A decision by a federal court to dismiss a lawsuit filed three years ago by counties in Kentucky against Mortgage Electronic Registration Systems Inc. has been upheld on appeal.
The case was originally filed in U.S. District Court for the Eastern District of
Kentucky by Boyd County, Kentucky, in 2012.
Forty-one other Kentucky counties subsequently joined the action as plaintiffs. The counties alleged that MERS failure to record assignments violated Kentucky law.
MERS argued
the clerks lacked a private right of action under the Kentucky statute (KRS 446.070) on which they based their case, and the judge agreed — dismissing the case in February 2013.
The court largely relied on the opinion of the U.S. Court of Appeals for the Sixth Circuit in Christian Cnty. Clerk ex rel Kem v. Mortgage Electronic Registration Systems, Inc., which held that county clerks lack a private right of action to pursue similar claims.
So the
counties appealed the decision to the Sixth Circuit, arguing that they have the power, as subdivisions of the state, to enforce mandatory provisions of Kentucky’s recording statute through civil litigation.
“This is a novel argument under Kentucky law, which we do not adopt without support from the Kentucky courts,” the June 5 decision stated. “Moreover, because the counties chose to bring this litigation in federal court and sought certification only after the district court ruled against them, we decline to certify a question to the Kentucky Supreme Court.”
The decision went on to state that the “novel legal theory” would be
better addressed by Kentucky courts.
MERS issued a statement indicating that it was “pleased” with the decision.
