in Re Midwestern Cattle Marketing, LLC

• Court: Court of Appeals of Texas
• Decided: April 20, 2016
• Docket: 02-16-00128-CV
• Status: Published

Opinion

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, -rEJ

R002 II. PARTIES

3. Plaintiff MWC is a Nebraska limited liability company authorized to conduct

business in Texas.

4. Defendant Tony E. Lyon d/b/a Lyon Farm is an individual who resides in Perrin,

Texas and may be served with process at his residence at 3100 Back Cemetery Road, Perrin, TX

76486 or wherever he may be found.

5. Defendant Owen Lyon is an individual who resides Perrin, Texas and may be

served with process at his residence and/or business at 1890 Hardy Road, Perrin, TX 76486, or

wherever he may be found.

6. Defendant Monna Lyon is an individual who resides in Perrin, Texas and may be

served with process at her residence and/or business at 1890 Hardy Road, Perrin, TX 76486, or

wherever she may be found.

III. JURISDICTION AND VENUE

7. The Court has jurisdiction over this controversy because the damages are within

the Court's jurisdictional limits.

8. Pursuant to Section 15.002 of the Texas Civil Practice and Remedies Code, venue

is proper in Jack County, Texas because it is the county of Defendants' residences and/or

businesses at the time the cause of action accrued. Venue is also proper because a substantial

part of the events or omissions giving rise to the causes of action asserted herein occurred in Jack

County, Texas. Further, venue is proper in Jack County, Texas pursuant to Section 15.005 of the

Texas Civil Practice and Remedies Code.

PLAINTIFF'S ORIGINAL PETITION PAGE2

R003 IV. FACTS

9. MWC was founded in 2008 by a team of cattlemen with nearly 100 years of

combined experience in the cattle business. MWC is built on a foundation of solid relationships

- some reaching back 25 years or more - that continue to be maintained with a high level of

service and integrity. MWC offers personal service to every customer and provides superior

quality that contributes to their bottom line.

10. In essence, MWC acts as cattle brokers or "order buyers." It makes cattle

purchases simple, straightforward, and profitable for producers and buyers alike. As part of its

business, MWC matches cattle producers with cattle buyers. Once matched, MWC pays for the

cattle when the company picks up the cattle from the producer. MWC is then paid when the

cattle are delivered to the seller. Accordingly, MWC makes its profit from the spread of the buy

and sell.

11. In July 2011, MWC and its owner Jason O'Co1U1ell met Tony Lyon in a sale barn

in Graham, Texas. Shortly after this July 2011 meeting, MWC, impressed by the representations

and ma1U1erisms of Tony Lyon, decided to enter into a business arrangement with one another.

As part of the agreement, Tony Lyon, through the assistance of Owen and Mo1U1a Lyon, would

buy cattle for MWC from the producer and charge the purchase price to the company. MWC

would then provide for the delivery of the cattle to the buyer. Through these years and

transactions, Tony Lyon built trust and befriended Jason O'Connell.

12. Unfortunately, Tony Lyon was not worthy of such trust. Unbeknownst to MWC,

prior to ever meeting Jason O'Connell, Tony Lyon had been sentenced to 37 months in prison

and ordered to pay more than $6 million for perpetrating a fraudulent cattle-buying scheme.

After his release from prison Tony Lyon again found himself in trouble. The U.S. Department of

PLAINTIFF'S ORIGINAL PETITION PAGE3

R004 Agriculture fined Tony Lyon $153,000 for, among other things: (1) failing to pay when due the

full purchase price of livestock purchased in commerce; (2) failing to have and maintain

sufficient funds on deposit and available in the account upon which checks for livestock

purchase are drawn to pay them when presented.

13. However, without knowledge of Mr. Lyon's background, MWC continued to do

business with and trust Tony Lyon. Indeed, around the beginning of 2014, to make their

business dealing more efficient, MWC provided a MWC checkbook and signature stamp to Tony

Lyon so he could sign checks on MWC's behalf.

14. This act of trust was apparently too much for Mr. Lyon, he was unable to restrain

himself, and the defrauding of MWC began. Tony Lyon informed MWC that he met a "big

money" buyer named John George, owner of George Cattle Company in Fort Worth, who

wanted to get into cattle through a "feeding club". A feeding club is where investors pool money

in the cattle market to buy, hold, and flip cattle for profit.

15. MWC, relying on Tony Lyon's representations to be true, set up repeated

transactions with George Cattle Company as the buyer. Under the agreement: (a) Tony Lyon

would write a check from MWC to either Owen Lyon or Lyon Farms, the d/b/a of Owen and

Tony Lyon; (b) Tony Lyon would then send MWC a hand-written invoice by fax that detailed

the number of cattle, the weight, etc., and the total amount due for the cattle; (c) Tony Lyon

would then request that MWC invoice George Cattle Company; (d) MWC would fax the invoice

to Tony Lyon; (e) Tony Lyon would tell MWC that the cattle should then be sent to George

Cattle Company; (t) Tony would present the MWC invoice to George Cattle Company for

payment; (g) George Cattle Company would then pay Lyon Farms and Lyon Farms would then

payMWC.

PLAINTIFF'S ORIGINAL PETITION PAGE4

R005 16. Despite the representations made by Defendants and unbeknownst to MWC, there

was never John George or George Cattle Company. Instead, Tony Lyon was deviously created

John George and George Cattle Company as a front for a fraudulent scheme to steal Plaintifrs

cattle and money.

17. In late June 2015, Tony Lyon's deplorable scheme was ultimately discovered

when MWC's bank PointsWest Bank-contacted MWC to inform it of a suspicious transaction

involving Tony Lyon and George Cattle Company. MWC deposit a check written on June 26,

2015, for the amount of $5,020,230.11 from Lyon Farms. The check was signed by Defendant

Monna Lyon and was written from the account of"Owen or Monna D Lyon Cattle Account."

18. PointsWest Bank called Lyon Farms' bank - Legend Bank - to verify if the

check would clear Lyon Farms' account. Legend Bank informed PointsWest Bank that the check

would not clear. The check was ultimately returned for insufficient funds on July 1, 2015.

However, while the banks were determining whether the check would clear, Tony Lyon wrote

the following checks from the MWC account without authorization:

• Check 1000892 $31,842.71 to K.L.

