### UNITED STATES DISTRICT COURT FORTHE DISTRICTOFCOLUMBIA

In re Federal National Mortgage Association Securities, Derivative, and "ERISA" Litigation Federal Housing FinanceAgency as Conservatorfor the Federal National MortgageAssociation v. Raines, etal.



### Middleton

### ~ MDLNo. 1668

Civil Case No. 07-1221 (RJL)

MEMORANDUM OPINION (JulyZ2, 2010) [# 14, 15, 18,58,61] This case is a desperate attemptto overcome the Court's earlier decision, which has since been affirmed by our Circuit Court, to dismiss a consolidated shareholder derivative action against various former and then-current officials ofthe Federal National Mortgage Association ("Fannie Mae") onthe ground that the shareholderplaintiffs lacked standing to bring a derivative suitbecause they failed to make the requisite demand on Fannie Mae's board ofdirectors pursuantto Federal Rule ofCivil Procedure 23.1. While the Court's decision in the consolidated action was on appeal, plaintiffArthurMiddleton brought his own derivative suitraising essentially the same allegations. Fannie Mae, as the nominal defendant,joinedby FranklinD. Raines and J. Timothy Howard (together, "theindividual defendants"), moved to dismiss Middleton's complaint for failure to make

a demand on Fannie Mae's board. Since these motions were filed, the Courthas replaced Middleton as the derivative shareholderplaintiffwith the Federal Housing Finance Agency ("FHFA"), the statutory conservator ofFannie Mae. FHFAinitially adoptedMiddleton'sresponse to the motions to dismiss buthas since moved to voluntarily dismiss the case withoutprejudice. Not surprisingly, the individual defendants opposed FHFA'sMotion for Approval ofVoluntary Dismissal and have moved to dismiss the case withprejudice for failure to prosecute. Having considered the parties' arguments, the Court finds that the individual defendants would sufferprejudice ifthe Court were to grant FHFA's motion now that the individual defendants havejustifiablyrelied on Fannie Mae's fully briefed Motion to Dismiss, which, ifgranted, would completely dispose ofthe claims against them. Accordingly, FHFA's Motion for Approval ofVoluntary Dismissal without Prejudice is DENIED. At the same time, the individual defendants' Motion to Dismiss with Prejudice for Failure to Prosecute is also DENIED because they have failed to show that FHFA's conduct is sufficiently egregious to warrant such a harsh remedy. Finally, regarding Fannie Mae'spending Motion to Dismiss, the Court concludes thatplaintiffMiddleton failed to make the demand required by Rule 23.1, and as a result, he lacks standing to bring this suit. The Court further concludes that Middleton's reliance on an earlier demand made by a shareholderplaintiffin arelated case does not suffice to confer standing on Middleton. Hence, Fannie Mae's Motion to Dismiss, which wasjoinedby the individual defendants, is GRANTED.

2BACKGROUND] The facts ofthis case arise from allegations that Fannie Mae engaged in improper accounting practices. These allegations are exhaustively explained in my previous opinions. See, e.g., In re Fannie Mae DerivativeLitig., 503 F. Supp. 2d 9, 11-14 (D.D.C. 2007). Beginning in September 2004, ten plaintiffs commenced shareholder derivative actions against former and then-current officers and directors ofFannie Mae. 

### Id. at 13 & n.3. Various parties promptly moved to consolidate these actions. One ofthe shareholder plaintiffs was James Kellmer. Although he did not oppose consolidation, he did oppose filing a consolidated complaint, and he soughtto have his counsel appointed as one ofthe co-lead counsel. (PI. Kellmer's Formal Position [Civ. No. 05-37, Okt. 

### # 7] at 10, 5,4). He argued that itwas necessary to distinguish his derivative suit, the only one in which a shareholdermade a demand on Fannie Mae'sboard ofdirectors, from the other derivative

