Union County, Illinois et al v. Merscorp, Inc., et al

Filing 118

ORDER granting #59 Motion to Dismiss; granting #104 Motion for Joinder. This action is dismissed as to all Defendants other than Defendant GMAC Mortgage LLC, to which the action is STAYED. GMAC Mortgage LLC and Plaintiffs are ORDERED to file a status update on or before 7/29/13, and biannually thereafter. Signed by Judge G. Patrick Murphy on 1/30/2013. (ktc)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

UNION COUNTY, ILLINOIS; PEOPLE OF
THE STATE OF ILLINOIS ex rel; TYLER
EDMONDS State’s Attorney for the County
of Union; and BOBBY TOLER Clerk of the
County of Union and on behalf of the County
of Union, Illinois and all Counties in Illinois,
Plaintiffs,
vs.
M E R S C O R P , IN C .; MO R TGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC.; JP MORGAN CHASE
BANK, N.A.; BANK OF AMERICA
CORPORATION; BANK OF AMERICA
N.A.; RBS CITIZENS, N.A.; RBS
SECURITIES, INC.; CITIGROUP, INC.;
CITIMORTGAGE, INC.; CITIBANK, N.A.;
DEUTSCHE BANK NATIONAL TRUST
COMPANY; EVERBANK; GMAC
MORTGAGE, LLC; HSBC BANK USA,
N.A.; KEYBANK NATIONAL
ASSOCIATION; NATIONWIDE
ADVANTAGE
MORTGAGE
CORPORATION; SUNTRUST
MORTGAGE, INC.; U.S. BANK
NATIONAL ASSOCIATION; WELLS
FARGO BANK, N.A.; and DEFENDANTS
DOE CORPORATIONS 1 - 100,
Defendants.

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CIVIL NO. 12-665-GPM

MEMORANDUM AND ORDER
MURPHY, District Judge:

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Defendants US Bank N.A., CitiMortgage, Inc., Citigroup, Inc., JP Morgan Chase Bank N.A.,
RBS Securities, Inc., Everbank, Wells Fargo Bank N.A., MERSCORP, Inc., and Mortgage
Electronic Registration Systems, Inc., removed this action from the First Judicial Circuit Court,
Union County, Illinois on May 25, 2012, citing this Court’s jurisdiction under the Class Action
Fairness Act, 28 U.S.C. § 1332(d)(2) (Doc. 3). In their amended class action complaint, Plaintiffs
define the basis of their action as “Defendants’ failure to record all mortgage assignments with the
Union County Clerk and all County recording offices across the state of Illinois, and pay the
attendant recording fees, as required by Illinois law.” (Doc. 3-1, ¶ 1). In part because the Court finds
that the recording statute does not impose a mandatory duty to record the assignments at issue here,
Defendants’ motion to dismiss the complaint is GRANTED. The Court also GRANTS Defendant
KeyBank National Association’s motion to join in the motion to dismiss (Doc. 104). Defendant
GMAC Mortgage, LLC filed a Notice of Bankruptcy and Effect of Automatic Stay on May 25,
2012, the day this action was removed (Doc. 3). Accordingly, this action is DISMISSED with
prejudice as to all Defendants except Defendant GMAC Mortgage, LLC. As to Plaintiff’s only
remaining claims, against Defendant GMAC Mortgage, LLC, the case is STAYED. Plaintiffs and
Defendant GMAC Mortgage, LLC are ORDERED to file a status report on or before July 29, 2013,
and biannually thereafter.
Plaintiffs’ Complaint
Plaintiffs’ removed “Amended Class Action Complaint” claims that Defendants, a “national
registry that tracks ownership and servicing rights in residential mortgage loans” and its
shareholders, failed to comply with Illinois’s recording statute, 765 ILCS 5/28 (Doc. 3-1).

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Defendant MERS, a subsidiary of Defendant MERSCORP, is essentially alleged to be a front for
the other Defendants’ inter-mortgage assignments. Defendants describe the MERS-mortgaging
structure as follows:
[MERS is] a corporate entity created to allow its members to track active residential
mortgage loans. When a mortgage loan is originated, a borrower typically signs a
mortgage, which grants a security interest in the borrower’s property as security for
the loan. When a loan is registered with MERSCORP, MERS is listed as mortgagee
on the mortgage executed by the borrower. Thereafter, MERS serves as mortgagee
in county land records on behalf of the lender and subsequent transferees or
purchasers of the loan. When ownership of a mortgage loan is transferred among
MERSCORP members, MERS remains the mortgagee of record, and no mortgage
assignment is created or recorded.
(Doc. 3, ¶ 2).

