# U ni te d S ta te s Co ur t of A pp ea ls
For the Eig hth Circu it

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No. 1 3- 23 34

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Pl y m ou th Co un ty, Io wa, Dari n J . Ray m on d, b y an d t hr ou gh ag en t o f

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Mer sc or p, In c.; M or tg ag e Ele ct ro ni c Reg is tra ti on Sy st em s, In c.; B an k o f Am eri ca N

. A

. ; B A C H o m

e L o a n s S e r v i c i n g , L P ; C i t i M o r t g a g e , I n c

. ; E v e r H o m e M o r t g a g e C o m p a n y

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

GMAC-R es id en ti al Fu nd in g C or po rat io n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t

HSBC B an k USA, N.A.; J PMo rg an Ch as e Ban k; Ch as e Hom e Fi na nc e LLC; EMC
Mo rtg ag e Co rp or at io n; Su nTru st Mo rtg ag e, In c.; Well s Fa rg o B an k, N.A.; Well s F a r g o H o m e M o r

t g a g e , I n c

. ; W

M C M o r t g a g e C o r p o r a t i o n ; J o h n D o e , D e

f e n d a n t s 1

- 1 0 0

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts - App el le es

Co rin th ia n M or tg ag e Co rp or at io n

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Nor th ern Dis tri ct of I owa - Sio ux Cit y

__ __ __ __ __ __Su bm it te d: Sep te m be r 8, 2 01 4 Fil ed : Dec em

be r 19 , 20 14

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Befo re RI LEY, Chi ef J ud ge , COLLOTO N and SHEPHERD, Circ ui t J ud ge s.

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SHEPHERD, Cir cu it Ju dg e.

Pl y m ou th C o u n t y, o n it s own be ha lf an d on be ha lf of al l si m il arl y si tu at ed

co un ti es in Io w a, br ou gh t su it in st at e co ur t al le gi ng th at App el le es , va rio us lo an

or ig in at or s an d se rv ic ers (Len de rs ), de pr iv ed th e Co un ty of rev en ue by us in g th e
Mo rtg ag e Elec tro ni c Reg is tra ti on Sy st em (MERS ) to av oi d pa y in g reco rd in g fees on

m or tg ag e as si gn m en ts

. The Len de rs rem ov ed th e act io n to fed eral co ur t and fil ed a

m ot i o n to di sm is s, whi ch th e di st ric t co ur t gr an te d. Pl y m ou th Co un ty ap pe al s, 1

as se rti ng th at th e di st ric t co ur t erre d in di sm is si ng th e co m pl ai nt on th e m eri ts an d in

de nyin g it s m ot io n to al te r or am en d th e jud gm en t an d fo r le av e to fil e an am en de d

co m pl ai nt . W e aff

irm.

I.

Gen eral ly, un de r Io wa la w, m or tg ag es on real pr o p e r t y a n d an y su bs eq ue nt

as si gn m en ts are reco rd ed wit h th e co un ty reco rd er in th e c o u n t y whe re th e real

pr op ert y is lo cat ed . A fee is pa id to th e co un ty w he n m or tg ag es or a ss ig nm en ts are

reco rd ed

. The in tro du ct io n of MERS si gn ifi can tl y alt ered th e rec or di ng pro ces s by

es ta bl is hi ng a na t i o n a l el ect ro ni c reg is try to tra ck m or tg ag es an d su bs eq ue nt

as si gn m en ts

. MERS do es no t or ig in at e, as si gn , or se rv ic e an y m or tg ag es , bu t in st ead

ch arg es a fee whe n m em be rs reco rd or tra ns fer a m or tg ag e on th e reg is try. Upo n

The Hon or ab le Mar k W

. Ben ne tt
, Uni te d St at es Dis tri ct Ju dg e fo r th e 1
Nor th ern Dis tri ct of I owa

.