]The following recitation offacts includes information obtained from pleadings and court orders in a different, butrelated, case. The Court, ofcourse, maytakejudicial notice ofpublic records like docket sheets and other court documents. See, e.g., Mangiajico v. Blumenthal, 471 F.3d 391,398 (2d Cir. 2006) (noting that "docket sheets are public records ofwhich the court couldtakejudicial notice"). Even though only motions to dismiss are presently before the Court, the Court's use ofinformation from the related case is not improper because the complaint incorporates and relies upon the demand made in that case to establish Middleton's standing to bring suit in this case. See id. (holding that a district court'sreliance on a docket sheet from a different case was not erroneous because (I) docket sheets are public records ofwhich the court can take judicial notice, and (2) the complaint incorporated pleadings that were referenced on the docket sheet). 3suits, where the shareholders declined to make such a demand on the theory that doing so would have been futile. (ld. at 4). In February 2005, the Court granted the motions to consolidate and appointed Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust and Wayne County Employees' Retirement System as co-lead plaintiffs. (Feb. 14,2005 Mem. Op. and Order [Civ. No. 05-37, Dkt. #25J at 3-4). The Court explicitly addressed Kellmer's argument that "demand made" and "demand futile" cases should not be consolidated into one action but decided nevertheless "thatthis distinction is insufficient to necessitate separate actions at this point in the litigation." (ld. at 4-5). As aresult, the Court entered Pretrial OrderNo.1, which consolidated the shareholder derivative actions "forall purposes through finaljudgment." (Pretrial OrderNo.1 [Civ. No.05-37, Dkt. #26J at 4). The Court also directed that the dockets for the individual cases be closed, (id.), and that the co-lead plaintiffs file a consolidated complaint that would "supersede all existing complaints filed in this action," (id. at 7). Pursuant to the Court's Order, the co-lead plaintiffs filed an initial consolidated complaint in September 2005, which they later amended in September 2006. The Amended Complaint asserts two types ofclaims: (l) "breach offiduciary duties and gross mismanagement arising out ofthe company's misapplication ofFAS 91 and 133 (,accounting-related claims')"; and (2) "claims for corporate waste and unjust enrichment relating to the Board's approval ofcertain executives' compensation

4('compensation-related claims')." In re Fannie Mae DerivativeLitig., 503 F. Supp. 2d at 13-14. The co-leadplaintiffs abandoned Kellmer's demand-made theory and instead proceeded on atheory that it would have been futile to make a successful demand on Fannie Mae's board. The defendants moved to dismiss the consolidated complaint claiming, among otherthings, thatthe co-leadplaintiffs failed to allege sufficient facts to establish futility. Ultimately, on May 31, 2007, I dismissed the consolidated derivative complaint because the plaintiffs failed "to make the requisite Rule 23.1 demand upon the Board of Directors ofFannie Mae priorto filing this derivative suit." Id. at 14. Among the cases that I dismissed as part ofthe consolidated action was Kellmer's. The co-lead plaintiffs promptly appealed. While that appeal was pending, plaintiffArthur Middletonbroughtthis case, raising essentiallythe same claims as in the consolidated derivative action. (See Compl. [Civ. No. 07-1221, Dkt. #1]). Middleton makes no allegation in his Complaint that he personally made a demand on Fannie Mae's board pursuantto Rule 23.1 orthat making such a demand would have been futile. The only reference to a demand made on Fannie Mae'sboard is a shareholder demand dated September 24,2004. (ld.**~~** 13, 51). That demand-the only one made by any ofthe derivative plaintiffs-was made by plaintiff Kellmer, whose claims were dismissed in the consolidated action. A few months later, in October 2007, Fannie Mae, as the nominal defendant, moved to dismiss Middleton's

5Complaint on the groundthat he lacked standing to bringthe derivative action because he failed to satisfy the requirements for making a demand under Rule 23.1. Fannie Mae also argued that Middleton could not "piggyback" on a demand already made by another shareholder. The individual defendantsjoinedFannie Mae's Motion to Dismiss. Subsequent developments in the case arising from FHFA's appointment as Fannie Mae's conservator have now raised questions about whetherthis Court should still decide the Motion to Dismiss. On September 8, 2008, months after our Circuit Court upheld my decision to dismiss the consolidated derivative action, Fannie Mae, with FHFA's authorization, moved to stay all cases related to the Fannie Mae multi-district litigation. (Mot. for Stay ofAll Proceedings [Civ. No. 07-1221, Dkt. #36]). I approved the stay for 45 days. (Order Granting Stay ofAll Proceedings [Civ. No. 07-1221, Dkt. #41]). On January 22,2009, I granted FHFA'sMotion to Intervene as Conservator for Fannie Mae. (Minute Order entered in Civ. No. 07-1221 on Jan. 22, 2009). Several months later, on June 25, I granted FHFA's motion to substitute itselffor Middleton and ordered FHFA to notify the Court ofits position on the defendants' pending Motion to Dismiss. (Mem. Order [Civ. No. 07-1221, Dkt. #51] at 6-7). FHFA did so on July 27,2009, announcing "forthe present"that it would "adopt[]"the pleadings filed in opposition by Middleton. (Status Report on the Mots. to Dismiss in Middleton and Kellmer's Shareholder Derivative Compls. [Civ. No. 07-1221, Dkt. #56] at 2). FHFA soon altered course. Claimingthat it needed more time to decide whetherprosecutingMiddleton's derivative

