Supreme Court of South Carolina sides with MERS in Kubic v. MERSCORP Holdings, Inc.

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Supreme Court of South Carolina sides with MERS in Kubic v. MERSCORP Holdings, Inc.On March 30 2016, the Supreme Court of South Carolina weighed in on the attempts of several South Carolina counties to make Mortgage Electronic Registrations Systems, Inc. (MERS), and its member banks pay for the correction of inaccurate land records and the remediation of the land records process. In a unanimous decision, the Court sided with MERS and its member banks.

The case, Kubic v. MERSCORP Holdings, Inc., is one of many lawsuits nationwide that attacked the MERS system and was the consolidation of five separate lawsuits by county administrators and registers of deeds in five counties in South Carolina (“Respondents”) against MERSCORP Holdings, Inc., Mortgage Electronic Registrations Systems Inc., and several banks (“Petitioners”). Respondents filed lawsuits claiming fraud, misrepresentation, unfair trade practices, and trespass to chattels. They sought a declaratory judgment that Petitioners “had caused damage to the public index in recording false documents” and sought to enjoin Respondents from “recording any documents indicating MERS has a lien on real property as well as requiring Respondents to correct the falsely filed documents.”

Petitioners then filed a motion to dismiss, which the trial court denied. In response, Petitioners filed a motion for a writ of certiorari, which was granted by the Supreme Court of South Carolina. The Supreme Court of South Carolina then reversed the trial court’s decision and dismissed Respondents’ lawsuits.

Respondents had complained that “[t]he tools provided were not sufficient to preserve the integrity of the public record from fraudulent and pervasive effects of a shadow recording system which would go undetected until substantial harm had been done.” The Supreme Court of South Carolina, however, noted that under the statute at issue, the counties did not have standing to bring the suit. According to the Court, “[h]owever laudable the interest in protecting the public index may be, our limited role here is discerning legislative intent from the statutory text. If Respondents are dissatisfied with the powers the legislature has outlined for them, that should be taken up with the General Assembly. It is not the province of this Court to legislate or imply remedies not specified by the legislature.” The Supreme Court of South Carolina found that Respondents had failed to state a claim and reversed the trial court’s denial of Petitioners’ motion to dismiss. Respondents have until April 14, 2016, to file a petition for rehearing.