• Check 1000894 $1,772,959.76 to Defendant Owen Lyon

• Check 1000895 $1,644,308.00 to Defendant Owen Lyon

• Check 1001336 $344,400.00 to L.H.

All of these checks were paid by the bank.

19. Once MWC was informed by PointsWest Bank that the check would not clear,

MWC contacted Tony Lyon. Preying upon MWC's trust yet again, Tony Lyon said he would

get the money from George Cattle Company. Tony Lyon then called back MWC and lied to

MWC that he received the funds and would wire it in the morning.

PLAINTIFF'S ORIGINAL PETITION PAGES

R006 20. Despite this assurance, Tony Lyon did not wire the money as promis~d. Because

the $5,020,230.11 wire never came through even though MWC fully performed, MWC

unsuccessfully attempted to stop payment on its outstanding checks. As a result, MWC went

from having over one million dollars in its bank account to being overdrawn by $1,644,440.36.

21. When MWC confronted Tony Lyon about why the check bounced, Tony Lyon

admitted that indeed there was no money, no cattle and George Cattle Company never existed.

22. On information and belief, Owen Lyon and Monna Lyon acted as agents of Tony

Lyon in the conduct described above.

23. Further, on information and belief, the money that was deposited in Defendants'

accounts is in the process of being removed from the accounts and hidden by Defendants, thus,

necessitating extraordinary relief.

24. All conditions precedent to Plaintiffs recovery have been fully performed, or

have occurred or been waived.

v. CAUSES OF ACTION

COUNT ONE: COMMON LAW FRAUD

25. MWC hereby repeats and incorporates by reference each and every allegation

contained in all paragraphs set forth above.

26. Defendants made multiple false representations to MWC regarding the

$5,020,230.11 transaction with George Cattle Company. These representations included that (1)

George Cattle Company existed and bought cattle, (2) Defendants had the money to pay MWC

the amount owed, and (3) Defend ants talked to George Cattle Company and would wire the

$5,020,230.11. Those representations were material. Defendants knew the representations were

false when they were made. Defendants made the representations with the intent that MWC rely

PLAINTIFF'S ORIGINAL PETITION PAGE6

R007 and act on them. MWC justifiably relied on the representations in providing for the delivery of

cattle and for writing other checks on the account with the belief the check for $5,020,230.11

would clear, and, as a result, suffered injury for which it seeks judgment.

COUNT TWO: CIVIL THEFT

27. MWC hereby repeats and incorporates by reference each and every allegation

28. Defendants violated the Texas Civil Theft Liability Act and Sections 31.03 and

31.06 of the Texas Penal Code. The actions of Defendants constitute civil theft because

Defendants, knowingly and without effective consent, appropriated cattle or, alternatively,

money belonging to MWC, for the purpose of using that property for their own benefit.

29. Defendants obtained property by issuing a check when they did not have

sufficient funds for the payment in full of the check. On June 26, 2015, Defendants received

notice that their account had insufficient funds, and the Defendants have failed to pay the holder

in full within 10 days after receiving notice of that refusal. MWC has been injured as a

proximate result of Defendants' actions in an amount to be more fully demonstrated at trial. In

addition, because the harm caused by Defendants results from fraud, malice, and/or gross

negligence, MWC is entitled to recovery of exemplary damages. In addition, MWC is entitled to

recover court costs and reasonable and necessary attorneys' fees. See TEX. CIV. PRAC. &

REM. CODE§ 134.00S(b).

PLAINTIFF'S ORIGINAL PETITION PAGE7

R008 COUNT THREE: NEGLIGENT MISREPRESENTATION

30. MWC hereby repeats and incorporates by reference each and every allegation

31. Defendants made multiple false representations to MWC regarding the

$5,020,230.11 transaction with George Cattle Company. These representations included that:

(1) George Cattle Company existed and bought cattle; (2) they had the money to pay MWC the

amount owed; and (3) Defendants talked to George Cattle Company and would wire the

$5,020,230.11. Those representations were made in the course of Defendants' business or in a

transaction in which he had a pecuniary interest. Defendants did not exercise reasonable care or

competence in communicating those representations. MWC justifiably relied on the

representations in providing for the delivery of cattle and for writing other checks on the account

with the belief the check for $5,020,230.11 would clear, and, as a result, suffered injury for

which it seeks judgment.

COUNTFOUR: FRAUDULENTINDUCEMENT

32. MWC hereby repeats and incorporates by reference each and every allegation

33. Defendants made multiple false representations to MWC regarding the

$5,020,230.11 transaction with George Cattle Company. These representations included that:

(1) George Cattle Company existed and bought cattle; (2) they had the money to pay MWC the

amount owed; and (3) they talked to George Cattle Company and would wire the $5,020,230.11.

Those representations were material. Defendants knew the representations were false when they

were made. Defendants made the representations with the intent that MWC rely and act on

them. MWC justifiably relied on the representations in entering into the agreement to provide

R009 delivery of cattle, and, as a result, suffered injury for which it seeks judgment.

COUNT FIVE: CONVERSION

34. MWC hereby repeats and incorporates by reference each and every allegation

35. As detailed above, Defendants wrongfully possessed MWC's property. MWC

entrusted Defendants to faithfully provide for the delivery of cattle and remit payment.

36. MWC has incurred substantial damages as a direct and proximate result of

Defendants' wrongful conduct and dominion ofMWC's property.

COUNT SIX: MONEY HAD AND RECEIVED

37. MWC hereby repeats and incorporates by reference each and every allegation

38. Defendants hold money that, in equity and good conscience, belongs to MWC.

MWC are entitled to recover this money from Defendants, in an amount to be more fully

demonstrated at trial.

COUNTSEVEN: BREACHOFCONTRACT

39. MWC hereby repeats and incorporates by reference each and every allegation

40. MWC and Defendants are parties to an Agreement. Pursuant to the Agreement,

Defendants assisted MWC in the purchase and selling of cattle. Defendants were to provide the

appropriate money to MWC for the selling price of the cattle. Defendants breached this

Agreement by failing to provide MWC with the money owed.

PLAINTIFF'S ORIGINAL PETITION PAGE9

R010 41. MWC has been injured as a proximate result of Defendants' actions in an amount

to be more fully demonstrated at trial. In addition, Plaintiffs are entitled to recovery of attorneys'

fees. See TEX. CN. PRAC. & REM. CODE § 38.001 {Vernon 2008).

