Union County v. MERSCORP, Inc.
2013 U.S. Dist. LEXIS 12345
S.D. Ill.2013Background
- Defendants removed the action to federal court under CAFA and moved to dismiss the amended class action complaint.
- Plaintiffs allege Defendants failed to record mortgage assignments and pay recording fees as required by Illinois law (765 ILCS 5/28 and related statutes).
- MERSCORP/MERS allegedly acts as a front for a chain of assignments with recording not taking place; Plaintiffs claim this defeats public notice and priority.
- The court must decide whether Illinois law imposes a mandatory duty to record and whether plaintiffs have a private right of action to enforce recording and fees.
- The court dismisses all claims against the Defendants except GMAC Mortgage, LLC, which remains in the case but with the action stayed; a status report is ordered.
- Court holds that 765 ILCS 5/28 does not create a general private right of action for failure to record and that there is no mandatory recording duty under the Conveyance Act as interpreted by Illinois precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 765 ILCS 5/28 imposes a duty to record | Plaintiffs contend recording is mandatory under §28. | Defendants argue no duty to record exists under Illinois law. | No mandatory duty to record; complaint fails. |
| Whether a private right of action exists to enforce recording and fees | Public interest enforcement by State's Attorney implies private action possible. | Statutes confer no private right of action for recording or fees. | No private right of action; dismissal of related claims. |
| Whether ICFA and related equitable claims survive without a statutory duty to record | ICFA and related claims are viable given public-interest enforcement and unjust enrichment. | ICFA predicates are not properly pleaded and no statutory basis is identified. | ICFA, unjust enrichment, and related claims fail for lack of duty to record. |
| Whether civil conspiracy claim can proceed given lack of unlawful act | Alleges concerted action to avoid recording constitutes an unlawful act. | No unlawful act found; conspiracy claim fails. | Civil conspiracy claim fails; not pleaded as to an unlawful act. |
Key Cases Cited
- Field v. Ridgely, 116 Ill. 424 (Ill. 1886) (no duty to record mortgage; recording relates to notice and priority)
- Haas v. Sternbach, 156 Ill. 44, 41 N.E. 51 (Ill. 1894) (recording not necessary to validity; purpose is notice for third parties)
- Farmers State Bank v. Neese, 281 Ill.App.3d 98, 216 Ill.Dec. 474, 665 N.E.2d 534 (Ill.App. 1996) (recording protects third parties; not required for enforceability between parties)
- In re Quade, 482 B.R. 217 (Bankr.N.D. Ill. 2012) (unrecorded interests relate to priority and third-party notice)
- United Community Bank v. Prairie State Bank & Trust, 2012 IL App (4th) 110973, 361 Ill.Dec. 839, 972 N.E.2d 324 (Ill. App. (4th) 2012) (recording discusses notice and priority under §28)
- Aames Capital Corp. v. Interstate Bank of Oak Forest, 315 Ill.App.3d 700, 248 Ill.Dec. 565, 734 N.E.2d 493 (Ill.App. 2000) (assignment recording not required to maintain priority between lenders)
- East St. Louis Lumber Co. v. Schnipper, 310 Ill. 150, 141 N.E. 542 (Ill. 1923) (priority rules tied to notice and recording limitations)
- King v. De Kalb County Planning Dept., 394 Ill.App.3d 699, 334 Ill.Dec. 439, 917 N.E.2d 36 (Ill.App. 2009) (statutory recording context referenced in modern priority analysis)