The Southern District of Illinois has dealt another blow to municipalities seeking to recover damages against Mortgage Electronic Registration Systems, Inc. (MERS) for failing to record mortgage assignments and pay the accompanying fees. In Union County v. MERSCORP, Inc., --F.Supp.2d-- (S.D. Ill. Jan. 30, 2013), the U.S. District Court for the Southern District of Illinois, interpreting Illinois law, dismissed a putative class action filed by Union County for failing to record assignments and to pay the required recording fees for those assignments. Judge Patrick Murphy dismissed the action holding that, under Illinois law, “there is no mandatory duty to record.” This ruling is another victory affirming MERS’s business model.
In its four-count complaint filed on behalf of all counties in Illinois, Union County alleged that MERS and the other defendant banks engaged in a civil conspiracy, violated Illinois’s Consumer Fraud and Deceptive Business Act, and were unjustly enriched by failing to record assignments and pay applicable county recording fees in Illinois’s recording statute, 765 ILCS 5/28. Union County sought, among other things, a declaratory judgment requiring MERS and the other bank defendants to record and pay the recording fees for every mortgage assignment in Illinois. The Court dismissed Union County’s claims, holding that “by the plain meaning of 765 ILCS 5/28, there is no mandatory duty to record here and Plaintiffs’ complaint fails to state any claim upon which relief may be granted.” The Court reasoned that the requirement to record “is not a duty, the dereliction of which exposes the mortgagee or mortgagor to civil penalties.”
This ruling marks the sixth state where MERS has obtained dismissal of a recording fee suit: The other states are: Missouri (Jackson County v. Merscorp, No. 12-cv-00665 (W.D. Mo. Jan. 14, 2013)); Iowa (Plymouth County, Iowa v. MERSCORP, No. 12-4022 (N.D. Iowa, August 21, 2012)), Florida (Fuller v. MERS, No. 11cv-1153 (M.D. Fla., June 27, 2012)); Arkansas (Brown v. MERS, No. 11-cv-06070 (W.D. Ark., September 17, 2012)); and Kentucky (Christian County Clerk v. MERS, No. 11-cv-00072 (W.D. Ky., February 21, 2012)). In each of these cases, the courts also held that the municipal plaintiffs had failed to state a claim because the laws in those jurisdictions did not require MERS to record assignments of mortgage.