COUNT EIGHT-QUANTUM MERUIT

42. MWC hereby repeats and incorporates by reference each and every allegation

43. In the alternative and without waiving the foregoing, MWC, acting in the ordinary

course of business, furnished Defendants with cattle, as detailed above. Defendants received and

accepted the cattle and the corresponding money, unjustly enriching Defendants at the expense

of MWC. Defendants knew, or should have known, that the cattle were provided in anticipation

of compensation, and were not furnished gratuitously. After all offsets, payments and credits,

the reasonable unpaid value of the cattle is at least $5,020,230.11. Despite demand, Defendants

wrongfully refused to pay the reasonable value of the cattle for which sum MWC sues.

44. MWC has been damaged in an amount in excess of the jurisdictional limits of the

Court and is entitled to recover.

COUNT NINE: CONSPIRACY

45. MWC hereby repeats and incorporates by reference each and every allegation

46. Defendants acted pursuant to a common scheme designed to unlawfully possess

MWC' s cattle and/or to steal MWC' s money.

47. Defendants committed overt acts in perpetuation of this common scheme by,

among other things, making false representations to MWC and writing a bad check to MWC.

48. Defendants are jointly and severally liable for the tortious conduct alleged in

Counts 1 through 5, infra.

PLAINTIFF'S ORIGINAL PETITION PAGE 10

R011 49. MWC has been injured as a proximate result of the conspiracy between

Defendants in an amount to be more fully demonstrated at trial. In addition, because the harm

caused by Defendants results from fraud, malice, and/or gross negligence, MWC is entitled to

recovery of exemplary damages.

COUNT TEN: AIDING AND ABETTING

50. MWC hereby repeats and incorporates by reference each and every allegation

51. Tony Lyon owed a fiduciary duty to MWC. Defendants Monna and Owen Lyon

acted with knowledge that Tony Lyon's conduct alleged infra, was a breach of his fiduciary duty

duty, and Defendants Monna and Owen Lyon provided substantial assistance and encouragement

to Tony Lyon in carrying out these tortious acts. Defendants Monna and Owen Lyon Bl 7 is

therefore liable for aiding and abetting the tortious acts alleged in Counts 1 through 5, infra.

52. MWC has been injured as a proximate result of Defendants Monna and Owen

Lyon actions in an amount to be more fully demonstrated at trial. In addition, because the harm

caused by Defendants Monna and Owen Lyon result from fraud, malice, and/or gross negligence,

MWC is entitled to recovery of exemplary damages.

COUNT ELEVEN: ATTORNEY'S FEES

53. Each of the foregoing paragraphs are incorporated and reasserted herein by

reference.

54. MWC previously presented Defendants with a written demand for its claims.

Despite that demand, Defendants failed and refused to pay the balance due. As a result, MWC

was required to retain the law firm of Bell, Nunnally & Martin LLP to enforce MWC' s rights

and has agreed to pay the firm a reasonable fee for its services. MWC has incurred, and will

PLAINTIFF'S ORIGINAL PETITION PAGE 11

R012 continue to incur, reasonable attorney's fees, which it seeks to recover as damages from

Defendants pursuant to Section 38.001 of the Texas Civil Practice and Remedies Code and

Texas law.

VI. PRAYER

WHEREFORE, PREMISES CONSIDERED, MWC requests that Defendants be cited

to appear and answer this Petition and that upon final hearing that MWC have judgment against

Defendants, jointly and severally, as follows:

a. all actual damages;

b. all special damages as permitted by law;

c. exemplary damages as permitted by law;

d. disgorgement of all profits obtained by Defendants as permitted by law;

e. pre-judgment interest at the highest rate permitted by Texas law;

f. post-judgment interest at the highest rate permitted by Texas law;

g. reasonable and necessary attorneys' fees for pre-trial, trial, any and all appeals, and petitions for review;

h. all costs of suit; and

i. all other relief to which MWC may be entitled in law or equity.

PLAINTIFF'S ORIGINAL PETITION PAGE 12

R013 Respectfully submitted,

BELL, NUNNALLY & MARTIN LLP

By:_~=------~~_,,_______ __ Christopher B. Trowbridge ctrowbridge@bellnunnally.com Texas Bar No. 24008182 R. Heath Cheek Texas Bar No. 24053141 hcheek@bellnunnally.com Gregory D. Kelminson State Bar No. 24070045 gkelminson@bellnunnally.com

3232 McKinney Avenue, Suite 1400 Dallas, Texas 75204-2429 Telephone: (214) 740-1400 Telecopy: (214) 740-1499

ATTORNEYS FOR PLAINTIFF MIDWESTERN CATTLE MARKETING, LLC.

2220269_ l .doc

PLAINTIFF'S ORIGINAL PETITION PAGE 13

R014 E-Filed for Record 11/24/2015 4:06:38 PM Jack County District Clerk , TX By: Brenda Fuller

CAUSE NO. 15-07-061

MIDWESTERN CATTLE MARKETING, § IN THE DISTRICT COURT LLC § § Plaintiff § § VS. § JACK COUNTY, TEXAS § TONYE. LYON d/b/a LYON FARMS, § Individually, OWEN LYON, individually and § MONNA LYON, individually § § Defendant § § and § § NORTHWEST CATILE FEEDERS, L.L.C. § and RILEY LIVESTOCK, INC. § § Intervenors § 271ST JUDICIAL DISTRICT

PETITION IN INTERVENTION

TO THE HONORABLE JUDGE OF THE COURT:

Northwest Cattle Feeders, LLC and Riley Livestock, Inc. (hereinafter collectively

"Intervenors") file this Petition in Intervention, and in support of same would respectfully show

as follows:

1.0 Discovery Level

I. I 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 TRCP 190.4.

2.0 Grounds for Intervention

2.1 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 Marketing, LLC

ORIGINAL PETITION IN INTERVENTION - PAGE 1

R015 (hereinafter Midwestern Cattle). Owen Lyon and Monna Lyon were also participants in the

scheme involving the alleged purchase and sell of cattle.

2.2 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 collectively known as "Lyon

Defendants") seeking damages arising from Lyon's conduct as Midwestern Cattle's agent.

2.3 As set forth below, Intervenors are entitled to recover legal and equitable relief

against Midwestern Cattle and Lyon 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.