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-in it ia l reco rd in g, m or tg ag es are re co rd ed wit h th e co un ty reco rd er an d MERS

be co m es th e m or tg a g e e o f reco rd

. W it h su bs eq ue nt tra ns fers

, MERS rem ai ns th e

m or tg ag ee of reco rd in th e co un ty pr op ert y reco rd s, b u t t r a c k s th e tra ns fers fo r

pr io rit y pu rp os es on it s reg is try. The se tra ns fers are no t r e c o r d ed wit h th e co un ty

reco rd er in th e co un ty whe re th e real pr op ert y is lo cat ed

. The Len de rs in th is su it are
al le ge d t o b e memb ers of MERS who reg is te r an d tra ck ch an ge s on th e m or tg ag es
th ey m ai nt ai n i n t he MERS d at ab as e o r sh areh ol de rs of M ERSCORP

.

Pl y m ou th Co un ty ini ti at ed th is cla ss act io n i n s ta te co ur t ag ai ns t t he Lend ers
al le gi ng th at th e Len de rs in te nt io na ll y fai le d t o re co rd m or tg ag e as si gn m en ts in th e

co un ty reco rd er’s o f

fic e an d fai le d to pa y th e acco m pa nyin g reco rd in g fees in

vi ol at io n of Io wa la w. The Co un t y br ou gh t cl ai m s fo r un jus t en ric hm en t an d ci vi l

co n s p i r a c y an d so ug ht de cl arat or y jud gm en t, in jun ct iv e rel ie f, an d to pi erce th e

co rp or at e ve il

. Afte r rem ov in g to fed eral co ur t, th e Len de rs fil ed a m ot io n to di sm is s

un de r Fed eral Ru le of Ci vi l Pro ced ur e 12 (b )(6 ). The Len d e r s al so ch al le ng ed

Pl y m ou th Co un ty’ s s ta nd in g t o b rin g t he su it

.

The di st ric t co ur t gr an te d th e Len de rs ’ m ot io n to di sm is s , f i n d i n g th at a
de te rm in at io n of whe th er Io wa’s Rec or di ng Act im po se d a m an da to ry reco rd in g

req ui rem en t res ol ve d al l of th e cl a i ms. Alt ho ug h th e Co un ty as se rte d th at it s

co m pl ai nt di d no t al le ge a m an da to ry reco rd in g req ui rem en t, th e di st ric t co ur t fo un d

th is t o b e “ bl at an tl y co nt rary” to th e al le ga ti on s co nt ai ne d in th e co m pl ai nt

. The

di st ric t co ur t fo un d th at th e Io wa Rec or di ng Act d o e s n o t im po se a du ty to reco rd

m or tg ag es an d as si gn m en ts in th e co un ty whe re th e pr op ert y is lo cat ed

. Bec au se th e
di st ric t co ur t de t e r mi n e d th at Io wa la w di d no t im po se a m an da to ry reco rd in g

req ui rem e n t
, th e co ur t di sm is se d al l of th e Co un ty’ s cl ai m s on th e ba si s th at th ey

co ul d n ot su rv iv e in th e ab se nc e o f m an da to ry reco rd in g.

Afte r th e d is tri ct co ur t gr an te d th e m ot io n t o d is m is s, Pl y m ou th Co un ty file d

a m ot io n to al te r or am en d th e jud gm en t an d fo r le av e to fil e an am en de d co m pl ai nt

.

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-Pl y m ou th Co un ty arg ue d th at reco ns id erat io n was ne ces sa ry be ca u s e it s br ie f in

op po si ti on to th e m ot io n to di sm is s req ue st ed le av e to am en d th e co m pl ai nt
, an d th e
di st ric t co ur t m ad e no ru li ng on th is req ue st

. The di st ric t co ur t ack no wle d g ed th e

ov ers ig ht an d reco ns id ered th e Co un ty’ s req ue st to am en d th e co mpla in t. Fi nd in g
th at al lo win g th e Co un ty leav e to am en d th e co m pl ai nt wou ld be fu ti le be cau se th e

ot he rwis e m eri tl es s cl ai m s co ul d no t be sa ve d by am en dm en t, th e di st ric t co ur t de ni ed

th e m ot io n. Th is ap pe al fol lo wed

.

II.