According to Plaintiffs, MERS “masquerades” as the title holder, while

shareholders/members actually prepare “MERS”’s initial mortgage assignments for record. If
further mortgage assignments take place between MERS members/shareholders, however, those
assignments are not recorded, as MERS acts “on behalf of both the assignor and assignee” (Doc.3-1,
¶ 54). It is this failure to record that forms the crux of Plaintiffs’ complaint. By creating an
“alternative” recording system, Plaintiffs argue, Defendants have purposefully circumvented Illinois
laws that mandate public county recording (and paying fees for that recording) (Doc. 70, p. 3).
Plaintiffs seek relief on four claims: (1) declaratory judgment (declaring that Defendants are required
by Illinois law to record and pay the recording fees for every mortgage and mortgage assignment
on real property in Illinois) and permanent injunction (enjoining Defendants to so-record and pay);
(2) restitution and civil penalties for violation of 815 ILCS 505/2, Illinois’s consumer fraud act; (3)
restitution for Defendants’ unjust enrichment (unjustly retaining the money they were required to
pay in recording fees); and (4) damages resulting from Defendants’ civil conspiracy to violate the
Illinois recording statute (Doc. 3-1).

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Standard of Review on Motion to Dismiss
Under Federal notice pleading, a complaint need only “include a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). It only need
include“factual allegations [that are] enough to raise a right to relief above the speculative level.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In other words, a “complaint must contain
sufficient factual matter...to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). Writing for the dissent in the Seventh Circuit’s recent Vance v. Rumsfeld en
banc opinion, Judge Rovner succinctly stated:
To survive a motion to dismiss, a complaint need not do more than enunciate a
plausible claim for relief. The plausibility standard is not akin to a ‘probability
requirement.’ It does not imply that the district court should decide whether the
claim is true, which version of the facts to believe, or whether the allegations are
persuasive. Provided the complaint invokes a recognized legal theory…, and
contains plausible allegations on the material issues, it cannot be dismissed under
Rule 12.
701 F.3d 193, 226 (7th Cir. 2012) (internal citations and quotations omitted). The plaintiff,
however, must allege “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal
at 678. And “the tenet that a court must accept as true all of the allegations contained in a complaint
is inapplicable to legal conclusions.” Id. It is “not enough to give a threadbare recitation of the
elements of a claim without factual support.” Bissessur v. Indiana Univ. Bd. of Trs., 581 F.3d 599,
603 (7th Cir. 2009).
Defendants’ Joint Motion to Dismiss Plaintiffs’ Amended Class Action Complaint
and Plaintiffs’ Response
Defendants argue for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) on the
bases that: there is no private right of action available to Plaintiffs here; Plaintiffs have no standing;
no duty to record exists under Illinois law; and Plaintiffs failed to adequately plead claims under the
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Illinois Consumer Fraud and Deceptive Business Practices Act, for unjust enrichment, for civil
conspiracy, or for declaratory/injunctive relief (Doc. 63-2).
Defendants point to the language of Illinois’s recording statute, 765 ILCS 5/28, and to the
fees statute, 55 ILCS 5/3-5018, to argue that Plaintiffs have no private right of action. The recording
statute reads:
Deeds, mortgages, powers of attorney, and other instruments relating to or affecting
the title to real estate in this state, shall be recorded in the county in which such real
estate is situated; but if such county is not organized, then in the county to which
such unorganized county is attached for judicial purposes. No deed, mortgage,
assignment of mortgage, or other instrument relating to or affecting the title to real
estate in this State may include a provision prohibiting the recording of that
instrument, and any such provision in an instrument signed after the effective date
of this amendatory Act shall be void and of no force and effect.
765 ILCS 5/28. The statute contains no provision for enforcement, argue Defendants, and neither
does the fees statute (Doc. 63-2, p. 7). Defendants also argue that Plaintiffs’ common law claims
are attempts to sidestep the absence of private rights of action in the applicable statutes. In response,
Plaintiffs contend that the broad powers of the State’s Attorney to protect the public interest
authorize the suit. Plaintiffs also argue that the county recorder has an implicit right of action, as
the recorder’s function depends on compliance with the recording statute.
Defendants’ basic standing argument is that Plaintiffs lack an injury in factSthe County is
entitled to fees for recording services performed, but here they did not perform recording services,
so they’re not due unpaid fees, and there is no compensable injury. In Plaintiffs’ view, because the
recording statute mandates recording, they have suffered real harm–lost recording fees and
inaccurate land records. Defendants respond that any injury resulting from silent land records (and
Defendants note that Plaintiffs have not alleged any specific injury–which the Court understands to
mean a specific instance where lack of mortgage assignment recording caused harm) would inure
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to specific creditors and purchasers of property, not Plaintiffs here.
Underlying the bulk of Defendants’ argument for dismissal (and their most consequential
argument) is that there is no duty to record mortgages or assignments in Illinois. According to
Defendants, the Illinois Supreme Court spoke to the issue in 1886 and 1894 cases: Field v. Ridgely,
6 N.E. 156, 159 (Ill. 1886) (“We are aware of no principle, outside of self-interest and prudence in
business, that requires the holder of a mortgage to put it on record at any particular time.”); and
Haas v. Sternbach, 41 N.E. 51, 56-57 (Ill. 1894) (“No one will contend that the recording of a
mortgage is, in this State, necessary to its validity. Recording such instruments serves but one
purpose, and that is to make them valid as against creditors and subsequent purchasers without
notice.”). Plaintiffs counter that these cases discussed only the validity of a mortgage document as
between the parties to a land transaction, not as to potential subsequent purchasers.
Defendants also argue that, looking at the language of 765 ILCS 5/28 in its entirety, the
statute plainly refers to where recordings are to take place; not that they must take place. Plaintiffs
on the other hand point to the word “shall” in the statute to argue that mortgage and assignment
recording in Illinois is mandatory. 765 ILCS 5/28 (“[M]ortgages…and other instruments relating
to or affecting the title to real estate in this state, shall be recorded in the county in which such real
estate is situated….”) (emphasis added).
In addition to their argument that Plaintiffs fail to state a claim because Illinois imposes no
duty to record, Defendants also argue that Plaintiffs failed to state a cognizable claim for
unfair/deceptive practices in violation of 815 ILCS 505/2; unjust enrichment; civil conspiracy; and
for declaratory and injunctive relief. Defendants’ qualm with Plaintiffs’ claims for declaratory and
injunctive relief is that those remedies cannot stand on the bases of other counts that fail under Rule