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 §15.002(a)(2) because one or more

parties are residents of Jack County, Texas. Additionally, venue is proper under Texas Civil

Practice & Remedies Code §15.002(a)(l) 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 § l 5.002(a)(l) 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.

ORIGINAL PETITION IN INTERVENTION-PAGE 2

R016 3.0 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.

4.2 Intervenors entered into an agreement with Midwestern Cattle through its agent

Tony E. Lyon d/b/a Lyon Farms to purchase 554 head of cattle. Before entering into this

agreement, Jeff Cox (on behalf of Intervenors) met with Tony Lyon in Jack County to discuss

the purchase. Lyon showed Cox the cattle he was 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 a Midwestern Cattle checkbook and signature stamp enabling him to

conduct the business of Midwestern Cattle. 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.

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 $798,351.19. 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. wrote 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.

ORIGINAL PETITION IN INTERVENTION - PAGE 3

R017 4.6 After receiving and depositing the check, 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.

4.8 To date, Midwestern Cattle has failed to deliver the 554 head of cattle to

Intervenors. To date, Midwestern Cattle has failed to return the $798,319.08 that lntervenors

paid.

4.9 Midwestern Cattle filed the present lawsuit against Defendants Tony E. Lyon

d/b/a Lyon Fanns, Owen Lyon and Monna Lyon for what it calls a "deplorable scheme" by its

agent to defraud others. 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.

5.0 Conditions Precedent

5.1 With respect to lntervenors' claims, all conditions precedent have been performed

or have occurred. TRCP 54.

6.0 Cause of Action for Violations of the Deceptive Trade Practices Act

6.1 Intervenors incorporate the allegations contained in Section 4 above as if fully set

forth herein.

6.2 Intervenors are consumers as that term is defined under the Texas Deceptive

Trade Practices Act ("DTPA"). See Texas Business & Commerce Code §17.41, et. seq. The

cattle are "goods" as that term is defined under the DTPA. See Texas Business & Commerce

Code §17.41, et. seq. As such, Midwestern Cattle and Lyon Defendants (collectively

ORIGINAL PETITION IN INTERVENTION - PAGE 4

R018 "Defendants") can be sued under the DTP A.

6.3 Through the conduct described above, Defendants committed false, deceptive,

and misleading acts or omissions in violation of§ l 7.46(b) as follows:

• Defendants caused confusion or misunderstanding as to the sources, sponsorship, approval, or certification of goods or services. See TEX. Bus. & COMM. CODE § l 7.46(b )(2);

• Defendants represented that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have. See TEX. Bus. & COMM. CODE § l 7.46(b)( 5);

• Defendants advertised goods or services with intent not to sell them as advertised. See TEX. Bus. & COMM. CODE § l 7.46(b)(9);

• Defendants represented that an agreement conferred rights, remedies or obligations that it did not have or involve. See TEX.Bus. & COMM.CODE §17.46(b)(l2);

• Defendants failed to disclose information concerning goods or services which was known at the time of the transaction and the failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed. See TEX.Bus. & COMM.CODE §!7.46(b)(24)

6.4 Intervenors relied on the false, misleading or deceptive act or practice to their

detriment when Intervenors paid $798,319.08 for 554 head of cattle that were not delivered.

6.5 Defendants also committed an unconscionable course of action prohibited by

TEX.Bus. & COMM.CODE §17.50(a)(3). Defendants acted to Intervenors' detriment by taking

advantage oflntervenors' lack of knowledge and capacity to a grossly unfair degree.

6.6 Defendants' actions were the actual, proximate and producing cause of

Intervenors' damages more fully set forth below.

6.7 Defendants committed this misconduct knowingly and willfully as those terms are

used in TEX.BUS. & COMM.CODE § l 7.50(b)(I).

ORIGINAL PETITION IN INTERVENTION-PAGE 5

R019 7.0 Cause of Action for Breach of Contract

7.1 Intervenors incorporate the allegations contained in Section 4 above as if fully set

7.2 The agreement between Midwestern Cattle and Intervenors to purchase 554 head

of cattle was a contract.

7.3 As set forth above, Midwestern Cattle breached this agreement by failing to

provide the 554 head of cattle after Intervenors made payment.

7.4 This is a breach of contract and has resulted in damages to Intervenors more fully

set forth below.

8.0 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 and aiding and abetting fraud against Defendants. 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, 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.

8.3 Tony E. Lyon d/b/a Lyon Farms, 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.

ORIGINAL PETITION IN INTERVENTION -PAGE 6

R020 8.4 These representations caused injury to lntervenors and were a proximate cause of

damages to lntervenors more fully set forth below.

8.5 Owen Lyon and Monna Lyon knowingly aided and abetted Midwestern Cattle

and Tony E. Lyon d/b/a Lyon Farm's fraud (including fraudulent inducement). As such, Owen

Lyon and Monna Lyon is jointly and severally liable to Intervenors along with Midwestern

Cattle and Tony E. Lyon d/b/a Lyon Farm for the harm resulting from this fraud. To the extent

necessary, Intervenors invoke the doctrine set forth in Restatement (Second) of Torts §876.

8.6 Intervenors are entitled to recover damages more fully set forth below, including

the $798,319.08 paid to Midwestern Cattle.

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 for fraud by non-disclosure.

9.2 Midwestern Cattle and Tony E. Lyon d/b/a Lyon Farm concealed from and failed

to disclose certain material facts to Intervenors that Midwestern Cattle and Tony E. Lyon d/b/a

Lyon Farms had a duty to disclose.

9.3 Midwestern Cattle and Tony E. Lyon d/b/a Lyon Farm knew Intervenors did not

know these facts and did not have an equal opportunity to discover those facts.

9.4 Midwestern Cattle and Tony E. Lyon d/b/a Lyon Farm remained deliberately

silent when they had a duty to speak. By remaining silent, Midwestern Cattle and Tony E. Lyon

d/b/a Lyon Farms intended to induce Intervenors to pay for the 554 head of cattle they never

received.

9.5 Intervenors relied on the non-disclosure of these facts by Midwestern Cattle and

Tony E. Lyon d/b/a Lyon Farms and sustained injury as a result of this non-disclosure.

ORIGINAL PETITION IN INTERVENTION-PAGE 7

R021 9.6 Intervenors are entitled to recover damages, including the $798,319.08 paid for

the 554 head of cattle.