6action would advance the statutory purpose ofthe conservatorshipto preserve and protect Fannie Mae's assets, FHFA moved on September25 to dismiss the case withoutprejudice underFederal Rules 23.1(c) and 41(a).2 Alternatively, FHFArequested a 180-day stay. In response, the individual defendants moved to dismiss withprejudice underRule 41 (b)

on the ground that FHFA has failed to prosecute the lawsuit diligently. DISCUSSION I. Individual Defendants' Motion For Involuntary Dismissal With Prejudice Because the individual defendants' motion for involuntary dismissal could dispose ofthe case on the merits without actually requiring the Courtto address the merits ofthe case, it makes sense to resolve this motion first. Rule 41(b) provides for involuntary dismissal ifthe plaintiff"fails to prosecute" its case. Fed. R. Civ. P. 41(b). Typically, dismissal is without prejUdice. UnderLocal Civil Rule 83.23, "[a]n order dismissing a claim for failure to prosecute shall specifythatthe dismissal is withoutprejudice, unless the Court determines that the delay in prosecution ofthe claim has resulted in prejudice to

an opposingparty." LCvR 83.23 (emphasis added). Thus, whetherthe Court should dismiss the case with prejudice depends on whetherthe defendants can showthat FHFA "has not manifested reasonable diligence in pursuing the cause,"Bomate v. FordMotor

2This case is one offour shareholder derivative actions still pending before this Court as part ofthe Fannie Mae multi-district litigation. The other cases were originally captioned as Kellmer v. Raines (Civ. No. 07-1173),Arthurv. Mudd(Civ. No. 07-2130), andAgnes v. Raines (Civ. No. 08-1093). FHFA seeks to dismiss each ofthese cases withoutprejudice. 7Co., 761 F.2d 713, 714 (D.C. Cir. 1985), and thatthe resulting delay has caused them prejudice. The individual defendants have not shown to the Court's satisfaction that FHFA has failed to exercise sufficient diligence in prosecuting Middleton's derivative claims. FHFA did not formally replace the original derivative plaintiffuntil as late as June 2009, and since then, its conduct has not been so "dilatory or contumacious" as tojustifY the stiffpenalty ofdismissal with prejudice. See BristolPetroleum Corp. v. Harris, 901 F.2d 165, 167 (D.C. Cir. 1990). For instance, FHFAhas responded to all ofthe Court's orders in a timely and reasonable fashion. Itcertainly has not disobeyed any Court order. Furthermore, FHFA's Motion for Approval ofVoluntary Dismissal comes less than a

mere three months after FHFA officiallyreplaced the original plaintiffand well before the eve oftrial. The real issue, therefore, is not whetherFHFA's conductuntil now has been egregiously dilatory (it has not) butwhetherFHFA's decision to dismiss its claims with the option ofbringing them again in the future is itselfso dilatory as to warrant dismissal with prejudice. The individual defendants contend that in moving for voluntary dismissal FHFA has stubbornly refused to announce whether ornot it intends to proceed with Middleton's derivative action and that this intentional delayjustifies involuntary dismissal with prejudice. Itgoes without saying that a decision to move for voluntary dismissal cannot-by itself-be abasis for granting involuntary dismissal. Were that so, then