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12(b)(6). Regarding the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”),
Defendants point out that the Conveyance Act (of which 765 ILCS 5/28 is a part) was not identified
in ICFA as one of the enumerated statutes, the violation of which would constitute a predicate act
for an ICFA claim. Neither, Defendants argue, did Plaintiffs properly allege the elements of an
ICFA claim. Plaintiffs respond that the ICFA claim was properly pleaded and that Illinois courts
give the State’s Attorney broad leeway to bring suit to protect the public interest. As to Plaintiffs’
unjust enrichment claims, because Defendants hold they had no duty to record or pay recording fees,
they claim they did not act unjustly; nor was there any benefit conferred to Defendants where they
did not pay for a service (recording) they did not utilize. In Plaintiffs’ view, avoiding the fees was
a benefit to Defendants, to Plaintiffs’ detriment.
Defendants ask the Court to dismiss the civil conspiracy claim, as Plaintiffs “merely parrot[]
the elements of civil conspiracy, which is insufficient to state a claim.” (Doc. 63-2, p. 26). Plaintiffs
argue that their complaint did provide factual detail for each element of conspiracy. As discussed
below, the Court finds that the failure to record was not an unlawful act, so Plaintiffs’ civil
conspiracy count fails to state a claim. However, the Court notes that Defendants’ insufficientpleading argument here would otherwise likely be unavailing. Defendants cite to detail that some
Illinois courts have required to plead civil conspiracy. However it is the Federal Rules of Civil
Procedure that “apply to a civil action after it is removed from a state court.” FED.R.CIV.P 81(c)(1);
see also Hanna v. Plumer, 380 U.S. 460, 465 (1965) (“[F]ederal Courts are to apply state substantive
law and federal procedural law.”) Under Federal notice pleading, a complaint need only “include
a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ.
P. 8(a)(2). It only need include“factual allegations [that are] enough to raise a right to relief above

