In yet another blow to local municipalities seeking to recover damages against Mortgage Electronic Registration Systems, Inc. (MERS) for failing to record mortgage assignments and pay the accompanying fees, the U.S. District Court for the Western District of Missouri dismissed an $8 billion putative class action suit filed by Jackson County, Missouri. U.S. District Senior Judge Ortrie D. Smith of the U.S. District Court for the Western District of Missouri, Western Division, ruled that Jackson County's complaint failed to state a claim because “there is no duty to record assignments under Missouri law.”
In its five-count complaint filed on behalf of all Missouri counties, Jackson County alleged that MERS had been unjustly enriched by failing to record assignments of deeds of trust and paying applicable county recording fees. MERS sought dismissal asserting that (1) Jackson County lacked standing; (2) there was no private right of action in Plaintiff’s favor; (3) there was no duty under Missouri law to record deed of trust assignments; and (4) the complaint failed to state claims upon which relief could be granted. While the Court agreed with Jackson County that it had standing and a private right of action, the Court dismissed its claims explaining “Plaintiff’s unjust enrichment claim is premised on the notion that Defendants acted improperly by not recording assignments after initial deeds of trust were recorded; therefore, Plaintiff’s unjust enrichment claim necessarily is rooted in a duty to record,” which MERS was not required to do under Missouri law. The Court also dismissed Jackson County’s unjust enrichment claim because Jackson County did not actually “confer a benefit onto defendant either, directly or indirectly.”
This case marks the fifth state where MERS has obtained dismissal of a recording fee suit. This other states are 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. Stay tuned to the CFPB-lawblog as we continue to monitor developments regarding these and similar lawsuits.