W e fir st co ns id er whe th er Pl y m ou th Co un ty ha s st an di ng to br i n g t h i s su it

. The Len de rs arg ue th at Pl y m ou th Co un ty l ack s st an di ng be cau se it ha s su f f ered no
in jury in fact fro m m or tg ag ees ’ us e of MERS o ve r th e co un ty recor de r syste m . W e

rev ie w a de te rm in at io n th at a pa rty ha s st an di ng de no vo

. St

. Pau l Area Ch am be r of

Co m m erce v. Gaertn er, 4 39 F.3d 48 1, 4 84 (8t h Cir. 20 06 ). A pl ai nt iff ha s st an di ng
whe n he su ffer s a co nc ret e in jury, or an “ in

jury in fact .” Urb an Co nt ract or s All ia nc e

o f S t

. Lo ui s v. Bi -St at e Dev

. Age nc y , 53 1 F.2 d 87 7, 88 1 (8 th Ci r. 19 76 ) (in te r n a l

qu ot at io n m ark s om it te d)

. “ The te s t o f co ns ti tu ti on al st an di ng ha s be en va rio us ly

ex pr es se d as ‘real an d im m ed ia te in jury’ to th e pl ai nt iff

, ‘a di st in ct a nd pa lp ab le

in jury to hi m se lf,’ or ‘inju ry in fact ’.

. . . [I]t is fu nd am en ta l th at th e pl ai nt iff hi m se lf

m us t h av e su ffer ed th e in

jury he se ek s t o re dr es s.” I d. (c it at io ns om it te d)

.

The in jury Pl y m ou th Co un ty ha s id en ti fie d is su ffi ci en t t o su pp or t st an di ng

. The Co un ty al le ge d th at th e us e of MERS to bypas s reco rd at io n wit h th e co un ty

reco rd er has de pr iv ed th e Co un ty of fees as so ci at ed wit h reco rd at io n and in te rfer ed

wit h th e Co un ty’ s du ty as th e reco rd er of pr op ert y reco rd s. W e be li ev e th is i s a

su ffi ci en t in

jury in fact to al lo w th e Co un ty to m ai nt ai n an act io n ag ai ns t th e Len de rs

. Fu rth er, ot he r co ur ts co ns id eri ng th e st an di ng of co un ti es br in gi ng si m il ar cl ai m s
ha ve de te rm in ed th at th e pa rti es ha d st an di ng

. See Ch ris ti an Cn ty. Cl erk v. Mo rtg

. Elec

. Reg is tra ti on Sy s., In c., 51 5 F. App ’x. 45 1, 45 4 (6 th Ci r. 20 13 ) (fi nd in g co un ty

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-ha d s ta nd in g to br in g su it ag ai ns t M ERS in cas e in te rp ret in g Ken tu ck y law) ; Fu ll er

v. Mo rtg

. Elec

. Reg is tra ti on Sy s., In c., 8 8 8 F.Su pp

. 2d 12 57

, 12 69 -7 0 (M.D. Fl a.
20 12 ) (“ Pl ai nt iff ha s al le ge d an in jury in fact –t ha t th e MERS reco rd in g syste m bo th

us ur ps hi s la wfu l au th or it y to m ai nt ai n pu bl ic la nd reco rd s an d red uc es th e am ou nt
of rev en ue hi s of

fic e rece iv es

. In ad di ti on , Pl ai nt iff al le ge s th at th is ‘non -p ub li c

reco rd in g’ in te rfer es wit h th e in te gr it y of th e pu bl ic reco rd s by m is st at in g th at MERS

is th e tru e m or tg ag e ho ld er an d ren de rin g th e pu bl ic un ab le to id en ti fy who ha s th e

tru e m or tg ag e in te res t in th e pr op ert y

. W it h th es e al le ga ti on s, Pl ai nt iff ha s sa ti sf ie d

Arti cl e III’s st an di ng req ui rem en ts .”). Bec au se Pl y m ou th Co un ty’ s lo ss of fees an d

t he in te rfer en ce wit h th e reco rd in g syste m are su ffi ci en t in juri es , we co nc lu d e t h a t

Pl y m ou th Co un ty has st an di ng to pu rs ue th es e cl ai m s.

III.

