta :l/{F~_ED P.M. MAR 2· 1 2016 TRACIE PIPPIN DIST. CLERK )d JACK COUN1Y TEXAS 1 BY. DEPUTY v~ R080 1 1 REPORTER'S RECORD VOLUME 1 OF 1 VOLUME{S) 2 TRIAL COURT CAUSE NO. 15-07-061 3 MIDWESTERN CATTLE MARKETING, § IN THE DISTRICT COURT LLC, § 4 § Plaintiff § 5 vs. § § 6 TONY E. LYON d/b/a LYON FARMS, § OWEN LYON and MONNA LYON, § 7 § OF JACK COUNTY, TEXAS Defendants § 8 § AND § 9 § NORTHWEST CATTLE FEEDERS, LLC, § 10 and RILEY LIVESTOCK, INC., § § 11 Intervenors § 271ST JUDICIAL DISTRICT 12 ************************************************************ 13 MOTION TO STRIKE INTERVENTION/SEVER 14 ************************************************************ 15 16 17 18 19 20 On the 4th day of March, 2016, the following 21 proceedings came on to be held in the above-titled and numbered 22 cause before the Honorable John Fostel, Judge Presiding, held 23 in Jacksboro, Jack County, Texas. 24 Proceedings reported by machine shorthand 25 utilizing computer-aided translation. Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R081 2 1 A P P E A R A N C E S 2 MR. CHRISTOPHER B. TROWBRIDGE SBOT NO. 24008182 3 BELL, NUNNALLY & MARTIN, LLP 3232 MCKINNEY AVENUE 4 SUITE 1400 DALLAS, TEXAS 75204-7422 5 TELEPHONE: 214.740.1400 6 - AND - 7 MR. TODD PARKS SBOT NO. 15526520 8 WALTERS, BALIDO & CRAIN 400 EAST MAIN STREET 9 DECATUR, TEXAS 76234 TELEPHONE: 940.626.8254 10 ATTORNEYS FOR PLAINTIFF 11 MR. DERRICK S. BOYD SBOT NO. 00790350 12 SIMPSON, BOYD & POWERS P.O. BOX 957 13 DECATUR, TEXAS 76234 TELEPHONE: 940.627.8308 14 ATTORNEY FOR INTERVENORS 15 16 17 18 19 20 21 22 23 24 25 Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R082 3 1 CHRONOLOGICAL INDEX 2 March 4, 2016 Page 3 Case Called. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 Plaintiff's Motion to Strike Intervention/Sever.......... 4 5 Intervenor's Response... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 6 Plaintiff's Rebuttal..................................... 10 7 End of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 8 Reporter's Certificate................................... 12 9 WITNESS INDEX 10 NONE 11 EXHIBIT INDEX 12 INTERVENOR'S 13 NO. DESCRIPTION OFFERED ADMITTED 14 A MCM Invoice 11 11 15 B Riley Livestock, Inc., Check 11 11 16 c Receipt of Sale 11 11 17 D MCM Invoice 11 11 18 19 20 21 22 23 24 25 Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R083 4 1 PROCEEDINGS 2 March 4, 2016 3 (Open court, attorneys present) 4 THE COURT: 15-07-061. If y'all would give 5 announcements for the record, please. You may proceed, 6 Counsel. 7 MR. TROWBRIDGE: Chris Trowbridge and Todd Parks 8 here for Midwestern Cattle, Plaintiff. 9 MR. BOYD: Your Honor, Derrick Boyd for the 10 Intervenor. 11 THE COURT: You may proceed. 12 MR. TROWBRIDGE: Thank you, your Honor. 13 This is Plaintiff Midwestern Cattle's motion to 14 strike the intervention of two intervenors. As you may recall, 15 Midwestern Cattle filed this lawsuit in July of 2015 against 16 Tony Lyon and his parents. Our petition is in connection with 17 a bounced check for $5 million that was written in June of 2015 18 and then four checks that were written by the Lyon family 19 without our authorization on Midwestern Cattle's checkbook. 20 Those checks totaled 3.7 million. So there's two transactions, 21 June 25th and June 26th. 22 Four months after we filed our suit the 23 Intervenors filed a petition for intervention. Now, their 24 damages stem from a cattle transaction that took place back in 25 March and April of 2013, and they're seeking to recovery Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R084 5 1 $800,000 from my client and from the Defendants we sued. 2 They're also seeking a constructive trust on funds stemming 3 from cattle that my client seized later in the year in July. 4 Intervenor's suit involves different relief. 5 They're seeking different damages and different claims. Under 6 those facts, intervention is not proper. It will cause my 7 trial, the Midwestern Cattle, to be longer. It will be less 8 efficient for this court. For those reasons, it should be 9 stricken by the Court. 