10.0 Cause of Action for Money Had and Received

I 0.1 Intervenors assert claims against Defendants for money had and received.

I 0.2 As set forth above, Intervenors paid $798,351.19, which included a $5,335.10

commission for 554 head of cattle. These funds were received and deposited by Midwestern

Cattle. Defendants never provided the 554 head of cattle.

10.3 As a result, Defendants hold funds that in equity and good conscience belong to

Intervenors, and lntervenors are entitled to recover from Defendants for money had and received.

I 0.4 Intervenors are entitled to damages in the amount of funds had and received by

Defendants that in equity and good conscience belong to Intervenors.

11.0 Damages

11.1 As a result of the acts and omissions set forth above, lntervenors have sustained

actual damages. These damages include direct damages and consequential damages resulting

from Defendants' wrongful conduct.

11.2 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, loss of earning capacity, and

all other losses reasonably flowing from the conduct oflntervenors.

ORIGINAL PETITION IN INTERVENTION - PAGE 8

R022 11.3 Pursuant to DTPA § 17.50, Intervenors are entitled to recover economic damages.

Intervenors are entitled to recover three times the amount of economic damages because

Defendants committed its misconduct knowingly. lntervenors are entitled to injunctive relief,

court costs, reasonable and necessary attorneys' fees and prejudgment interest.

11.4 Intervenors are entitled to recover reasonable and necessary attorney fees pursuant

to Texas Civil Practice & Remedies Code §38.001 and Texas Business & Commerce Code

§ 17.50.

11.5 Intervenors 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.

12.0 Exemplary Damages

12.1 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.

12.2 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 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.

ORIGINAL PETITION IN INTERVENTION - PAGE 9

R023 12.3 Midwestern Cattle is also liable for exemplary damages for the wrongful conduct

of Tony Lyon under Texas Civil Practice & Remedies Code §41.005(c).

13.0 Midwestern Cattle is liable for the wrongful conduct of Tony Lyon

13.1 Midwestern Cattle is liable for the wrongful conduct of Tony Lyon d/b/a Lyon

Farms under the doctrine of agency or apparent authority as a result of Midwestern Cattle

admitting that Tony Lyon d/b/a Lyon Farms was their agent. Specifically, Midwestern Cattle

provided Tony Lyon with a Midwestern Cattle checkbook and signature stamp to conduct

Midwestern Cattle business. Alternatively, Midwestern Cattle is liable for the wrongful conduct

of Tony Lyon d/b/a Lyon Farms under the doctrine of apparent authority because it took

affirmative steps to clothe Tony Lyon d/b/a Lyon Farms with authority to act on its behalf, and

Intervenors relied on those acts in dealing with Tony Lyon d/b/a Lyon Farms as an agent of

13.2 Midwestern Cattle is jointly and severally liable for the damages caused by Tony

Lyon d/b/a Lyon Farms' fraud by misrepresentation (including fraudulent inducement) for aiding

and abetting such conduct as set forth in Section 8 above.

13.3 Midwestern Cattle is jointly and severally liable for the damages caused by Tony

Lyon d/b/a Lyon Farms' fraud by non-disclosure (including fraudulent inducement) for aiding

and abetting such conduct as set forth in Section 9 above.

14.0 Civil Conspiracy

14.1 Intervenors assert that Tony Lyon d/b/a Lyon Farms; Owen Lyon; and Monna

Lyon engaged in a civil conspiracy to defraud Intervenors.

14.2 The members of the conspiracy included Tony Lyon d/b/a Lyon Farms; Owen

Lyon; and Monna Lyon.

ORIGINAL PETITION IN INTERVENTION - PAGE 10

R024 14.3 The object of the conspiracy was to induce Intervenors to pay for cattle that they

would never receive.

14.4 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.

14.5 Intervenors suffered injury and sustained damages based upon this conduct.

15.0 Ratification

15.l Midwestern Cattle is also liable for the acts and omissions of Tony Lyon d/b/a

Lyon Farms under the doctrine of Ratification.

15.2 Tony Lyon d/b/a Lyon Farms was an agent for Midwestern Cattle. lntervenors

entered into a transaction with this agent. Midwestern Cattle Marketing, LLC approved by word,

act or conduct after acquiring full knowledge of the act that gave validity to their acts including

but not limited to allowing Tony Lyon d/b/a Lyon Farms to solicit funds for the 554 head of

cattle and taking a commission for cattle that were never provided to Intervenors.

16.0 Demand for Jury

16.1 Intervenors demand their right to a jury trial afforded by the Texas Constitution

and the United States Constitution and hereby tender the requisite fee to the district clerk.

17.0 Request for Disclosure

17. l Pursuant to TRCP 194, Midwestern Cattle and Lyon Defendants are requested to

disclose, in the time period prescribed by TRCP 194.3, the information or material described in

TRCP I 94.2(a) - (I).

WHEREFORE, lntervenors requests that Midwestern Cattle and Lyon Defendants be

cited to appear and answer, and that on final trial lntervenors have:

ORIGINAL PETITION IN INTERVENTION - PAGE 11

R025 (a) Judgment against Midwestern Cattle Marketing, LLC, Tony E. Lyon d/b/a Lyon Farms, Owen Lyon and Monna Lyon for actual, statutory and compensatory damages in an amount in excess of the minimum jurisdictional limits of the Court for compensatory damages 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) Reasonable and necessary attorney fees as set forth above;

(d) Pre-judgment interest and post-judgment interest at the highest rates allowed by law; and

( e) Costs of suit; and

(f) Such other and further relief to which Intervenors may be justly entitled.

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. Box 957 I 05 N. State Street, Suite B Decatur, Texas 76234 Telephone No. (940) 627-8308 Facsimile No. (940) 627-8092

BY:~/~~t/~~//- ATTORNEYS FOR INTERVENORS

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 1l'f!!:tlay ofNovember, 2015.