W e ne xt co ns id er whe th er th e di s t r i c t co ur t erre d in di sm is si ng Pl y m ou th

Co un ty’ s u nju st en ric hm en t an d ci vi l co ns pi racy cl ai m s an d in de nyin g i ts req ue st s

to pi erce th e ve il an d for in jun ct iv e an d dec la rat or y rel ie f. W e rev ie w th e di sm is sa l

of a c o mp l ai nt fo r fai lu re to st at e a cl ai m un de r Fed eral Ru le of Ci vi l Pro ced ur e
12 (b )(6 ) de no vo . Bot te n v . Sho rm a, 44 0 F.3 d 97 9, 98 0 (8 th Cir . 20 06 ). Plym ou th

Co un ty fir st arg u es th at th e Len de rs ha ve be en un jus tl y en ric he d be cau se MERS

al lo ws th e Len de rs to real iz e th e be ne fit s of th e reco rd in g syste m by m ai nt ai ni ng

pr io rit y wit ho ut pa y in g th e acco m pa nyi n g f

e e to th e Co un ty. Pl y

m ou th Co un ty

as se rts th at th e di st ric t co ur t’s di sm is sa l of th is cl ai m was in erro r, cl ai m in g no t th at

th ere is a du ty t o reco rd a m or tg ag e un de r Io wa la w, b ut in s t e a d th at MERS en joy s

pr ot ect io n affo rd ed by reco rd in g m or tg ag e as si gn m en ts at th e ex pe ns e of th e Co un ty.

Our own co ur t ha s rece nt ly he ld th at whe n st at e la w im po se s no du ty to reco rd

a m or tg ag e or su bs eq ue nt as si gn m en t, a co un ty can no t su cces sf ul ly st at e a cl ai m fo r

un jus t en ric hm en t. See Bro wn v. Mo rtg

. Elec

. Reg is tra ti on Sy s., In c., 73 8 F.3 d 92 6,

93 4- 35 (8 th Ci r. 20 13 ) (“ Bec au se Ark an sa s la w do es no t im po se a du ty on as si gn ees

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-of real es ta te m or tg ag es to reco rd th os e as si gn m en ts
, Bro wn’s st at e la w un jus t

en ric hm en t an d ADTPA cl ai m s do no t st at e a cl ai m .”). Oth er co ur ts co ns id eri ng th e
is su e ha ve al so reac he d th e sa m e co n c l u s i on

. See, e.g ., Mac on Cn ty., Ill

. v.
MERSC ORP, In c., 74 2 F.3 d 71 1, 71 4 (7 th Ci r. 20 14 ) (“ [Defe nd an ts ] are no t de riv in g

a n y b en efi t fro m th e Co un ty’ s m et ho d, th e reco rd in g syste m , b ey on d th e rec o r d i n g
of th e m or tg ag e as si g n men ts to MERSC ORP– fo r whi ch MERSC ORP pa y s th e
Co un ty’ s fe e. Rat he r, th e de fen da nt s are by pa ss in g th e Co un ty’ s re co rd in g s y st em ,

as th ey are en ti tl ed to do be cau se th ere is no req ui rem en t th at ei th er th e in it ia l

gr an ti ng of a m or tg ag e or it s as si gn m en t be reco rd ed

, le t al on e th at th e as si gn m en t
of a pr om is so ry

no te be reco rd ed .”).

The di st ric t co ur t de te rm in ed th at Io wa la w im po se s no du ty to reco rd

m or tga ge s or su bs eq ue nt as si gn m en ts
, an d Pl y m ou th Co un ty co nc ed es th is po in t. See

Sh oe m ak er v. Rag la nd

, 21 1 N.W

. 56 4, 56 6 (Io wa 19 26 ) (“ It is tru e we ha ve no st at ut e
whi ch

, in ex pr es s te rm s, req ui res th e reco rd in g of as si gn m en ts of m or tg ag es ei th er of

real or pe rs on al pr op e r t y

. . . .”); Sh oe m ak er v. Mi nk le r, 21 1 N.W

. 56 3, 56 4 (Io wa
19 26 ) (“ The re is no req ui rem en t of st at ut e th at m or tg ag e as si gn m en ts be pl ace d of