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the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Analysis
The Court notes that both parties spent some effort apprising the Court of analogous caselaw.
Defendants and Plaintiffs both cited (and filed supplemental briefs citing) non-Illinois cases
interpreting state recording statutes vis a vis a duty to record mortgage assignments (including
Christian County v. Mortg. Elec. Registration Sys., Inc., 2012 WL 566807 (W.D. Ky. Feb. 21,
2012); Fuller v. Mortg. Elec. Registration Sys., Inc., No. 11-1153 (M.D. Fla. June 27, 2012) (Ex.
1); Bates v. Mortg. Elec. Registration Sys., Inc., 2011 U.S. Dist. LEXIS 40356, at *9-10 (D. Nev.
Mar. 30, 2011); Bates v. Mortg. Elec. Registration Sys., Inc., 2011 WL 892646 (E.D. Cal. Mar. 11,
2011), appeal docketed, No. 11-15894; Bates v. Mortg. Elec. Registration Sys., Inc., No. 2010 CA
002993 (D.C. Super. May 7, 2012); Bates v. Am. Lending Alliance, No. 10-1-0160-01 (Haw. Mar.
12, 2012); Bates v. Mortg. Elec. Registration Sys., Inc., No. 49D12-0911-CT-051734 (Ind. June 22,
2012); Bates v. Mortg. Elec. Registration Sys., Inc., No. MCRE-1010 (Tenn. Apr. 4, 2012); Jackson
Cnty., Missouri v. MERSCORP, Inc., No. 12-0665-CV-ODS (W.D. Mo. Jan. 14, 2013); Plymouth
Cnty., Iowa v. MERSCORP, Inc., 2012 WL 3597430 (N.D. Iowa Aug. 21, 2012); Montgomery Cnty.,
v. MERSCORP, Inc., 2012 U.S. Dist. LEXIS 151598 (E.D. Pa. Oct. 19, 2012); and Brown v.
Mortgage Electronic Reg. Sys., Inc., No. 6:11-CV-06070 (W.D. Ark. Sept. 17, 2012)). The Court
has reviewed these cases, but does not borrow any of their rationale–as it is the directive of Illinois’s
recording statute that is dispositive here. (Defendants did cite Illinois and Northern District of
Illinois cases acknowledging MERS’s legitimacy as a mortgagee–but that is not directly at issue in
this action, see Doc. 63-2, p. 4, n. 4).
The Court finds that the question of whether or not Illinois law requires Defendants to record

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all mortgages and substantive assignments is dispositive. If there is no duty to record, then the
complaint states no claim for relief for violation of ICFA, unjust enrichment, civil conspiracy, or any
declaratory or injunctive relief. The primary question of standing also turns on the statute–if
Defendants were required to pay recording fees, then Plaintiffs have an argument for injury in fact.
As the parties agreed at the hearing on the motion to dismiss, this is purely a question of law and
requires the Court to interpret section 765 ILCS 5/28 of Illinois’s Conveyance Act. Statutory
interpretation “depends upon reading the whole statutory text, considering the purpose and context
of the statute, and consulting any precedents or authorities that inform the analysis.” United States
v. Hagler, 700 F.3d 1091, 1097 (7th Cir. 2012), quoting Dolan v. U.S. Postal Service, 546 U.S. 481,
486 (2006). As the Seventh Circuit has distilled:
In Illinois, the primary objective in statutory interpretation is to give effect to the
intent of the legislature. Because the most reliable indicator of the legislature’s
intent is the language of the statute, the Illinois Supreme Court looks there first,
applying the plain, ordinary, and popularly understood meanings of the statute’s
terms. The Court looks to the dictionary when necessary to discern the ordinary and
popular meanings of words. In addition to the language of the statute, the Court also
considers the purpose behind the law and the evils sought to be remedied, as well as
the consequences that would result from construing the law one way or the other.
It assumes that the legislature did not intend absurdity, inconvenience or injustice
and looks to legislative history if the need arises.

Rexam Beverage Can Co. v. Bolger, 620 F.3d 718, 732 (7th Cir. 2010) (internal citations and
quotations omitted); see also Illinois Dept. of Financial and Professional Regulation v. Rodriquez,
No. 113706, 2012 WL 6115103 at *3 (Ill. Nov. 29, 2012). In consideration of an Illinois statute, the
Court’s “duty is to interpret the Act as best we predict the Illinois Supreme Court would. In the
absence of guiding decisions by the state’s highest court, we consult and follow the decisions of
intermediate appellate courts unless there is a convincing reason to predict the state’s highest court

