769 S.E.2d 476
W. Va.2015Background
- Wyoming County filed a putative class action alleging that trustees (large banks acting as trust fiduciaries) must record assignments of residential trust deeds/mortgages in county record books and pay recording fees, rather than relying solely on MERS.
- The trustees used Mortgage Electronic Registration Systems, Inc. (MERS) to register transfers/assignments instead of recording each assignment in county clerk offices; the underlying deeds and trust deeds were recorded, but assignments were not.
- The county sought injunctive relief to force recording of prior assignments (lenders → depositors → trusts), claiming lost revenue, impaired public records, and unjust enrichment of trustees.
- The circuit court denied trustees’ Rule 12(b)(6) motion to dismiss, concluding recording of assignments is required and allowing the counties to pursue unjust-enrichment and related claims.
- Trustees petitioned this Court for a writ of prohibition arguing West Virginia recording statutes do not mandate public recording of trust deed assignments and that the circuit court exceeded its jurisdiction.
- The Supreme Court of Appeals held that West Virginia law does not require recording assignments of trust deeds/mortgages in county clerk offices; failure to record only risks rights against subsequent bona fide purchasers or creditors without notice. The county action was dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether West Virginia law mandates public recording of assignments of trust deeds/mortgages | Counties: recording assignments is required; MERS circumvents statutes and deprives counties of fees and accurate public records | Trustees: recording assignments is not statutorily required; MERS registration and recorded trust deeds suffice; assignments valid between parties | The Court: Recording assignments is not mandatory under WV statutes; assignments valid among parties but unrecorded assignments risk claims by bona fide purchasers/creditors without notice |
| Whether counties can pursue unjust enrichment/revenue claims for use of MERS | Counties: trustees unjustly enriched by avoiding recording fees and impairing records | Trustees: no statutory duty to record, so no unjust enrichment from nonpayment of fees | Court: Because no statutory recording duty exists, counties’ theory fails; action dismissed |
| Whether prohibition is appropriate to stop the lower court’s denial of dismissal | Counties: interlocutory denial should remain; remedy by appeal later | Trustees: interlocutory appeal inadequate given pure legal question and statewide implications | Court: Writ appropriate — lower court exceeded jurisdiction; prohibition granted |
| Whether MERS system alters recording statute effect | Counties: MERS undermines public recording scheme and perfection | Trustees: MERS functions as mortgagee of record/registrar; county recording not necessary | Court: Use of MERS does not change statutory text; statutes do not require assignment recording; legislative change, if any, is for Legislature |
Key Cases Cited
- Farrar v. Young, 159 W.Va. 853, 230 S.E.2d 261 (1976) (unrecorded written agreements remain binding between parties)
- Alexander v. Andrews, 135 W.Va. 403, 64 S.E.2d 487 (1951) (protection for bona fide purchasers against prior unrecorded deeds requires payment and lack of notice)
- Citizens Nat’l. Bank of Connellsville v. Harrison-Doddridge Coal & Coke Co., 89 W.Va. 659, 109 S.E. 892 (1921) (assignment of a mortgage is within recording acts; unrecorded assignment does not defeat rights against third parties without notice)
- Wolfe v. Alpizar, 219 W.Va. 525, 637 S.E.2d 623 (2006) (reiterating purchaser protections under recording act principles)
- Boyd County ex rel. Hedrick v. MERSCORP, Inc., 985 F.Supp.2d 823 (E.D. Ky. 2013) (dismissal of county claims that MERS scheme unlawfully avoided recording requirements)
- Union County v. MERSCORP, Inc., 920 F.Supp.2d 923 (S.D. Ill. 2013) (class action dismissal holding recording of mortgage assignments not statutorily required)