8voluntary dismissal under Rule 41(a)(2) would be a nullity. The questionthen is whether FHFA's motion to dismiss without prejudice is an unwarranted deferral ofa decision that this Court has required FHFAto make. Ifso, then the Court may properly deem FHFA's motion as an obstinate refusal to prosecute and thereby dismiss the case with prejudice. Although I directed FHFA to submit a status report stating its position on the defendants' pendingMotion to Dismiss, I never gave FHFA the choice to proceedwith Middleton's derivative claims or face the prospect ofinvoluntary dismissal with prejudice. Itwould "upset[] notions offundamental fairness" for this Court, "in response to [FHFA's] request for dismissal withoutprejudice,"to dismiss the case with prejudice, "while failing to give [FHFA] notice ofits inclination to impose this extreme remedy." Andes v. Versant Corp., 788 F.2d 1033, 1037 (4th Cir. 1986). Having never warned FHFA that arefusal to pursue Middleton's claims in this litigation could result in dismissal on the merits, the Court will not grant the individual defendants' Motion for Dismissal with Prejudice under Rule 41(b). II. FHFA's Motion For Voluntary Dismissal Without Prejudice Whether the Court should grant the individual defendants' motion for involuntary dismissal is, however, a separate question from whetherthe Court should grant FHFA's motion for voluntary dismissal. Denyingthe former does not mean thatthe Court should grant the latter. Underthe Federal Rules, a derivative action may be "voluntarily dismissed

... only with the court's approval." Fed. R. Civ. P. 23.l(c). Voluntary

9dismissal by court order is withoutprejudice unless the court states otherwise. Fed. R. Civ. P. 41(a)(2). Before granting a motion for voluntary dismissal, the Court must satisfy itselfofthe following: (l)thatthe motion is sought in good faith, and (2) that the defendants will not suffer "legal prejudice" ifthe case is dismissed. In re Vitamins AntitrustLitig., 198 F.R.D. 296, 304 (D.D.C. 2000). "Legal prejudice" is determined by considering four factors: (l)the defendants' effort and expense in preparation for trial; (2) excessive delay or lack ofdiligence on the plaintiffs' part in prosecuting the action; (3) the adequacy ofthe plaintiffs' explanation for voluntary dismissal; and (4) the stage of the litigation at the time the motion to dismiss is made. Id. at 304. Voluntary dismissal is generally "granted in the federal courts unless the defendant would sufferprejudice other than the prospect ofa second lawsuit or some tactical disadvantage." Conafayv. Wyeth Labs., 793 F.2d 350,353 (D.C. Cir. 1986). Notwithstanding that courts typically grant voluntary dismissal, FHFA has not convinced this Court that its motion isjustified at thisjuncture. Even though the Court has no reason to believe that FHFA is acting in bad faith, it has plenty ofreason to believe that the individual defendants will suffer legal prejudice ifthe Court grants FHFA's Motion for Approval ofVoluntary Dismissal without first resolving the defendants' dispositive Motion to Dismiss, which had been pending for nearly two years before FHFA filed its motion. To be sure, the defendants' efforts preparing for trial do not support a finding oflegal prejudice because the trial preparations made in this case (if

10any) can likely be used in other cases that are part ofthe Fannie Maemulti-district litigation. Furthermore, the Courthas already determined that FHFA is far from delinquent in prosecuting the claims that it inherited from Middleton. Notwithstanding that the first two ofthe four factors for determining legal prejudice weigh in favor of FHFA's motion, I find nonetheless that FHFA's explanation for seeking voluntary dismissal, coupled with the fact that the defendants had already filed a dispositive motion in this case, is enough to tip the balance against FHFA. Before addressing the merits ofFHFA's explanation for requesting voluntary dismissal, however, the Courtwill first address FHFA's claim that it is entitled to prevail

on its motion because the Housing and Economic Recovery Act of2008 ("HERA"), 12 U.S.C. §§ 4501 

### etseq., precludesjudicialreview ofFHFA's chosen course ofaction. FHFA contends that, as Fannie Mae's conservator, it is vested with the sole authority under HERAto protect and preserve the assets ofFannie Mae and that its decision to seek voluntary dismissal is the best means for accomplishing that end. Furthermore, according to FHFA, its decision is notjudiciallyreviewable by virtue ofa provision in HERA that specificallyprovides: "[N]o court may take any action to restrain or affect the exercise of powers or functions ofthe Agency as a conservator." 12 U.S.C. §4617(f). FHFA construes this provision much too broadly. A careful reading reveals that the Court is barred only from interferingwith the powers or functions ofFHFA "as a conservator." That means that the Court cannot affect FHFA'spower and authority to

