6th Circuit: "[County] Clerks Have No Private Right Of Action" To Tag MERS In Suit Alleging Recording Fee Dodge, Failure To Record Mortgage Assignments; Says Property Owners, State AG May Make For More Appropriate Plaintiffs

In Louisville, Kentucky, The Associated Press reports:

• A federal appeals court has rejected a lawsuit brought by two Kentucky county clerks alleging that a private company took part in a scheme to avoid paying mortgage registration fees.
  
  The U.S. 6th Circuit Court of Appeals on Tuesday upheld a decision to dismiss the suit brought by the clerks in Christian and Washington counties against MERSCORP Holdings Inc. and Mortgage Electronic Registration Systems Inc.
  
  The county clerks accused MERSCORP and others of not recording mortgage assignments with county clerks when mortgages were sold or transferred from one bank to another.
  
  Judge Helene White wrote that Kentucky law doesn't give the clerks legal grounds on which to sue the company.(1)
  
  The ruling lets stand a decision by U.S. District Judge Joseph McKinley in 2012.(2)

Source: Federal appeals court rejects lawsuit against mortgage company.

For the ruling, see Christian Cnty. Clerk v. Mortgage Elec. Registration Sys., Inc., No. 12-5237 (6th Cir. February 15, 2013).

(1) The court stated:

• "The district court held that the Clerks have no private right of action against Defendants for their alleged violation of Ky. Rev. Stat. Ann. § 382.360(3), which requires that mortgage assignments be filed for recording with the county clerk’s office. We AFFIRM."

It may be that the Plaintiff county clerks in this case were simply the wrong parties to bring this lawsuit, and that the individual homeowners, and/or the State of Kentucky itself, through the state attorney general's office, may have been the proper parties to pursue this matter, as one might surmise by this observation buried deeper in the three-judge panel's opinion:

• "Last, the Clerks surmise that property owners have no cause of action under the Kentucky statutes to enforce 382.360(3)’s requirement that mortgage assignments be recorded, and argue that the legislature could not have intended that the statutes could be violated with impunity.
  
  However, even if no express cause of action is provided under that provision, section 382.365(3) grants property owners a cause of action against lienholders who fail to record lien assignments in accordance with section 382.360.
  
  And nothing in our opinion forecloses property owners from bringing suit based on alleged statutory violations. Moreover, the Kentucky attorney general presumably has “the power to act to enforce the state’s statutes.” Kentucky ex rel. Conway v. Thompson, 300 S.W.3d 152, 173 (Ky. 2009) (citation omitted)"

(2) Christian Cnty. Clerk v. Mortgage Electronic Registration Systems, Inc., No. 5:11CV-00072-M (W.D. Ky. 2012).