reco rd

. . . .”). W it ho ut a du ty to reco rd m or tg ag e as si g n men t s u n de r Io wa la w,
P l ym o ut h Co un ty can no t su cces sf ul ly st at e a cl ai m fo r un jus t en ric hm en t. Th e
Len de rs ha ve wit h h el d no m on ey whi ch in go od co ns ci en ce be lo ng s to th e Co un ty
be cau se Io wa la w do es no t req ui re th at al l m or tg ag ees reco rd th ei r in st ru m en ts wit h

th e co un ty reco rd er. See In re St rat m an ’s Est at e, 1 N.W .2d 63 6, 64 2 (Io wa 19 42 ) (ex pl ai ni ng th at to pr ev ai l on an un jus t en ric hm en t cl ai m

a pl ai nt iff

m us t s ho w th at

th e “ de fen da nt ha s rece iv ed m on ey whi ch in eq ui ty an d go od co ns ci en ce be lo ng s to pl ai nt iff ”). A m or tg ag ee’s de ci si on to reco rd a m or tg ag e as si gn m en t wit h MERS an d

pa y it th e co rres po nd in g fee do es no t res ul t in MERS ob t ai ni ng pa y m en t of m on ey
whi ch be lo ng s to Pl y

m ou th Co un ty. Bec au se Io wa la w do es n ot im po se a du ty on

as si gn ees to reco rd as si gn m en ts of real es ta te m or tg ag es , Pl y m ou th Co un ty’ s un jus t

en ric hm en t cl ai m

fai ls to st at e a cl ai m

up on whi ch rel ie f m ay

be gra nt ed

.

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-P l ym o u th Co un ty’ s rem ai ni ng cl ai m s si m il arl y fai l in th e ab se nc e of a

m an da to ry reco rd in g req ui rem en t. The ci vi l co ns pi racy cl ai m can no t su rv iv e wit ho ut

m an da to ry

reco rd in g bec au se “ [c]iv il co ns pi racy is n ot in it se lf a ct io na bl e; rat he r it

is th e act s cau si ng in

jury un de rta ke n in fu rth eran ce of th e co ns pi racy [th at ] gi ve ris e

to th e act io n.” Bas ic Ch em s., In c. v. Ben so n , 25 1 N.W .2d 22 0, 23 3 (Io wa 19 77 ).

The re is n o u n de rlyin g un la wfu l co nd uc t to su pp or t th e cl ai m th at th e Len de rs

en ga ge d i n a co nc ert ed effo rt t o c om m it un la wfu l acts

. Plym ou th Co un ty’ s re qu es t

to pi erce th e ve il fai ls be cau se it is a rem ed y rat he r th an a cau se of act io n. See Tam ko

Ro of in g Pro ds

., In c. v. Sm it h Eng ’g Co

., 45 0 F.3 d 82 2, 82 6 n.2 (8 th Ci r. 20 06 ). The

un de rlyin g cl ai m s fai l be cau se th ere is no du ty to reco rd a m or tg ag e as si gn m en t un de r
Io wa la w, pr ov id in g no ba si s to se ek th is rem ed y

. Lik ew i s e , P l y m ou th Co un ty’ s

req ue st fo r in

jun ct iv e rel ie f was pr op erl y de ni ed on th e ba si s th at in jun ct iv e rel ie f is

no t ap pr op ria te whe n th e un de rlyin g cl ai m s fai l. See Pat el v. U.S. Bu reau of Pri so ns , 51 5 F.3 d 80 7, 81 3 (8 th Ci r. 20 08 ). We d e c l i ne to co ns id er Pl y m ou th Co un ty’ s

req ue st fo r de cl arat or y rel ie f be cau se it ha s aba nd on ed th is cla im . See App el la nt ’s

Br. 27 n. 18 (The Co un ty “ wil l no t pr es s it s cl ai m fo r de cl arat or y rel ie f as pl ed in it s
in it ia l Co m

pl ai nt on th is ap pe al .”). In su m , b ecau se Pl y m ou th Co un ty’ s cl ai m s are
de pe nd en t up on a m an da to ry reco rd in g req ui rem en t, we affi r m t h e di st ric t co ur t’s

di sm is sa l o f th e co m

pl ai nt on th e m eri ts

.

V.