ORIGINAL PETITION IN INTERVENTION -PAGE 12

R026 E-Filed for Record 12/18/2015 5:00:41 PM Jack County District Clerk , TX By: Brenda Fuller

MIDWESTERN CATTLE § IN THE DISTRICT COURT OF MARKETING, LLC, § § Plaintiff, § § vs. § § TONY E. LYON d/b/a LYON FARMS, § individually, OWEN LYON, individually, § and MONNA LYON, individually, § JACK COUNTY, TEXAS § Defendants. § § and § § NORTHWEST CATTLE FEEDERS, § L.L.C. and RILEY LIVESTOCK, INC., § § Intervenors. § 271ST JUDICIAL DISTRICT

PLAINTIFF’S MOTION TO STRIKE PETITION IN INTERVENTION, AND ALTERNATIVE MOTION TO SEVER

Plaintiff Midwestern Cattle Marketing, LLC (“Plaintiff”) moves the Court to strike the

Petition in Intervention (the “Intervention”) filed by Northwest Cattle Feeders, LLC and Riley

Livestock, Inc. (collectively, “Intervenors”), and, alternatively, if the Court denies Plaintiff’s

motion to strike, Plaintiff moves the Court to sever Intervenors’ claims into a separately

numbered cause and realign the parties. See TEX. R. CIV. P. 60.

INTRODUCTION

1. This is a suit to recover the proceeds of a fraudulent scheme the Lyon Defendants

perpetrated using the name George Cattle Company. The Intervention does not relate to the

George Cattle Company scheme.

2. The Court should strike the intervention because Intervenors fail to plead a

justiciable interest in the underlying lawsuit that would grant them the right to intervene under

PL.’S MOTION TO STRIKE PET. IN INTERVENTION, ETC. PAGE 1 R027 Rule 60. They do not identify a relationship between Intervenors and the Defendant, any interest

held by Intervenors in the property at issue (i.e., the proceeds from the George Cattle Company

scheme), or that they are entitled to any of the recovery sought by Plaintiff. Instead, the

Intervention discusses a transaction unrelated to George Cattle Company. Put simply,

Intervenors do not have a justiciable interest in this lawsuit and seek to unnecessarily multiply

the issues before the Court without adequate reason or justification.

GROUNDS FOR MOTION

3. Under Rule 60, “Any party may intervene by filing a pleading, subject to being

stricken out by the court for sufficient cause on the motion of any party.” TEX. R. CIV. P. 60.

When a party files a motion to strike an intervention, the intervenor has the burden of proof. In

re Union Carbide Corp., 273 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 this case, 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

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.

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

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

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

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

/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

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:

1.1 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

2.1 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

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.

5.1 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

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

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.

9.1 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

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

9.8 Intervenors are entitled to recover damages more fully set forth below,.

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,

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

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

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 trial court "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 also In 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 is the 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, as set

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, intervention is 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 479671 at *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.

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

1-= !"Tf. =cc M-,--O-E-SC-R-l~-r-10-N-~----~- · Hl:,1.U I C.RO~S NEl Wfi GHT l'l(J( t /CWT AMOUNT COU'IT I WEIG:1T -.---...,------+---- ... - -------+------- -- I St eer~ Snlr1 trom Perrin . TX 55~ 1 167,870 355,613 )224 .50/cwt S i98,3 ~1.l\1 ' 1 heao I 64211 Ave I I I l I I ! lI I

I I i

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t I -· I I t±-_·--·-=----- I -- TOTAL ·- . $798,351.19 --' I

A~ an a'fldavlt 1~ d ~m eat all liv e~tock rt>fercncceations specific :.o the tran~a ct1011 d rtd trunsterrco ~·c of us oro91n (born&. ra1se<1) M1dwe.

Maki> '' "check~ oavallle co Midwestern Cattle Marketing, LLC

Thank you for your business!

R068 Exhibit B

R069 Page 1 of I

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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:;'\i~.....· , ..~ :,. •'!fe. ,,,· ~,· ",,,,~·" f' • ··"•·*~t t'• · · +:..(">f':.···~ ~;..;:;/; • · ;: ·i :·. :i,.~···: ~!:1,.~ -~~ ~··. ·•. • .::,·.~•.'., ~~.;:;!~/: :.~;:';~.: :~.. ,,::-j,,.. > --~:,::· ~;, :1~:s,~:<:...::\ . . ~14:• ~->~i!. ·t(i;i~. .~ ige~ 1- • • ., . ·, .',: ;. 1 •r .., ....: · • 1:"_,.,.-. .: :· ' ':~-~;:--:.·<~7· ·: : ~·-

1 BLK cow SL 8-3 1265 72. soc 917 .13 1 BLK · HFRT FE 195-51 1515 76.00C 1,151.40 1 BLK cow SL 8 1190 8:3.SOC 993.65 1 BLK cow SL 8-3 1450 75.00C 1, 087 . 50 1 BLK HFRT FE 46-9 1320 8b.ooc 1,056.00 1 BLK HFRT FE 225 810 9i. ooc 737.10 1 BLK HFRT FE 195-51 1760 7.7 . ooc 1,355 . 20 1 BLK HFRT FE 46-3 1085 75 . ooc 813.75 1 BLK HFRT SL 195 1065 7'8 . 00C 841. 35 2 BLK cow BR 32-5 1320 2640 1,30,0 . 00H 2,600.00 5 - 6 YR OLD FALL CLVR

Averages: Head Avg-wt Avg- $- cwt Avg-$-hd Bred Cow 2 1320 98.48 1,300.00 Cows 3 1302 76.78 999.43 Hfrettes 6 1259 78.82 992.47

11 14100 $11,553.08

BEEF COUNCIL 11.00 HEALTH 4.18 INSURANCE 16.17 BRAND INSP. 11.00 PREG MO TATT 14.00 PREG TEST · 33.75 HAY 132.00 49 .0 TOTAL DEDUCTIONS

PLEASE KEEP THIS RECEIPT FOR YOUR RECORDS!!!! ! ! 11,0 0. NET PROCEEDS PLEASE DETACH THIS PORTION BEFORE DEPOSITING CHECK

~ 1041 ADAMS BANK & TIIUST CO. OliAUALA, NEBRASKA

DATE CHECK NO. AMOUtlT PAY TO THE ORDER OF Feb 4, 2016 027517 $****11,060 . 02

******************Eleven Thousand Sixty and 02/100 Dollars OGALLALA LIVESTOCK AUCTION MARKET, INC. CUSTODIAL ACCOUNT FOR SHIPPERS' PROCEEDS VOID AFTER 180 DAYS NORTHWEST CATTLE FEEDERS & MIDWESTERN CATTLE MKTG 675 ROAD WEST F SOUTH BRULE, NE 69127 SIGNATURE