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would disagree.” ADT Security Services Inc., v. Lisle-Woodridge Fire Protection District, 672 F.3d
492, 498 (7th Cir. 2012) (internal citations omitted).
Neither party has shown that the Conveyance Act as it existed before Field, 6 N.E. 156 (Ill.
1886), or Haas, 41 N.E. 51 (Ill. 1894), differs in any significance from the current version, so the
Court will consider both the contemporary statutory language and the historical opinions of the
Illinois Supreme Court. See Commonwealth Plaza Condominium Ass’n v. City of Chicago, 693 F.3d
743, 749 (7th Cir. 2012).
In Field, appellants argued that appellees, both creditors of a Springfield Illinois merchant
company, fraudulently induced appellants to sell goods to that merchant, even though appellees
knew that the merchant was insolvent. 6 N.E. 156 at 158-59. Appellants were unaware that the
merchant company had executed mortgages on real estate to appellees as security against the
merchant’s indebtedness. Id. Those mortgages were not recorded. Id. The Illinois Supreme Court
found that appellants could not prove a constructive trust had been created between themselves and
the appellees. Id. at 159. The Court found the only bases for that argument were insufficient: (1)
appellees were in receipt of a judgment against the merchant without alerting appellants of the same;
and (2)–pertinent here–appellees had not recorded the mortgages that the merchant had assigned to
them. Describing why the failure to record was insufficient to form a basis for a breached
constructive trust, the Court said:
We are aware of no principle, outside of self-interest and prudence in business, that
requires the holder of a mortgage to put it on record at any particular time. By not
doing so promptly he runs the risk of having it postponed to prior liens, and even of
losing the benefit of it altogether. As to subsequent purchasers and creditors without
notice, such securities take effect from the time of filing for record only.
Id.

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Eight years later, the Illinois Supreme Court considered whether withholding a mortgage
from record could form the basis for fraud. Haas v. Sternbach, 41 N.E. 51, 55 (Ill. 1894). Henry
Leopold mortgaged property to Charles Sternbach (et al) with an agreement between those two that
the mortgage not be recorded until November 5, 1890. Id. at 49. Before that date, Leopold
mortgaged and recorded the same (or parcels of the same) real property to other parties. Id. The
trial court found that the Sternbach mortgage was fraudulent as a matter of law, but the Supreme
Court agreed with the appellate court that the unrecorded transaction was not per se fraudulent. Id.
at 53-54. The Court distinguished between an agreement to keep a mortgage secret (which might
evidence actual fraud) and an agreement not to record (which the Court–reiterating the decision in
Field–clarified was not a basis to find a mortgage fraudulent at law). Id. at 56. Recording was an
issue of notice and perfecting rights–the absence of recording was not in and of itself a bad act. Id.
at 57 (“No one will contend that the recording of a mortgage is, in this state, necessary to its validity.
Recording such instruments serves but one purpose, and that is to make them valid as against
creditors and subsequent purchasers without notice…. No time is fixed within which the filing for
record must take place in order to give such an instrument validity. It cannot, therefore, be said that
the mere omission to record is fraudulent per se as to subsequent creditors of or purchasers from the
mortgagor.”). The Court also stated that “in light of our statute,” as opposed to other state’s statutes,
the question of whether not-recording was per se fraudulent was “free from doubt.” Id. at 58.
The Illinois Supreme Court, per Field and Haas and considering Illinois’s statutes, found that
there is no fraud in law for failure to record, and there may be actual fraud only if the mortgagor had
some duty to record (for example, the Court discussed in Haas that the mortgagor was the
mortgagee’s attorney). Id. at 59. The Illinois Supreme Court mentioned no such duty created by

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any Illinois statute, and here, Plaintiffs have provided no alternate source of a duty to record. During
the hearing on Defendants’ motion to dismiss, Plaintiffs attempted to distinguish Field and Haas by
stating that those cases discuss only the validity of a mortgage document between two individual
parties–they do not speak to a statutory mandate to record and pay recording fees. Plaintiffs’ papers
make the same point: “these opinions [Field and Haas] only contemplate the legal consequences
amongst the parties of a failure to record and not the actual requirement itself” (Doc. 70, p. 10). But
that is the circumstance in this case: MERS coordinates assignments which the parties have agreed
not to record.
The Illinois Supreme Court has then, made general statements regarding the need to record
in the context of whether unrecorded mortgages are valid and/or fraudulent. This Court finds it
nonsensical that if Illinois law mandated recording, the Illinois Supreme Court would not so-note
in the factual contexts of Field or Haas. Given these cases, the Court finds that the Illinois Supreme
Court does not consider recording mortgages/assignments statutorily mandatory. C.f. East St. Louis
Lumber Co. v. Schnipper, 141 N.E. 542, 544-45 (Ill. 1923) (The Illinois Supreme Court stated that
there are “conditions prescribed by statute under which a judgment creditor may have priority over
the actual owner of land if he is without notice, either by record or otherwise.” Section 30 of the
Conveyances Act explains how conveyances transferred with notice take effect. Section 30 extends
“only to instruments required to be recorded.” That is, the provisions of section 30 do not extend
to instruments that are not required to be recorded in order to take priority.)
More recent Illinois appellate court cases referencing 765 ILCS 5/28 also support the finding
that not-recording is not-violative of Illinois law. The only non-absurd, non-inconvenient way to
read the language of the law itself and the language of Illinois appellate courts is to read that the law

