State ex rel. Saporta v. Mortgage Electronic Registration Systems, Inc.
2016 IL App (3d) 150336
| Ill. App. Ct. | 2016Background
- Relator (State ex rel. Stephen T. Saporta) filed a qui tam suit alleging MERS and others used mortgage language (nominating MERS) to avoid county recording/assignment fees, violating the Illinois False Claims Act §3(a)(1)(G).
- Relator’s investigation of county recorders showed most counties did not collect separate recording fees on such documents.
- The Attorney General declined to take over the action but requested notice and monitoring rights under the Act; the court granted those requests.
- The court ordered the State to produce its investigative file for in camera review; shortly after, the Attorney General (still having declined intervention) moved to dismiss and sought a protective order and reconsideration.
- Relator moved to disqualify the Attorney General, alleging a conflict from prior ties to banks; the court denied disqualification as untimely and meritless, then granted the Attorney General’s motion to dismiss and held the other motions moot.
- Relator appealed; the appellate court affirmed dismissal, rejected the disqualification claim, and held the State may move to dismiss even if it initially declines to intervene.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the State may move to dismiss a qui tam action after declining to take it over | Saporta: §4(c) permits dismissal only if State elected to proceed; here State declined, so it cannot dismiss | State: §4(c) and Scachitti give AG authority to monitor and, at any time, move to dismiss or control the action | Court: AG may move to dismiss even if it initially declines to intervene; dismissal was proper |
| Whether the court erred in ruling AG’s motions for reconsideration and protective order moot | Saporta: Dismissal was improper, so AG’s other motions should not be moot | State: Dismissal was proper, rendering other motions moot | Court: Because dismissal was proper, the motions were moot; no further review needed |
| Whether the AG should be disqualified for conflict of interest | Saporta: AG had a conflict due to prior ties/recognition involving banks and housing groups | AG/State: No disqualifying interest; AG acted only as counsel for the State; any knowledge was long-known and not a basis for disqualification | Court: Motion untimely and without merit; no conflict under governing standards; denial affirmed |
| Standard of review for dismissal and disqualification | Saporta: (argues error) | State: dismissal under §4(c) akin to 2-619; statutes and precedent control standard | Court: Dismissal reviewed de novo; disqualification reviewed for abuse of discretion |
Key Cases Cited
- Scachitti v. UBS Fin. Servs., 215 Ill. 2d 484 (supreme court interpretation of AG control and dismissal authority in qui tam actions)
- Schwartz v. Cortelloni, 177 Ill. 2d 166 (standard of review for disqualification motions)
- Environmental Protection Agency v. Pollution Control Bd., 69 Ill. 2d 394 (circumstances creating AG conflict of interest)
- State ex rel. Beeler, Schad & Diamond, P.C. v. Target Corp., 367 Ill. App. 3d 860 (procedural comparison to 2-619 motions)
- Andrews v. Kowa Printing Corp., 217 Ill. 2d 101 (de novo review for statutory interpretation)