Brown v. Mortgage Electronic Registration System, Inc.
2012 U.S. Dist. LEXIS 161496
W.D. Ark.2012Background
- Plaintiff is Hot Spring County Circuit Clerk suing in official and individual capacity on behalf of Arkansas circuit clerks; alleges MERS deprives counties of recording fees; claims under ADTPA, unjust enrichment, and illegal exaction; suit filed Aug. 15, 2011 in state court and removed to federal court; jurisdictional basis for illegal-exaction under CAFA due to potential damages and class size; MERS designates itself as mortgage beneficiary to avoid rerecording; Defendants allegedly fail to record or to record truthfully; Defendants move to dismiss (ECF No. 103) which the court grants; Plaintiff amended complaints did not alter the essential claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Illegal-exaction claim viability | Plaintiff seeks relief for illegal exaction by private entities | Claim fails because plaintiff, as tax receiver, cannot sue; governments must be the target | Claim dismissed with prejudice |
| Duty to record mortgages under Arkansas law | Arkansas law requires recording to preserve notice | No duty to record exists; recording optional for enforceability | No duty to record found; ADTPA/Unjust enrichment dismissals hinge on this |
| Third-party beneficiary/contractual duty to record | Contracts between defendants create a duty enforceable by plaintiff | Plaintiff lacks clear evidence of intended third-party benefit | Plaintiff not a third-party beneficiary; cannot enforce recording duty |
| ADTPA and unjust enrichment claims | Claims stem from alleged duty to record and truthfully disclose | No duty to record or truthfully disclose exists; lack of standing | Claims dismissed due to lack of duty to record and standing |
Key Cases Cited
- Bryan v. Easton Tire Co., 262 Ark. 731 (Ark. 1978) (recording statute does not require assignments to be recorded; recording provides notice to later purchasers)
- Elsner v. Farmers Ins. Group, 364 Ark. 393 (Ark. 2005) (third-party-beneficiary contract requires clear intention to benefit the third party)
- McGhee v. Ark. Bd. of Collection Agencies, 360 Ark. 363 (Ark. 2005) (illegal-exaction action brought for taxpayers; benefit to all taxpayers)
- Worth v. City of Rogers, 351 Ark. 183 (Ark. 2002) (illegal-exaction framework; focus on governmental violation of Ark. Const. Art. XIII, §13)
- Dempsey v. Merchants Nat’l Bank, 292 Ark. 207 (Ark. 1987) (untruthful recording harms consequences borne by bank error; parties responsible)