968 F. Supp. 2d 959
C.D. Ill.2013Background
- Macon County and Mary Eaton (Recorder) filed a putative class action against MERS, Merscorp, MERS members, and related entities alleging unjust enrichment, civil conspiracy, declaratory and injunctive relief based on MERS’ practice of recording initial mortgages naming MERS as nominee and not recording intermediate assignments.
- Plaintiffs alleged counties lost recording fees and the county land records became inaccurate because intermediate transfers among MERS members were not recorded.
- Defendants removed the case to federal court on diversity grounds and moved to dismiss the amended complaint.
- The Magistrate Judge recommended dismissal for failure to state a claim; the District Judge accepted the recommendation and granted the motion to dismiss.
- The court concluded the Illinois recording statute (765 ILCS 5/28) does not impose a blanket duty to record intermediate assignments and that Plaintiffs did not allege benefits were conferred on Defendants at Plaintiffs’ expense or that retention of benefits was wrongful.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue | County lost fees and has inaccurate land records so it suffered concrete injury | Defendants challenged Article III standing | County’s allegations of lost fees and inaccurate records sufficed for Article III standing |
| Whether unjust enrichment claim is viable absent a duty to record | Unjust enrichment can be pled independently; MERS profited by avoiding recording fees and retaining priority | No duty to record; counties didn’t confer a benefit; thus no unjust enrichment | Dismissed: plaintiffs failed to show benefit was conferred at county’s expense or that retention was unjust |
| Whether Illinois law mandates recording of assignments (statutory duty) | Plaintiffs initially argued recording was encouraged (amended to that effect) but relied on duty theory in substance | Defendants: statute and case law do not mandate recording of assignments | Court: 765 ILCS 5/28 does not impose a mandatory duty to record intermediate assignments; prior Illinois cases support voluntariness of recording |
| Derivative claims (civil conspiracy; declaratory & injunctive relief) | These flow from unjust enrichment and seek correction/recording of chains of title | Without viable unjust enrichment claim, derivative causes fail | Dismissed: conspiracy and equitable claims fail because underlying unjust enrichment claim fails |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Sup. Ct. 1992) (standing elements)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (Sup. Ct. 1998) (distinguishing jurisdictional defects from merits)
- Oneida Indian Nation of N.Y. v. County of Oneida, 414 U.S. 661 (Sup. Ct. 1974) (insubstantial federal claims)
- Brooks v. Ross, 578 F.3d 574 (7th Cir. 2009) (notice-pleading / plausibility framework)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (plausibility and rejection of legal conclusions)
- TRW Title Ins. Co. v. Sec. Union Title Ins. Co., 153 F.3d 822 (7th Cir. 1998) (elements of unjust enrichment under Illinois law)
- HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill.2d 145 (Ill. 1989) (unjust enrichment standard under Illinois law)
- Field v. Ridgely, 116 Ill. 424 (Ill. 1886) (recording mortgages not required at any particular time)
- Haas v. Sternbach, 156 Ill. 44 (Ill. 1894) (recording serves to protect against subsequent purchasers without notice)