MERS, Inc. is Sued Again – This Time by Multiple Oregon Counties, for Fraud, Negligence, Unjust Enrichment

[vc_row][vc_column][vc_column_text] By Litigation and Creditors’ Rights & Bankruptcy Attorney

November 3, 2016 – Several Oregon Counties have filed a lawsuit today against MERS, Inc., and its holding company, MERSCORP Holdings, Inc. (“MERS”), as well as several financial institutions that operate in Oregon and transferred security instruments to MERS. The Counties are alleging fraud, unjust enrichment, and negligence against all of the defendants. The Counties’ claim damages in excess of $50,000,000 for lost recording fees, the cost of remediating existing public records, and punitive damages. The Counties named as plaintiffs in the case are Coos, Crook, Clackamas, Jackson, Josephine, Klamath, Lane, Linn, Marion, Washington, and Yamhill Counties.

The Counties’ suit is filed by D’Amore Law Group and others, the same law firm that recently represented Multnomah County’s lawsuit against MERS in 2012. The Multnomah County suit ultimately settled earlier this year for an undisclosed amount in January, 2016.

MERS has been the target of nation-wide litigation since the housing market crash of 2007. Many of these lawsuits also name as defendants the lending institutions that transferred and assigned trust deeds and mortgages to MERS as beneficiary. State law governs the recording and perfection of real property, and each state’s law is different. As such, MERS has been successful in defending against many of these lawsuits, including in such states as Nevada, Arizona, Florida, Minnesota, Kansas, and California. However, Washington’s Supreme Court held that MERS was not a lawful beneficiary on a trust deed because Washington statutes require the beneficiary of a trust deed to actually hold the promissory note or other instrument evidencing the obligation that is secured by the trust deed. Bain v. Metropolitan Mortgage Group, Inc., 175 Wash.2d 83 (2012).

Oregon’s leading case interpreting its own statutes is Brandrup v. Recontrust, 353 Or. 668 (2013). The Oregon Supreme Court answered certified questions and held that, under Oregon law, a beneficiary to a trust deed must also hold the note or be owed the obligation that is secured by the trust deed. However, that case left open the question of whether MERS could act as the agent of the beneficiary so that the entire MERS recording scheme would not be chaotically undone with one legal opinion. Cases following Brandrup and challenging MERS foreclosure authority have been successful because of insufficient evidence of MERS’ authority to act for the lender-beneficiary.

Read the full text of the Complaint HERE.

Because of Saalfeld Griggs’ prior involvement in the Multnomah County litigation, lawyers in the Financial Service Industry Practice Group are very well versed in the issues raised in the recent litigation. If you have any questions about the MERS litigation, please contact a professional in our Financial Services Industry Practice Group.