NCF000020

R072 ~t:l ILtMt:NI DWAYNE MAYS Owner/Manager Res. 308-284-2069 CARLA DE KAY Office Manager scon VAN WINKLE 308-284-2071 Owner/Manager Res. 308-874-2813 LIVESTOCK AUCTION MARKET, INC. DATE P.O. Box 30 Feb 4, 2016 Ogallala, Ncbro$kll 69153 SELL- NO: 276 027516 308·284-2071 SOLD FOR JEFF COX 221 S JEFFERSON AVE NORTH PLATTE, NE 6910

32 BLK C&C BR 205-8 779 24920 2,375 . 00H 3-6 YR OLD RUNNING BACK WITH ANGUS BU LL 6 BBWF C&C BR 130-1 588 3530 1,675 .00 H 5,025 .00 3 - 6 YR OLD RUNNING BACK WITH BULL 6 BLK C&C BR 205-8 973 5835 l,825.00H 5,475.00 5- SOLID MOUTH RUNNING BACK WITH BULL 2 BLK C&C BR 13 0-9 715 1430 1,100.00H 1,100 .00 5-6 YR OLD RUNNING WITH BULL CALF HAS CROOKED NECK 2 BLK C&C BR 202 660 1320 1,325 . 00H 1,325.00 SOLID MOUTH RUNNING BACK WITH BULL 2 BLK C&C BR 202 613 1225 1,075.00H 1 ,0 75 . 00 3-4 YR OLD RUNNING WITH BULL CALF IS AS IS

Averages: Head Avg-wt Avg - $-cwt Avg-$-hd Cow-cf pr. 25 1530 135.91 2,080.00 so 38260 $52,000.00

BEEF COUNCIL 50.00 HEALTH 19.00 INSURANCE 72.82 BRAND INSP. 50.00 MO TATTOO 125.00 HAY 300 . 00

TOTAL DEDUCTIONS

PLEASE KEEP THIS RECEIPT FOR YOUR RECORDS!!!!!! NET PROCEEDS P~~SE DETACH THIS PORTION BEFORE DEPOSITING CHECK

~

0 1041 ADAMS BANK & TRUST CO. OGALLALA. NEBRASKA Livestock Auction Market, Inc. Custodlel Account For Shippers' Proceeds DATE CHECK NO. AMOUNT PAY TO THE ORDER OF Feb 4, 2016 027516 $****50,208 . 18

*******Fifty Thousand Two Hundred Eight and 18/100 Dollars OGALLALA LIVESTOCK AUCTION MARKET, INC. CUSTODIAL ACCOUNT FOR SHIPPERS' PROCEEDS NORTHWEST CATTLE FEEDERS VOID AFTER 180 DAYS

& MIDWESTERN CATTLE MKTG 675 ROAD WEST F SOUTH BRULE, NE 69127 SIGNATURE

NCF000021

R073 Exhibit D

R074 ~+~ Midwestern Cattle Marketing, LLC P.O. Box 710 JrNVOICIE Sidney, NE 69162 Phone 308.249.0079 Fax 308.254.4731 INVOICE #DEALER·FEEDER CATILE DATE: 3/31/2015

TO: Northwest Cattle Feeders 675 Rd West F South Brute, Ne 69127

PAYMENT IS DUE wrrHIN 24 HOURS OF RECEIPT OF THIS INVOICE omoN #1: WIRE RJNDS omoN #2: FEDEX FUNDS (OVERNIGHT) Points West Community Bank Points West Community Bank 609 nttnols St 809 Illlnols St PO Box 157 PO Box 157 Sidney, NE 69162 Sidney, NE 69162

Midwestern cattle Marketing, LLC Midwestern cattle Marketing, LLC Custodial Account - Dealer Custodial Acmunt - Dealer ABA #104101627 ASA #104101627 Account #10111276 Account #10111276

ITEM DESCRIPTION HEAD GROSS NET WEIGHT PRICE/CWT AMOUNT COUNT WEIGHT

Steers Sold from Perrin, TX 554 362,870 355,613 $224.50/cwt $798,351.19 head 642# Ave.

. ){1 11vr~ TOTAL 1$798,351.19

As an affidavit ts deemed by USDA as an official record of Country of Origin, I attest through first·hand knowledge, normal business records, or producer affldavlt(s) that all livestock referenced by this document or other communications specific to the transaction and transferred are of US origin (born & raised). Midwestem CiUtle Marketing, LLC

Make all checks payable to Midwestern cattle Marketing, LLC

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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

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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 ************************************************************

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

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

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.

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' origin (born~ ra1se

MakP "" c:-irrkc; oavabl~ to Midwestern Cattle Marketmg, LLC

R094 Exhibit B

R095 Page 1 of 1

The Front Image: --- ... -;,,- -111 •.. .!i•UJJCC..... 2284 llAllOOUi-<.N>. RILEY LWESTOCK, SNC. · "'-''tt.D ~~ . .. ~ ICY&.'LV~•l·l AAn(lYOCll\llC):,:to U

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R096 Exhibit C

R097 ~CI I LCIVICI°' I DWAYNE MAYS Owner/Manager Res. 308·284-2069 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 Ogallala, Ncbro&ke 69153 SELL-NO: 279 027517 308-284·2071 SOLD FOR JEFF COX 221 S JEFFERSON AVE NORTH PLATTE, NE 6910 · Def?c~ip_#~~tjp.,,. · H~ad . : . : ..:. ·• ·:··~·· . ~: · • · .: . = '...... ~~*~t\:~:)~.~~~~r1:~::~1~e~t·~~~·::~fi' ?5{.· =~~~r.m.r:;t~?r&~il.i~~• l BLK cow SL 8-3 1265 72.SOC 917 .13 1 BLK ·HFRT FE 195-51 1515 76.00C l, 151.40 l BLK cow SL 8 1190 8:3.SOC 99~.65 1 BLK cow SL 8-3 1450 75.00C 1,087.50 1 BLK HFRT FE 46-9 1320 80.00C 1,056.00 1 BLK HFRT FE 225 810 91. ooc 737.10 l BLK HFRT FE 195-51 1760 77. ooc 1,355.20 l BLK HFRT FE 46-3 1085 75.ooc 813.75 1 BLK HFRT SL 195 1065 7'9.00C 841. 35 2 BLK cow BR 32-5 1320 2640 1,30,0.00H 2,600.00 5-6 YR OLD FALL CLVR

