United States District Court, S.D. Illinois
UNION COUNTY, ILLINOIS; People of the State of Illinois ex rel; Tyler Edmonds State's Attorney for the County of Union; and Bobby Toler Clerk of the County of Union and on behalf of the County of Union, Illinois and all Counties in Illinois, Plaintiffs,
MERSCORP, INC.; Mortgage Electronic Registration Systems, Inc.; JP Morgan Chase Bank, N.A.; Bank of America Corporation; Bank of America N.A.; RBS Citizens, N.A.; RBS Securities, Inc.; Citigroup, Inc.; CitiMortgage, Inc.; Citibank, N.A.; Deutsche Bank National Trust Company; Everbank; GMAC Mortgage, LLC; HSBC Bank USA, N.A.; Keybank National Association; Nationwide Advantage Mortgage Corporation; Suntrust Mortgage, Inc.; U.S. Bank National Association; Wells Fargo Bank, N.A.; and Defendants Doe Corporations 1-100, Defendants.
Elizabeth A. Fegan, Thomas E. Ahlering, Hagens Berman Sobol Shapiro LLP, Oak Park, IL, Sean R. Matt, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Stephen W. Stone, Howerton, Dorris & Stone, Marion, IL, Paul T. Slocomb, Blunt Slocomb, Ltd., St. Louis, MO, for Plaintiffs.
Robert M. Brochin, Morgan, Lewis Bockius, LLP, Miami, FL, Rebecca R. Jackson, Rhiana A. Luaders, Darci F. Madden, Douglas W. King, Louis F. Bonacorsi, Bryan Cave, LLP, Christopher M. Hohn, Matthew D. Guletz, Thompson Coburn, Justin L. Assouad, Theodore J. MacDonald, Jr., Heplerbroom LLC, St. Louis, MO, Romeo S. Quinto, Jr., Morgan, Lewis et al., Lucia Nale, Thomas V. Panoff, Mayer Brown LLP, Jonathan M. Cyrluk, Steven C. Moeller, Carpenter, Lipps et al., P. Russell Perdew, Sherina E. Maye, Locke
Lord LLP, Chicago, IL, Joseph F. Yenouskas, Richard M. Wyner, Thomas M. Hefferon, Goodwin Procter, Washington, DC, Gregory J. Marshall, Snell & Wilmer, Phoenix, AZ, Lisa M. Ghannoum, Baker & Hostetler, Cleveland, OH, Katheryn Meagan Lloyd, Michael Hiram Carpenter, Tyler Kabaki Ibom, Carpenter Lipps et al., Columbus, OH, Erin R. McClernon, John M. McFarland, Kutak Rock LLP, Kansas City, MO, for Defendants.
MEMORANDUM AND ORDER
MURPHY, District Judge.
Defendants U.S. Bank N.A., CitiMortgage, Inc., Citigroup, Inc., JP Morgan Chase Bank N.A., RBS Securities, Inc., Everbank, Wells Fargo Bank N.A., MERSCORP, Inc., and Mortgage Electronic Registration Systems, Inc., removed this action from the First Judicial Circuit Court, Union County, Illinois on May 25, 2012, citing this Court's jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2) (Doc. 3). In their amended class action complaint, Plaintiffs define the basis of their action as " Defendants' failure to record all mortgage assignments with the Union County Clerk and all County recording offices across the state of Illinois, and pay the attendant recording fees, as required by Illinois law." (Doc. 3-1, ¶ 1). In part because the Court finds that the recording statute does not impose a mandatory duty to record the assignments at issue here, Defendants' motion to dismiss the complaint is GRANTED. The Court also GRANTS Defendant KeyBank National Association's motion to join in the motion to dismiss (Doc. 104). Defendant GMAC Mortgage, LLC filed a Notice of Bankruptcy and Effect of Automatic Stay on May 25, 2012, the day this action was removed (Doc. 3). Accordingly, this action is DISMISSED with prejudice as to all Defendants except Defendant GMAC Mortgage, LLC. As to Plaintiff's only remaining claims, against Defendant GMAC Mortgage, LLC, the case is STAYED. Plaintiffs and Defendant GMAC Mortgage, LLC are ORDERED to file a status report on or before July 29, 2013, and biannually thereafter.
Plaintiffs' removed " Amended Class Action Complaint" claims that Defendants, a " national registry that tracks ownership and servicing rights in residential mortgage loans" and its shareholders, failed to comply with Illinois's recording statute, 765 ILCS 5/28 (Doc. 3-1). Defendant MERS, a subsidiary of Defendant MERSCORP, is essentially alleged to be a front for the other Defendants' inter-mortgage assignments. Defendants describe the MERS-mortgaging structure as follows:
[MERS is] a corporate entity created to allow its members to track active residential mortgage loans. When a mortgage loan is originated, a borrower typically signs a mortgage, which grants a security interest in the borrower's property as security for the loan. When a loan is registered with MERSCORP, MERS is listed as mortgagee on the mortgage executed by the borrower. Thereafter, MERS serves as mortgagee in county land records on behalf of the lender and subsequent transferees or purchasers of the loan. When ownership of a mortgage loan is transferred among MERSCORP members, MERS remains the mortgagee of record, and no mortgage assignment is created or recorded.
(Doc. 3, ¶ 2). According to Plaintiffs, MERS " masquerades" as the title holder, while shareholders/members actually prepare " MERS's" initial mortgage assignments for record. If further mortgage assignments take place between MERS members/shareholders, however, those assignments are not recorded, as MERS
acts " on behalf of both the assignor and assignee" (Doc. 3-1, ¶ 54). It is this failure to record that forms the crux of Plaintiffs' complaint. By creating an " alternative" recording system, Plaintiffs argue, Defendants have purposefully circumvented Illinois laws that mandate public county recording (and paying fees for that recording) (Doc. 70, p. 3). Plaintiffs seek relief on four claims: (1) declaratory judgment (declaring that Defendants are required by Illinois law to record and pay the recording fees for every mortgage and mortgage assignment on real property in Illinois) and permanent injunction (enjoining Defendants to so-record and pay); (2) restitution and civil penalties for violation of 815 ILCS 505/2, Illinois's consumer fraud act; (3) restitution for Defendants' unjust enrichment (unjustly retaining the money they were required to pay in recording fees); and (4) damages resulting from Defendants' civil conspiracy to violate the Illinois recording statute (Doc. 3-1).
Standard of Review on Motion to Dismiss
Under Federal notice pleading, a complaint need only " include a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). It only need include " factual allegations [that are] enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In other words, a " complaint must contain sufficient factual matter ... to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Writing for the dissent in the Seventh Circuit's recent Vance v. Rumsfeld en banc opinion, Judge Rovner succinctly stated:
To survive a motion to dismiss, a complaint need not do more than enunciate a plausible claim for relief. The plausibility standard is not akin to a ‘ probability requirement.’ It does not imply that the district court should decide whether the claim is true, which version of the facts to believe, or whether the allegations are persuasive. Provided the complaint invokes a recognized legal ...