CIVIL PROCEDURE

Class Action • Fed.R.Civ.P. 23 • Certification Requirements

Montgomery County v. Merscorp, PICS Case No. 14-0231 (E.D. Pa. Feb. 11, 2014) Joyner, J. (37 pages).

Where gravamen of plaintiff’s complaint was that defendant’s creation of a separate recording system to be used in lieu of public recording was unlawful, questions of law or fact common to class of 67 recorders of deeds predominated over any questions affecting only individual members. Motion for class certification granted.

Plaintiff, duly-elected Recorder of Deeds for Montgomery County, sought to compel defendants to record all mortgage assignments that were, are now and will in the future be, registered within the “MERS” system (defendant’s separate recording system in which it offered members the option of recording mortgage assignments in lieu of recording in public recorders of deeds) and pay the attendant recording fees. She sought a declaration and or permanent injunction compelling defendant to record the disputed mortgage assignments, and an order quieting title.

Plaintiff moved to certify as a proposed class the 67 county recorders of deeds in Pennsylvania in his or her official capacity. The U.S. District Court for the Eastern District of Pennsylvania certified the class under Fed.R.Civ.P. 23(b)(3).

To warrant certification, a class action must satisfy the requirements of numerosity, commonality, typicality and adequate representation under Rule 23(a), and those of either Rule 23(b)(1), (2) or (3). In addition, the class must be readily ascertainable.

If plaintiff demonstrated that the potential number of plaintiffs exceeded 40, the numerosity requirement was met. Here, numerosity and ascertainability requirements were easily satisfied. Plaintiff sought to certify as a class 67 recorders in Pennsylvania. This number, while small, was sufficiently numerous that joinder of all would be impracticable and unwieldy and each and every member may easily be identified and noticed.

The putative class also satisfied commonality; it appeared that the claims of each of the putative class were in fact identical or very nearly so. Specifically, the harm which was alleged to have occurred to all of them was the purportedly improper avoidance of recording mortgage assignments and paying the attendant recording fees. As a consequence, it was alleged that public records which all of the proposed class members were charged by Pennsylvania law with safeguarding, and the accuracy of which they were charged with maintaining, have been compromised.

Likewise, the typicality requirement was satisfied. The claims of plaintiff arose from the same course of conduct and or practices of defendants as do those of the other 66 recorders of deeds.

In addition, plaintiff’s interests and incentives were aligned with all of the members of the proposed class, and hence she was an adequate class representative.

All the requirements of Rule 23(a) being met, certification was proper under subsection 23(b)(3), i.e., questions of law or fact common to class members predominate over any questions affecting only individual members, making the class action a superior method of adjudicating the controversy. The gravamen of plaintiff’s complaint was that defendants’ creation of a separate recording system to be used in lieu of the public recorders of deeds, violated Pennsylvania law. A factual determination that operation of the MERS system violated the law would apply with equal force in all 67 Pennsylvania counties and the recorder of deeds in each would be entitled to a declaration of illegality, an injunction compelling payment of lost and future assignment filing fees and to recover as damages the unpaid filing fees for those assignments previously not properly recorded. The only factual variance between the individual counties was the number of unrecorded assignments and the sum charged and or fee schedules set by each. The questions of law or fact common to class members which involve liability—whether defendants were required by Pennsylvania law to record in the county recorder of deeds assignments of mortgages every time a loan was transferred or sold from one note holder to—clearly predominated over the damages questions affecting only individual members.