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MERS class action dismissed

By Kerry McInerney • Friday, September 21, 2012

On June 27, 2012, the United States District Court out of Jacksonville ruled on a motion to dismiss by MERS in a purported class action.  In Fuller v. Mortgage Electronic Registration Systems, Inc., 2012 WL 3733869 (M.D. Fla.), Jim Fuller, the Clerk of the Circuit Court of Duval County sued MERS alleging, among other claims, that MERS usurped the rights of the Florida clerks of court, that MERS conspired in a scheme to avoid paying recording fees, and that MERS has committed fraud by falsely recording mortgages where it is listed as mortgagee.  In its motion to dismiss, MERS responded that the clerks of court do not have standing to bring the action because the applicable Florida statute upon which the clerks rely does not create a private right of action.

In its 21‐page opinion, the court provided a detailed history of mortgage assignment recording in Florida, as well as a detailed explanation of MERS's role in the secondary market.  The clerks claimed that MERS owes millions in unpaid recording fees.  The clerks pointed to Section 28.222(1), Florida Statutes, which provides that the clerk of the circuit court shall be the recorder of all instruments in Florida, and MERS, through its system, usurps the clerk's authority as provided by this statute. The court viewed the plain language of the statute and concluded that it does not provide a cause of action and added that under Florida law, the recording of mortgage assignments is at the complete discretion of the party wishing to record the document.  In citing Alexander Hamilton's The Federalist, the court proclaimed that the Florida legislature is in better position to resolve the clerk's issue.

The clerks also alleged that MERS is not a mortgagee since it lends no money and acquires no interest in the promissory notes which are secured by the recorded mortgage.  MERS argued that the statement in the mortgage is not a false statement, but rather is a legal designation in a contract which has been approved by many Florida Courts and the Eleventh Circuit.   The court dismissed the class action concluding that no private right of action exists under Section 28.222(1).  The court added that it is legal under Florida law for one corporation to serve as the agent for another, and that MERS's function of accepting and recording instruments is merely a ministerial act.

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