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“requires” a recording only insofar as a mortgagee’s interest in property might otherwise be in
jeopardy. See In re Quade, 482 B.R. 217, 234 (Bankr. N.D.Ill. 2012) (“In Illinois, to claim an
interest in real property that is enforceable as to third parties, a creditor must record that interest in
accordance with applicable law.”), citing 765 ILCS 5/28-31.
For example, the Fourth District appellate court mentioned the recording statute when it
considered the priority of proceeds from a real estate foreclosure sale in Farmers State Bank v.
Neese, 665 N.E.2d 534 (Ill.App.Ct. 1996). The court found that because assignments are voluntary
contracts, they need not be recorded to be enforceable as-between the parties, but “to be protected
against third parties” the assignment needed to be recorded. Id. at 106-107. So, the requirement is
not a duty, the dereliction of which exposes the mortgagee or mortgagor to civil penalties. The
‘penalty’ is the potential inability to enforce assignments against other purchasers. In Federal
National Mortgage Association v. Kuipers, Illinois’s Second District appellate court stated that the
purpose of 765 ILCS 5/28 is “to give third parties the opportunity to ascertain the status of title to
the property.” 732 N.E. 2d 723, 726 (Ill.App.Ct. 2000). “An unrecorded interest in land is not
effective as to a bona fide purchaser without notice. However, where a party has constructive notice
of a prior interest in real estate, the failure to record is not necessarily fatal to the rights of the prior
interest holder.” Id. Given language like this, it does not make sense to interpret section 28 to read
that ‘failure to record is actionable.’ The parties “shall” record if they wish to clarify priority. See
also Aames Capital Corp. v. Interstate Bank of Oak Forest, 734 N.E.2d 493, 496-97 (Ill.App.Ct.
2000) (“[W]e recently held…that an assignee of a mortgagee was not required to record the
assignment of mortgage in order to maintain the original mortgagee’s priority position.”). In 2009,
Illinois’s Second District, on consideration of whether a purchaser of real property was subject to

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a never-recorded zoning restriction, stated that under the county zoning ordinance (not the state
recording statute), recording was required, but the only effect of the failure to record was that
restrictions on the property without notice to the subsequent purchaser were void. King v. DeKalb
County Planning Dept., 917 N.E.2d 36, 42 (Ill.App.Ct. 2009). Similarly, Illinois’s Fourth District
appellate court mentioned recording as one way notice for the purposes of equitable conversion may
be effected: “One can give constructive notice of an interest in land by recording the corresponding
instrument in the county in which such real estate is situated.” United Community Bank v. Prairie
State Bank & Trust, 972 N.E.2d 324, 331 (Ill.App.Ct. 2012) (emphasis added), quoting 765 ILCS
5/28.
Section 28 does say that “mortgages…and other instruments relating to or affecting the title
to real estate in this state, shall be recorded in the county in which such real estate is situated” 765
ILCS 5/28 (emphasis added). However, looking at the language of this section in toto, and
considering Illinois caselaw, it is clear to the Court that section 28 relates to ‘how such instruments
shall be recorded,’ see section 30. The statute does not create a general, public cause of action
arising when an instrument is not recorded. Therefore, in context and upon consulting Illinois
Supreme Court and appellate court decisions, the Court finds that, by the plain meaning of 765 ILCS
5/28, there is no mandatory duty to record here and Plaintiffs’ complaint fails to state any claim
upon which relief may be granted. The action is DISMISSED as to all Defendants except GMAC
Mortgage, LLC, which did not move for dismissal and Judgment pursuant to Federal Rule of Civil
Procedure 54(b) shall enter accordingly. As ordered above, the case is STAYED as to GMAC
Mortgage, LLC and the parties shall file status reports with the Court as indicated. The action is
otherwise closed.

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IT IS SO ORDERED.

DATED: January 30, 2013
s/ ZA ctàÜ|v~ `âÜÑ{ç
G. PATRICK MURPHY
United States District Judge

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