Plymouth County, Iowa v. Merscorp, Inc.
2014 U.S. App. LEXIS 23962
| 8th Cir. | 2014Background
- Plymouth County, Iowa, sues various loan originators/servicers (Lenders) in state court for allegedly using MERS to avoid recording fees on mortgage assignments.
- MERS creates a national electronic registry; while initial recording occurs in the county, MERS becomes mortgagee of record and tracks transfers without recording them locally.
- Lenders, as MERS members, register and track changes in MERS but do not record subsequent transfers with the county recorder, and collect fees for registry activity.
- County alleges unjust enrichment, civil conspiracy, declaratory relief, injunctive relief, and veil-piercing; district court dismissed after removing to federal court and ruling no mandatory recording duty under Iowa law.
- County then moved to amend; district court denied as futile; on appeal, this court affirms the district court’s dismissal and standing ruling.
- The district court’s ruling focused on whether Iowa’s Recording Act imposes a mandatory recording duty; the court concluded it does not, thus undermining the merits of the County’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue in federal court | Plymouth County suffers injury in fact through lost recording fees. | Lenders dispute injury to county and thus lack standing. | Plymouth County has standing based on injury in fact from lost fees and interference with recording system. |
| Unjust enrichment without a duty to record | County may recover unjust enrichment because MERS benefits from recording system without paying fees. | Iowa law imposes no duty to record mortgages or assignments; unjust enrichment fails without duty. | Unjust enrichment claims fail because there is no mandatory duty to record under Iowa law. |
| Impact of lack of mandatory recording on remaining claims | Even without a formal recording duty, other theories (conspiracy, veil piercing, injunctive/declaratory relief) could lie. | Without a duty to record, underlying unlawful conduct is missing; conspiracy and related remedies fail. | All remaining claims fail absent a mandatory recording requirement; district court properly dismissed and denied amendments. |
| Motion to amend/alter judgment futile | Amendment would remove references to the recording statute and salvage claims. | Amendment would not save meritless claims. | District court did not abuse its discretion; amendment would be futile. |
Key Cases Cited
- Brown v. Mortg. Elec. Registration Sys., Inc., 738 F.3d 926 (8th Cir. 2013) (no duty to record; unjust enrichment claims fail without duty)
- Macon Cnty., Ill. v. MERSCORP, Inc., 742 F.3d 711 (7th Cir. 2014) (no duty to record by assignees; recording not mandated for enforceable claims)
- Christian Cnty. Clerk v. Mortg. Elec. Registration Sys., Inc., 515 F. App’x 451 (6th Cir. 2013) (standing of county to sue; MERS recording system affects public records)
- Fuller v. Mortg. Elec. Registration Sys., Inc., 888 F. Supp. 2d 1257 (M.D. Fla. 2012) (county injury from system bypassing recording; standing recognized)
- Shoemaker v. Ragland, 211 N.W. 564 (Iowa 1926) (no statutory duty to record assignments; lack of duty defeats claims)
- Shoemaker v. Minkler, 211 N.W. 563 (Iowa 1926) (no statutory duty to record mortgage assignments)
- Tamko Roofing Prods., Inc. v. Smith Eng’g Co., 450 F.3d 822 (8th Cir. 2006) (veil-piercing and related remedies governed by substantive theories; not applicable here)