MONTGOMERY COUNTY, PENNSYLVANIA, RECORDER OF DEEDS v. MERSCORP, INC. et al

Filing 109

MEMORANDUM ORDER THAT THE MOTION FOR SUMMARY JUDGMENT FILED BY THE MERS DEFENDANTS' (DOC. NO. 87 ), IS DENIED FOR THE REASONS SET FORTH IN THE PRECEDING MEMORANDUM OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 4/21/2014. 4/22/2014 ENTERED AND COPIES E-MAILED.(amas)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
MONTGOMERY COUNTY, PENNSYLVANIA,
RECORDER OF DEEDS, by and through
Nancy J. Becker in her official
capacity as Recorder of Deeds of
Montgomery County, on its own
behalf and on behalf of all others
similarly situated,
Plaintiff,
v.
MERSCORP, INC., and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.,
Defendants.

:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:

CIVIL ACTION
NO. 11-CV-6968

MEMORANDUM AND ORDER

JOYNER, J.

April 21, 2014

Now before this Court is the Motion of Defendants Merscorp,
Inc. and Mortgage Electronic Registration Systems, Inc. (the MERS
Defendants) for Summary Judgment that 21 P.S. §351 is
Unconstitutionally Vague As Applied to them.

For the reasons

which follow, the motion is DENIED.
History of the Case
This case was filed in November, 2011 by Nancy Becker, who
is the Recorder of Deeds for Montgomery County, Pennsylvania, on
behalf of herself and all other similarly situated Pennsylvania
County Recorders of Deeds.

The gravamen of Ms. Becker’s

complaint is that by creating and maintaining a private, membersonly registry for recording and tracking conveyances of interests
in real property, the MERS Defendants have violated Pennsylvania
state law requiring that such conveyances be recorded in county
recorder of deeds offices – specifically 21 P.S. §351.

On behalf

of herself and the class, Plaintiff seeks not only monetary
relief for what she submits are Defendants’ negligent and willful
violations of the foregoing statute but declaratory and
injunctive relief as well.
In response, Defendants moved for dismissal of the action in
its entirety on the grounds that first, 21 P.S. §351 does not
require the recording of transfers of beneficial interests in
real estate - which is what the MERS system tracks, and that even
if it did, no private right of action exists to enforce that
requirement.

Second, Defendants argued that Plaintiff failed to

state a cause of action for unjust enrichment, or declaratory or
injunctive relief.

In our Memorandum and Order of October 19,

2012, these arguments were largely rejected insofar as we
predicted that the Pennsylvania Supreme Court would conclude that
the statute does indeed make recording of conveyances compulsory
and that by virtue of Pa. R. C. P. 1061(b)(3), Plaintiff
possessed a sufficiently plausible interest in the recording of
mortgage assignments to enable her to pursue an action to quiet
title.

Finally, we found that the complaint alleged sufficient

2

facts to state viable claims for unjust enrichment and
declaratory and injunctive relief.1
Thereafter, on December 12, 2012, Defendants
contemporaneously filed an answer to the complaint and moved to
dismiss Plaintiff’s Claims to Quiet Title asserting that
Plaintiff had failed to describe the real property(ies) that were
subject to the quiet title action, failed to join the owners or
others with interest in the property(ies) as real parties in
interest and failed to identify the documents sought to be
recorded.

These arguments were likewise rejected and the

defendants’ second motion denied on March 6, 2013 for the reasons
that: (1) the existence of a title dispute is not a pre-requisite
to commencement of a quiet title action under Pa. R. C. P. 1061,
(2) the Court had already determined that Rule 1061(b)(3)
permitted Plaintiff to bring a quiet title action absent an
interest in the underlying land at issue, (3) the absence of a
description of the property was not fatal to the Plaintiff’s
claim, and (4) Defendants had failed to meet their burden to show
that the property owners were indeed necessary parties.
Shortly after the entry of the Court’s Order of March 6,
1

Plaintiff’s complaint also included, at Count II, a claim for civil
conspiracy, alleging that “Defendants in this action have conspired with other
unnamed co-conspirators to violate the provisions of 21 P.S. §351,” and that
“Defendants acted in combination to create an alternative mortgage recording
system, outside of public view, with the specific purpose of unlawfully
failing to record assignments of mortgages and paying the associated fees.”
(Complaint, ¶s 38, 39). This count was dismissed in our Memorandum and Order
of October 19, 2012, however, because it failed to aver a malicious intent to
injure the individual recorders of deeds or their offices.

3

2013, Defendants filed an Amended Answer to the Complaint,
denying the substance of the allegations of the remaining counts
of the complaint and raising a number of affirmative defenses.
On October 31, 2013, following the filing of Plaintiff’s Motion
to Certify the Class and its Motion for Summary Judgment,
Defendants (with Plaintiff’s consent) filed a second Amended
Answer to the Complaint in which they raised the affirmative
defense that 21 P.S. §351 was unconstitutionally vague and
unconstitutional as applied to them.

