Editor: David Reiss
Brooklyn Law School

January 16, 2013

Class Action Recording Fee Suit in Missouri Dismissed

By Karl Dowden

Jackson County, Missouri v. MERSCorp, Inc., et al., No. 12-0665-CV-W-ODS (W.D. Mo. Jan. 14, 2013) is a suit by Jackson County to recover lost recording fees resulting from the use of MERS. This suit is a class action law suit where the plaintiff county also sought to recover lost fees for all of the counties in Missouri along with St. Louis. The plaintiffs argued that each assignment of a deed of trust within their respective county (or within St. Louis) must be recorded and a recording fee must be paid. In addition to the lost revenue, they also argued that their land records are inaccurate or incomplete because of MERS.

The defendants argued that the plaintiff lacks standing because it cannot recover fees for assignments it never recorded and there is no duty under Missouri law to record deed of trust assignments.

The Court found there was standing because the plaintiff alleged an injury to its financial interest caused by the lost recording fees and inaccurate county land records.

The defendants also argued that there was no private right of action to enforce any violations of statutes regarding recording the assignments. However, the Court found the plaintiffs were not enforcing any statutory requirement to record assignments because the Missouri recording statutes only “encourage” recording, not require them.

The plaintiffs argued the defendants were unjustly enriched because each assignee retained the original assignor’s priority by listing MERS as the beneficiary. However, the Court finds because there is no duty to record assignments, there cannot be unjust enrichment. The defendants did not act improperly by not recording further assignments since it is permissible under Missouri statute.

A claim of civil conspiracy was also dismissed because it relied on the finding of unjust enrichment as the basis of the conspiracy.

Plaintiff also argued that a prima facie tort occurred. This claim requires the plaintiff to establish: (1) an intentional lawful act by defendant; (2) an intent to injure the plaintiff; (3) injury to plaintiff; and (4) insufficient justification for defendant’s action. However, this claim is disfavored under Missouri law, particularly when there are other remedies or tort claims available. However, the defendants argued there was no intent to harm the plaintiffs. The court found no evidence or allegation of malicious intent to injure the plaintiff, as required to satisfy the second prong of the claim. As a result, the claim is dismissed.

The plaintiff’s requests for a declaratory judgment and injunctive relief are dismissed because they are remedial actions. Since the court has not found a viable claim for the plaintiff to request remedial action, the court denied the requests.

The court ultimately finds that the plaintiff must convince the legislature to change the statute to create a legal duty to record assignments in order to recover from the defendants (with a private right of action that the plaintiffs can avail of). As a result, the motion to dismiss the claim was granted.

| Permalink