10 The case that I handed you, the Texas Supreme 11 Court case Union Carbide, outlines three grounds for a proper 12 intervention, and that's on the demonstrative I handed you. 13 First, Intervenors have to show a justiciable interest in the 14 relief sought by the Plaintiff. Texas Supreme Court says that 15 -- that condition is paramount. Next, the intervention must 16 avoid a multiplication of issues. And third, the intervention 17 must be essential to protect Intervenor's claims. None of 18 those requirements exist here. 19 First, with respect to justiciability, the 20 Supreme Court says the justiciable interest requirement 21 protects pending cases from having interlopers disrupt the 22 proceedings. That's exactly what's happening here before you, 23 your Honor. Intervenors are interlopers. They don't seek any 24 of the relief that Plaintiffs are seeking. They were not 25 involved in the $5 million bounced check. They were not Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R085 6 1 involved in the $3.7 million checks. They're seeking new and 2 different relief, that $800,000 for 554 head of cattle and the 3 constructive trust. Those are new and different transactions 4 from what Midwestern Cattle is suing on. 5 Now, the standard and the test that you have to 6 conduct pursuant to the Texas Supreme Court says to constitute 7 a justiciable interest the intervenor's interest must be such 8 that if the original action had never been commenced and he had 9 first brought it as a sole plaintiff, he would have been 10 entitled to recover in his own name at least a part of the 11 relief sought in the original suit. 12 They have no right to our -- the relief we're 13 seeking on the $5 million check, and they have no right to the 14 $3.7 million in unauthorized checks. What they're trying to do 15 is simply piggy back on MCM's suit, Midwestern Cattle's suit. 16 But their forced participation in this lawsuit before you will 17 complicate the case for you, will complicate the case for the 18 jury, it will multiply the issues, it'll extend the days 19 necessary to try the Midwestern case. 20 We've added two new parties, new claims, a new 21 transaction, new fact issues, new misrepresentations forming 22 the basis for their fraud claim, and the Court says you need to 23 look at the petition and intervention and compare it to the 24 original petition that was filed. I have copies of that for 25 you. I can move to have them admitted as exhibits, or I'd ask Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R086 7 1 that you take judicial notice of them -- 2 THE COURT: I'll take judicial notice of it. 3 MR. TROWBRIDGE: Thank you. 4 And to briefly summarize the last two issues, of 5 course you see how it's multiplying the issues. It's not going 6 to be efficient for this court. One might think, oh, well, 7 let's just have one trial instead of two. Well, we might have 8 one jury hearing it, but it would be combining two trials into 9 one. It will take just as long as the two trials. 10 Finally, it's not essential to protect their 11 claim. Even if we win on our bounced check, the $5 million and 12 then the unauthorized checks, that will not preclude 13 Intervenor's claims, and nothing prevents Intervenors from 14 filing their own separate lawsuit. 15 So for those reasons, we ask that you strike 16 Intervenor's petition in our motion. 17 THE COURT: Response. 