11manage Fannie Mae orto act on its behalf. Itdoes not mean, however, thatthe Court is barred from treating FHFAthe same as any other litigant when FHFA invokes the Court's authority. Nothing in the language ofSection 4617([)purports to suspend the operation ofthe Federal Rules as applied to FHFA. Nordoes any language in thatprovision entitle FHFA to different treatment as a litigant than Fannie Mae or its shareholders would have received had FHFA not been appointed Fannie Mae's conservator. Thus, in the absence ofa convincingbasis for casting aside the usual standards governing motions for voluntary dismissal underRule 41(a)(2), Iwill not simply rubber stamp FHFA'smotion. BecauseFHF A is subject to the same rules as any otherplaintiffseeking voluntary dismissal, the Court must and will scrutinize the merits ofFHFA'srequest as it would any other. FHFA claims that dismissal withoutprejudice "is necessary to allow for the Conservator to thoroughly and effectively evaluate whether continued prosecution ofthe claims would further the statutory purpose ofthe conservatorship to preserve and protect these assets." (FHFA'sMem. in Support ofMot. for Approval ofVoluntary Dismissal without Prejudice [Civ. No. 07-1221, Dkt. #58] at 2). In light ofCongress's decision to extend the statute oflimitations as long as three years for tort claims and sixyears for contract claims from the date ofthe conservator's appointment, see 12 U.S.C. § 4617(b)(12), FHFA's explanation for withdrawing Middleton's derivative claims is not wholly unreasonable. Indeed, by extending the limitations period, Congress seems to have contemplated that FHFA might need more time to decide whether and howto pursue

12any claims it inherited as Fannie Mae'snewly-appointed conservator. That alone, however, is not particularly compelling. As the regulatory body that oversees Fannie Mae, FHFA and its predecessorthe Office ofFederal Housing Enterprise Oversight are already quite familiar with the facts underlying Middleton's derivative claims. Moreover, even though FHFA did not substitute itselffor Middleton until three months before it moved for voluntary dismissal, it intervened as Fannie Mae's conservator a full five months earlier. Thus, FHFA was a party in the case for eight months before it moved to dismiss withoutprejudice. Given that FHFA had at least eight months to contemplatehow this case should proceed, the Court is not particularly persuaded by FHFA'srequest for more time. In addition to FHFA's less-than-compelling explanation for seeking non-suit, its decision to move for voluntary dismissal nearly two years afterthe defendants had filed their dispositive Motion to Dismiss also weighs against granting dismissal without prejudice. One factor that courts have recognized as apotential basis for denying a motion for voluntary dismissal underRule 41(a)(2) is the existence ofan already-pending motion for summaryjudgment. See, e.g., Pace v. 

### S. Express Co., 409 F.2d 331,334 (7th Cir. 1969); Conafay, 793 F.2d at 352. I see little reason not to extend that rule to a defendant's fully briefed motion to dismiss, so long as that motion is alreadypending and would actually dispose ofthe case on the merits. Indeed, defendants have a reasonable expectation that when they file a motion that could resolve the case against

13them-whetherit be for dismissal or for summaryjudgment-thecourts will address it. As such, allowing plaintiffs to move successfully for voluntary dismissal afterthe defendants' motion had become ripe would deprive the defendants oftheirreasonable expectation in aresolution oftheirpending motion. Thus, to grant FHFA'sMotion for Approval ofVoluntary Dismissal, which FHFA had filed nearly two years afterthe defendants' pendingMotion to Dismiss, would be prejudicial to the individual defendants. Voluntary dismissal in favor ofFHFAunder Rule 41(a)(2) is, therefore, not appropriate at this time. III. Defendants' Motion To Dismiss Having disposed ofthe parties' dueling motions for dismissal underRule 41, Itum to Fannie Mae's long-pending Motion to Dismiss for lack ofstanding, which has been joinedby the individual defendants. 3 The defendants make the rather straightforward argument that Middleton has no standing to prosecute this derivative action because he failed to make a demand on Fannie Mae's board ofdirectors oreven to allege that doing

so would have been futile. Under Rule 23.1, a shareholderplaintiffmust "statewith particularity: (A) any effortby the plaintiffto obtain the desired action from the directors

3 Even though FHFA, as Fannie Mae's conservator, has taken Middleton's place as the shareholder derivative plaintiff, the Court will treat Middleton's pleadings as adopted by FHFA. Nowthatthe Courthas rejected FHFA'sMotion for Approval ofVoluntary Dismissal, the Courtrelies on FHFA's earlier representation that it would adopt Middleton's pleadings. (See Status Report on the Mots. to Dismiss in Middleton and Kellmer's ShareholderDerivative Compls. [Civ. No. 07-1221, Dkt. #56] at 2). 14or comparable authority and, ifnecessary, from the shareholders or members; and (B) the

reasons for not obtaining the action or not making the effort." Fed. R. Civ. P. 23.1(b)(3). 