W e fin al ly co ns id er whe th er th e d i s t r i ct co ur t erre d in de nyin g Pl y m ou th

Co un ty’ s m ot io n to am en d or al te r th e jud gm en t an d fo r le av e to am en d th e co m pl ai nt

un de r Fed eral Ru le of Ci vi l Pro ced ur e 59 (e). Gen eral ly, we rev ie w a di st ric t co ur t’s

de ni al of a m ot io n t o am en d a co m pl ai nt fo r ab us e of di sc ret io n. Fe rg us on v. Ca pe
Gira rd eau Cn ty., 88 F.3 d 64 7, 65 1 (8 th Ci r. 19 96 ). Bu t we co nd uc t a de no vo rev ie w

o f t he un de rlyin g le ga l co nc lu si on as to whe th er th e pr op os ed am en dm en t to th e

co m pl ai nt wou ld be fu ti le

. U.S. ex rel Gau di ne er & Co m it o, L.L.P. v. Io wa, 26 9 F.3 d

93 2, 93 6 (8 th Ci r. 20 01 ). Un d e r Fed eral Ru le of Ci vi l Pro ced ur e 15 (a), le av e to

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-am en d a co m pl ai nt sh ou ld be free ly gi ve n in or de r to pr om ot e jus ti ce. Ferg us on , 88

F.3 d at 65 0. Bu t a pa rty is no t en ti tl ed to am en d a co m pl a i n t w i t ho ut m ak in g a
sh owi ng th at su ch an am en dm en t wou ld be ab le to sa ve an ot he rwis e m eri tl es s cl ai m

. W is do m v. Firs t Mid wes t Bank

, 16 7 F.3d 40 2, 40 9 (8 th Ci r. 19 99 ). A di st ric t cou rt

th us m ay de ny a m ot io n to am en d a co m pl ai nt w h e n su ch an am en dm en t wou ld be

fu ti le . See i d.

The Co un ty al le ge s th at it s pr op os ed am en de d co m pl ai nt wou ld no t be fu ti le

be cau se it rem ov es al l refe ren ce to Io wa’s Rec or di ng Act im po si ng a du ty to reco rd

m or tg ag e as si gn m en ts
, an d th e di st ric t co ur t de ni ed th e Co un ty’ s cl ai m s on th e ba si s
th at it al le ge d a m an da to ry reco rd in g re qu ire m en t. W e be li ev e, ho wev er, tha t th es e

a l t e r at io ns to th e or ig in al co m pl ai nt do no t res cu e th e un de rlyin g m eri tl es s cl ai m s

. Alt ho ug h th e pr op os ed am en de d co m pl ai nt m ak es no refe ren ce to an y vi ol at io n of a

reco rd in g st at ut e or ot he r m an da to ry reco rd in g re qui re m en t, the un de rlyin g cl ai m s are

st il l pr em is ed on th e du ty to reco rd a mo r tg ag e as si gn m en t. Pl y m ou th Co un ty’ s
cl ai m s can no t su rv iv e in th e ab se nc e of a m an da to ry r e c o r d i n g req ui rem en t, an d

al te rin g th e la ng ua ge of th e co m pl ai nt do es no t al lo w th e Co un ty to ev ad e th is ba rri er

to st at in g a cl ai m

. Bec au se we be li ev e an y am en dm en t to th e co m pl ai nt wou ld ha ve

pr ov ed fu ti le

, we fin d th at th e di st ric t co ur t act ed wit hi n it s di sc ret io n in de nyin g th e

m ot io n t o a lt er o r am en d.

VI.

Fo r th e fo reg oi ng reas on s, we fin d th at Pl y m ou th Co un ty ha s s t a n d i ng to

pu rs ue it s cl ai m s. W e fu rth er ho ld th at th e di st ric t co ur t pr op erl y di sm is se d Pl y m ou th

C o u n t y’ s cl ai m s fo r fai lu re to st at e a cl ai m up on whi ch rel ie f m ay be gr an te d a n d

act ed wit hi n it s d is cret io n b y de nyin g P lym ou th Co un ty’ s m ot io n to al te r or am en d

it s co m pl ai nt . The jud gm en t o f th e d is tri ct co ur t i s af fir m ed

.

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