18 MR. BOYD: Your Honor, very briefly, the 19 intervention is not going to complicate the case. What's going 20 to complicate is Midwestern's strategy in this case. What they 21 have sued the Lyons over is saying you are our agent, you stole 22 this money from us, you did not have authority to do that, and 23 they sued the Lyons for breach of fiduciary duty. 24 We have come in and said, exactly, we agree. He 25 was your agent. You were the one that invoiced us for the Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R087 8 1 cattle. We wrote you the check, Midwestern, and we never got 2 the cattle. The only issue that it adds is agency. What 3 they're wanting to do is take a position in the Lyons' case 4 that he was their agent but then have a separate case so they 5 can deny agency in our case. It's not -- the only issue it's 6 going to add is the agency question. All the other issues 7 overlap, whether the Lyons committed fraud, whether Midwestern 8 delivered the cattle. All of that is interwoven. And that's 9 the Acton (phonetic) case that we cite to the Court, where 10 there was a fraud case, it went up on appeal, that they 11 reversed the jury's finding on fraud and sending it back down, 12 the Court of Appeals instructed that the Intervenors should 13 have been allowed to intervene in that case because their 14 interests were interwoven. 15 It benefits the Court because we do have one 16 trial instead of two over these same issues. The other 17 parties, the Lyons, are not here today, but they have filed 18 briefs in opposition of the motion to strike. They don't want 19 to have two separate trials over these issues. 20 And the Union Carbide case that they rely on is 21 distinguishable for the very reason that we point out in our 22 brief. It says in that case there was no claim that the claims 23 of the intervenors would be affected by the underlying lawsuit. 24 Here, what happened was when they found out about what their 25 agent had done, they called us up and said, hey, we've got a Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R088 9 1 problem. We came down to Texas to meet with them. They were 2 already here. They seized 892 head of cattle from the Lyons. 3 We were told that was going to be used to kind of pay off 4 everybody who had been a victim of this scheme. Next thing we 5 find out, they get 41 head shipped to us, which were far short 6 of the 554 that we were supposed to get. They converted the 7 other -- we don't know what happened to it still, but that 8 cattle was seized from the Defendants who are the same people 9 we're both suing trying get the recovery. That's a joint 10 interest. And for the reasons we stated in the brief, that 11 satisfies the justiciable interest issue. 12 The multiplication issues we talked about. 13 There's only one issue that's going to be added, and that's the 14 agency. And it would be better for the Court to address that 15 in one case rather than have to address it twice in two 16 separate cases. 17 So for these reasons, we believe Union Carbide 18 is distinguishable. That was a case where there was a plant 19 explosion -- not explosion. There was one plaintiff that 20 worked at a particular plant over a time period that was 21 claiming exposure to one substance. Someone who had been 22 exposed to a different substance by the same Defendant at a 23 different plant over a different time period was trying to come 24 in and join that lawsuit because they had the venue that they 25 liked. Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R089 10 1 Here, there's no forum shopping. If the 2 intervention is struck, we turn around and file another lawsuit 3 tomorrow in Jack County. They're subject to venue here. 4 So the Union Carbide case is distinguishable. 5 We believe that this case falls under Acton where intervention 6 is proper, and we would ask that the Court deny the motion to 7 strike the intervention. 