### It is apparent from areview ofthe pleadings, and Middleton himselfdoes not dispute, that he neither made a demand on FannieMae'sboard nor alleged in his Complaint that making such a demand would have been hopeless. Instead, he claims that the demand made by Kellmer in August 2004 was sufficient to give him standing to bring the same derivative claims. He relies on Mullins v. De Soto Sec. Co., an old federal case out ofLouisiana, for the proposition that "the necessity ofdemand" by additional shareholderplaintiffs "is an unnecessary requirement to impose" on them "inthe face of the full demand by the original plaintiffand the unqualified refusal ofthis demand for redress by the officers ofthe corporation." 3 F.R.D. 432, 435 (W.D. La. 1944). In short, Middleton contends that aprior demand by one shareholderplaintiffcan establish standing for another shareholderplaintiffto bring the same claims. In otherwords, Rule 23.1 does not require that the requisite demand be made by the plaintiffwho ultimately brings the litigation on behalfofthe corporation. The courts "have made clear," says Middleton, "that 'the identity ofthe specific representative shareholderplaintiffis not a paramount concern' because 'the corporation is always the real party in interest' in derivative suits." (PI. Opp'nto Mot. to Dismiss [Civ. No. 07-1221, Dkt. #22] at 3 (quotingIn re MAXXAM, Inc.!FederatedDerivative S'holderLitig., 698 A.2d 949,956 (Del. Ch. 1996)). I disagree.

15When the co-lead plaintiffs in the consolidated action abandoned Kellmer's (and by inference Middleton's) demand-made theory and that case was dismissed as a result, the corporation as the real party in interest lost the benefit ofwhatever demand Kellmer made. By failing to assert Kellmer's demand, even though they had the opportunity to do so, the co-lead plaintiffs in the consolidated action waived any argument that a demand hadbeen made on Fannie Mae'sboard, and the Courtrenderedjudgment against Kellmer and all other shareholderplaintiffs on that basis. In effect, therefore, the Court already adjudicated Kellmer's demand-made claims. Unfortunately for Middleton, he cannot revive them now. Furthermore, the Court is unpersuaded by Middleton's argumentthat Kellmer's demand was sufficient to putFannie Mae's board on ongoing notice that the shareholders wanted the board to take action. The board no longer had any reason to act on Kellmer's demand because the claims for which his demand was made had been dismissed by the time that Middleton filed his action. IfMiddleton wanted to bring his own claims, then he should have made his own demand on Fannie Mae's board.4

4 Middleton's much belated attempt to make a demand on Fannie Mae'sboard after Fannie Mae had already filed its Motion to Dismiss for lack ofstanding is utterly without merit. "Rule 23.1 specifically calls upon the complaintto showthat demand was made orwas properly excused; there is no provision for thereafterremedying an omission in the same suit, especially afterthe defendants have moved to dismiss because ofthe absence ofademand." Grossman v. Johnson, 674 F.2d 115, 125 (IstCir. 1982). 16In sum, the facts ofthis case are entirely different from Mullins where the court allowed certain shareholder plaintiffs to intervene in an ongoing derivative case even though they themselves had not made a formal demand on the company's board. The Mullins court found thatthe demand made by the original plaintiffin the action was sufficient to confer standing on the intervenor shareholderplaintiffs. Unlike Middleton's case, however, the claims ofthe original plaintiffand the demand upon which the plaintiffasserted standing to bring those claims had notyetbeen adjudicated. The intervenors were thus relying on a demand that was still very much alive. That is not so in Middleton's case. Kellmer's demand is dead, and Middleton's craven attemptto resuscitate it has no basis in law. Therefore, Middleton cannot rely on Kellmer's demand

as a basis for establishing his right to bring on behalfofthe corporation the same claims thatthe Court dismissed in the consolidated action. Accordingly, this case must be dismissed.

17CONCLUSION For all ofthe foregoing reasons, the individual defendants' Motion to Dismiss with Prejudice for Failure to Prosecute and FHFA's Motion for Approval ofVoluntary Dismissal without Prejudice are both DENIED. Fannie Mae'sMotion to Dismiss for lack ofstanding,joined 

### by the individual defendants, is GRANTED. An appropriate Order consistent with this ruling is attached.

18