Averages: Head Avg-wt Avg-$-cwt Avg-$-hd Bred Cow 2 1320 98.48 1,300.00 Cows 3 1302 76.78 999.43 Hfrettes 6 1259 78.82 992.47

BEEF COUNCIL 11.00 HEALTH 4.18 INSURANCE 16.17 BRAND INSP. 11. 00 PREG MO TATT 14.00 PREG TEST · 33.75 HAY 132.00

j lOTAL DEDUCTIONS I PLEASE KEEP THIS RECEIPT FOR YOUR RECORDS!!!!!! NET PROCEEDS I PLEASE DETACH THIS PORTION BEFORE DEPOSmNG CHECK

Z!:lm 1041 I AOAUSBANK&TRUSTCO. OGAU.Al.A, NEBRASKA

DATE CHECK NO. AMOUNT PAY TO THE ORDER OF Feb 4, 2016 027517 $****11,060.02 I

******************Eleven Thousand Sixty and 02/100 Dollars OGALLALA LIVESTOCK AUCTION MARKET, INC. I NORTHWEST CATTLE FEEDERS & MIDWESTERN CATTLE MKTG CUSTODIAL ACCOUNT FOR SHIPPERS' PROCEEDS VOID AmR 180 DAYS I 675 ROAD WEST F SOUTH BRULE, NE 69127 SIGNATURE

NCF000020 11• o~?si ? 11• •: • o s.. ~ L 3 ~ sa•: 11• oooo o b b a 11°

R098 t>t: I I LtMt:N I DWAYNE MAYS Owner/Manager Res. 308·284·2069 CARLA DEKAY Office Manager SCOTT VAN WINKLE 308-284-2071 Owner/Manager Res. 308-874-2813 LIVESTOCK AUCTION MARKET, INC. DATE P.O.Box30 Feb '4, 2016 Ogallalo, Ncbr~oka 69153 SELL-NO: 276 027516 308·284-2071 SOLD FOR JEFF COX 221 S JEFFERSON AVE NORTH PLATTE, NE 6910

32 BLK C&C BR 205-8 779 24920 2,375.00H 38,000.00 3-6 YR OLD RUNNING BACK WITH ANGUS BU LL 6 BBWF C&C BR 130-1 588 3530 1,675.00H 5,025.00 3-6 YR OLD RUNNING BACK WITH BULL 6 BLK C&C BR 205-8 973 5835 1,825.00H 5,475.00 5- SOLID MOUTH RUNNING BACK WITH BULL 2 BLK C&C BR 130-9 715 1430 1,100.00H 1,100.00 5-6 YR OLD RUNNING WITH BULL CALF HAS CROOKED NECK 2 BLK C&C BR 202 660 1320 1,325.00H 1,325.00 SOLID MOUTH RUNNING BACK WITH BULL 2 BLK C&C BR 202 613 1225 1,075.00H 1,075.00 3-4 YR OLD RUNNING WITH BULL CALF IS AS IS

Averages: Head Avg-wt Avg-$- cwt Avg-$-hd Cow-cf pr. 25 1530 135.91 2,080.00 so 38260 $52,000.00

BEEF COUNCIL 50.00 HEALTH 19.00 INSURANCE 72.82 BRAND INSP. 50.00 MO TATTOO 125.00 HAY 300.00

PLEASE KEEP THIS RECEIPT FOR YOUR RECORDS!! .. !. NET PROCEEDS PLEAS!! DETACH THIS PORTION DUORE DfPOSrTIHG CHECK

0 1041 ADAMS BANK 6 TRUST CO. OGALLALA. NEBRASKA Livestock Auction Market, Inc. Custodial Account For Shippers' Proceeds DATE CHECK NO. AMOUNT PAY TO THE ORDER OF Feb 4, 2016 027516 $****50,208.18

*******Fifty Thousand Two Hundred Eight and 18/100 Dollars OGALLALA LIVESTOCK AUCTION MARKET, INC. CUSTODIAL ACCOUNT FOR SHIPPERS' PROCEEDS NORTHWEST CATTLE FEEDERS VOID AFTeR 180 DAYS & MIDWESTERN CATTLE MKTG 675 ROAD WEST F SOUTH BRULE, NE 69127 SIGNATURE

R099 Exhibit D

R100 ~+~ Midwestern Cattle Marketing, LLC P.O. Box 710 INVOICE Sidney, NE 69162 Phone 308.249.0079 Fax 308.254.4731 INVOICE #OEALER·FEEDER CATTLE DATE: 3/31/2015 TO: Northwest tattle Feeders 675 Rd West F South Brule, Ne 69127

PAYMENT IS DUE wrrHIN 24 HOURS OF RECEIPT OF THIS INVOICE omoN #1: WIRE AJNDS OPTION #2: FEDEX FUNDS (OVERNIGHT) Points West Community Bank Points West Community Bank 809 nuno1s St 809 IITinols St PO Box 157 PO Box 157 Sidney, NE 69162 Sidney, NE 69162

Midwestern cattle Marketing, LLC Midwestern cattte Marketing, UC Custodial Account- Dealer Custodial Acmunt- Dealer ABA #104101627 ASA #104101627 Account #10111276 Account #10111276

ITTM DESCRIPTION HEAD GROSS NET WEIGHT PRICE/CWT AMOUNT COUNT WEIGKT

Steers Sold from Perrin, TX 554 362.870 355,613 $224.50/cwt $798,351.19 head 642# Ave.

)0 ~l\I ~ ~ TOTAL \$798,351.19

As an affidavit Is deemed by USDA as an official record of Country of Origin, I attest through first-hand knowledge, normal business records, or producer affidavtt(s) that all livestock referenced by this document or other communications speclflc to the transaction and transferred are of US origin (born & ralsed). Midwestem CiJttle Marketing, LLC

Make all checks pay~ble to Midwestern Cattle Marketing, LLC

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Sarvlcea FodEx Priority FedEx Standard FedEx 2Day AMO FedEx 2DaYo FedEx Ezpl'988 Savoro delivery with Ovemlgh\9 Overnight° dateltlme 12:00 Fn Apr 03, 2015 16:30 Fri Apr 03, 2015 16:30 Mon Apr 06, 12:00 ThuApr02. 2015 16:30 Thu ~r02. 2015 2015

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R105