8 MR. TROWBRIDGE: Briefly, your Honor, Acton is a 9 Dallas Court of Appeals case; it's not binding on you. The 10 Texas Supreme Court case is binding on you. 11 That case says that once a party to the pending 12 suit moves to strike the intervention, the intervenors have a 13 burden to show a justiciable interest in the pending suit. 14 They can't meet that burden, and they haven't met that burden 15 in front of you. They've put forth no evidence demonstrating 16 that they're seeking to recover on the damages being sought by 17 Midwestern Cattle. They are the exact type of interlopers that 18 the Texas Supreme Court says you shouldn't allow into a suit. 19 They're going to complicate Midwestern Cattle's case. 20 Midwestern Cattle has a simple case. They're 21 adding fraud claims, constructive trust, conspiracy claims 22 alleging that Midwestern Cattle conspired with the Lyons. It 23 will -- it could very well triple the time of my trial, but it 24 certainly will double it. It will not be efficient. And under 25 the Texas Supreme Court mandate, they should not be allowed in Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R090 11 1 this case, and we ask that you strike the intervention. 2 MR. BOYD: Just briefly for the record, we did 3 offer Exhibits A through D. It was attached to our motion. We 4 would offer those so that they're before the Court. 5 THE COURT: Any objection to that? 6 MR. TROWBRIDGE: Let me look at those real 7 quick. 8 No objection to those exhibits, but they do 9 nothing to show that they have an interest in the damages we're 10 seeking. 11 THE COURT: All right. They're admitted. 12 Just out of curiosity, how many other potential 13 intervenors are there out there? 14 MR. TROWBRIDGE: I didn't even expect them to 15 intervene, so I don't think -- 16 THE COURT: You might have some idea. I mean as 17 I recall from the prior hearings in this, there were several 18 MR. TROWBRIDGE: (Overlapping) Oh. We filed 19 suits against other people as separate suits, but I don't 20 anticipate anybody else intervening in this case. 21 THE COURT: All right. Just curious. 22 Gentlemen, I'm going to review the material 23 y'all have submitted on the cases, and I will get you an 24 opinion shortly. 25 (Proceedings adjourned) Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R091 12 1 STATE OF TEXAS 2 COUNTY OF JACK 3 I, DENISE HILL, Official Court Reporter in and 4 for the 271st Judicial District Court of Wise and Jack 5 Counties, State of Texas, do hereby certify that the above and 6 foregoing contains a true and correct transcription of all 7 portions of evidence and other proceedings requested in writing 8 by counsel for the parties to be included in this volume of the 9 Reporter's Record in the above-styled and numbered cause, all 10 of which occurred in open court or in chambers and were 11 reported by me. 12 I further certify that this Reporter's Record of 13 the proceedings truly and correctly reflects the exhibits, if 14 any, offered by the respective parties. 15 I further certify that the total cost for the 16 preparation of this Reporter's Record is $200.00 and was 17 paid/will be paid by Bell, Nunnally & Martin. 18 WITNESS MY OFFICIAL HAND this the 31st day of 19 March, 2016. 20 21 22 ls/Denise Hill DENISE HILL, CSR No. 4381 23 Expiration Date: 12/31/16 Official Court Reporter 24 27lst Judicial District Court Wise-Jack Counties, Texas 25 denise.hill@co.wise.tx.us Denise Hill, CSR, RPR - Official - (940) 627-3200 271 st Judicial District Court - Wise-Jack Counties R092 Exhibit A R093 Midwestern Cattle Marketing, LLC P.O Sox. 710 S1dnt:y, N~ 69161 Phc.mc 306.2'19 0079 fDa 308.1~11/Jl It.VOICE 'OEALER·FEtO~R CATTLC DATE .\/31/201~ 10: Northw``t C:itrtle Feer.lers 675 Rd West F Sout "I Oru•e. Ne 69127 PAYMENT IS DUE WITHIN 24 HOURS OF RECEIPT OF THIS INVOICE OPTION #l: WIRE FUNDS OPTION •2: FEDEX FUNDS (OVERNIGHT) Point:r, West Community Bank Potnts Wesl Community Bank 809 r.unols St 809 Uhnu1~ St PO Box 157 PO Bo:i 157 Sidney, NE 69162 \ Sidney. NE 69162 I M1Clwcstem Oltle Marketing, u.c 'I MtClwe§tem Canle Marketing, UC Custodial Account - Dealer Cu.~odlal Account - Oealer ABA dl04t01627 ABA II 1CH 101G27 Account 1110111276 I Account 11'10111276 NCT WEiGHl "1IUCt:/CWl 1A,.'lOUNl , Steer':. Snlt1 from Perrin, fX lI::~" I::::~: I 11eac 355.613 I tiot]a Avt •224. 50/cwr S/98,)~J. l~ •• i· L± ·____ _ TOTAl $798,351.19 A" an aftlaav111s d~med lJy U~OA i>'> an official •C'
Document Info
Docket Number： 02-16-00128-CV
Filed Date： 4/20/2016
Precedential Status： Precedential
Modified Date： 4/25/2016