Montgomery County v. MERSCORP, Inc.
904 F. Supp. 2d 436
E.D. Pa.2012Background
- Plaintiff Montgomery County Recorder of Deeds sues MERS and MERSCORP on behalf of a proposed class to compel recording of mortgage assignments and collect recording fees.
- Plaintiff alleges MERS created a private electronic system that tracks ownership changes without recording traditional assignments, bypassing Pennsylvania’s recording statute.
- MERS is the nominee/mortgagee of record for many loans, while the true beneficial ownership may change along securitization chains.
- Plaintiff asserts that recording fees are revenue for the county and that unrecorded assignments create defective public records.
- Defendants move to dismiss arguing §351 does not require recording and that no private right of action exists, among other defenses.
- Court must determine, under Pennsylvania law, whether §351 requires recordation and whether a quiet title action may be used to compel recordation and recover fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §351 require recording of all conveyances? | Plaintiff asserts all conveyances must be recorded under §351. | MERS contends recording is not mandatory for all conveyances. | Statute requires recording of all conveyances. |
| Can a private party bring a remedy to enforce §351 via a quiet title action? | Plaintiff contends quiet title allows enforcement to compel recording. | Defendants argue no private right exists to enforce §351 through quiet title. | Quiet title action may be used to compel recording; standing shown. |
| Has Plaintiff pleaded sufficient interest/standing to pursue quiet title relief? | Office interest in recording fees and public records satisfies standing. | Defendants contend insufficient interest to support standing. | Plaintiff pleaded sufficient pecuniary/interest in recordation to state standing. |
| Is there an implied right of action under §351 if quiet title is unavailable? | Plaintiff frames claim as implied right of action under §351. | Defendants argue no implied right exists absent quiet title. | Court need not decide implied right of action because quiet title is viable. |
| Does Plaintiff state a viable unjust enrichment claim? | Defendants benefit from recording system without paying full fees. | Unjust enrichment not adequately pled or proved. | Unjust enrichment claim survives; conspiracy claim is dismissed. |
Key Cases Cited
- Siskos v. Britz, 567 Pa. 689 (Pa. 2002) (extends Rule 1061 standing and quiet-title-type relief)
- Sutton v. Miller, 405 Pa. Super. 213 (Pa. Super. Ct. 1991) (recognizes continued vitality of predecessor statutes in Rule 1061 context)
- Capobianco, 836 F.2d 808 (3d Cir. 1988) (predicts continued vitality of substantive rights after repeal)
- Mower v. Mower, 367 Pa. 325 (Pa. 1951) (quiet title action may be brought against custodians)
- White v. Young, 409 Pa. 562 (Pa. 1963) (quiet-title/standing principles; liberal construction)
- Bruker v. Burgess and Town Council of Borough of Carlisle, 102 A.2d 418 (Pa. 1954) (illustrates broad scope of Rule 1061-like relief)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (pleading standards under Ashcroft v. Iqbal in Third Circuit)