Then, on December 4, 2013,

Defendants filed the motion which is now before us seeking the
entry of judgment in their favor as to all of the remaining
claims against them in this action.
Standards Applied to Motions for Summary Judgment
The standards governing consideration of motions for summary
judgment in the federal courts are set forth in Fed. R. Civ. P.
56.

Under subsection(a) of that rule,
A party may move for summary judgment, identifying each
claim or defense - or the part of each claim or defense
- on which summary judgment is sought. The court shall
grant summary judgment if the movant shows that there
is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law...

In considering a motion for summary judgment, the reviewing court
should view the facts in the light most favorable to the nonmoving party and draw all reasonable inferences in that party’s
favor.

Burton v. Teleflex, Inc., 707 F.3d 417, 425 (3d Cir.

2013).

The initial burden is on the party seeking summary
4

judgment to point to the evidence “which it believes demonstrate
the absence of a genuine issue of material fact.”

United States

v. Donovan, 661 F.3d 174, 185 (3d Cir. 2011)(quoting Celotex
Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed.2d
265 (1986)).

An issue is genuine only if there is a sufficient

evidentiary basis on which a reasonable jury could find for the
non-moving party, and a factual dispute is material only if it
might affect the outcome of the suit under governing law.
Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir.
2006)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
106 S. Ct. 2505, 91 L. Ed.2d 202 (1986)).

Thus, “if there is a

chance that a reasonable juror would not accept a moving party’s
necessary propositions of fact,” summary judgment is
inappropriate.”

Id, (quoting El v. SEPTA, 479 F. 3d 232, 238 (3d

Cir. 2007)).
Discussion
The statute under challenge here - 21 P.S. §351 is one of a
number of state statutes addressing the maintenance, upkeep and
state of the title and land records in the Commonwealth of
Pennsylvania.

It reads as follows:

All deeds, conveyances, contracts, and other instruments of
writing wherein it shall be the intention of the parties
executing the same to grant, bargain, sell, and convey any
lands, tenements, or hereditaments situate in this
Commonwealth, upon being acknowledged by the parties
executing the same or proved in the manner provided by the
laws of this Commonwealth, shall be recorded in the office
for the recording of deeds in the county where such lands,
5

tenements, and hereditaments are situate. Every such deed,
conveyance, contract, or other instrument of writing which
shall not be acknowledged or proved and recorded, as
aforesaid, shall be adjudged fraudulent and void as to any
subsequent bona fide purchaser or mortgagee or holder of any
judgment, duly entered in the prothonotary’s office of the
county in which the lands, tenements, or hereditaments are
situate, without actual or constructive notice unless such
deed, conveyance, contract, or instrument of writing shall
be recorded, as aforesaid, before the recording of the deed
or conveyance or the entry of the judgment under which such
subsequent purchaser, mortgagee, or judgment creditor shall
claim. Nothing contained in this act shall be construed to
repeal or modify any law providing for the lien of purchase
money mortgages.
It is of course a fundamental principle in our legal system
that laws which regulate persons or entities must give fair
notice of conduct that is forbidden or required.

FCC v. Fox

Television Stations, Inc.,

U.S.

, 132 S. Ct. 2307, 2317,

183 L. Ed. 2d 234, 245 (2012).

Indeed, “[a] statute which either

forbids or requires the doing of an act in terms so vague that
men of common intelligence must necessarily guess at its meaning
and differ as to its application, violates the first essential of
due process of law.”

Id, (quoting Papachristou v. Jacksonville,

405 U.S. 156, 162, 92 S. Ct. 839, 31 L. Ed. 2d 110 (1972)).

It

is therefore a basic principle of due process that an enactment
is void for vagueness if its prohibitions are not clearly
defined; hence laws must give the person of ordinary intelligence
a reasonable opportunity to know what is prohibited, so that he
may act accordingly.

Grayned v. City of Rockford, 408 U.S. 104,

108, 92 S. Ct. 2294, 2298, 33 L. Ed. 2d 222 (1972).

6

In other

words, “a statute should be struck as vague if (1) it fails to
give a person of ordinary intelligence a reasonable opportunity
to know what is prohibited, or (2) it fails to provide explicit
standards to the enforcing officer.”

Trojan Technologies, Inc.

v. Commonwealth of Pennsylvania, 916 F.2d 903, 914 (1990).
Finally, it should also be noted that “vagueness challenges
to statutes which do not involve First Amendment freedoms must be
examined in the light of the facts of the case at hand” - that
is, the statute is to be reviewed as applied to the defendant’s
particular conduct.

United States v. Mazurie, 419 U.S. 544, 550,

95 S. Ct. 710, 713, 42 L. Ed. 2d 706 (1975); Commonwealth v.
Habay, 2007 PA Super. 303, 934 A.2d 732, 738 (2007).

“The degree

of vagueness the Constitution tolerates - as well as the relative
importance of fair notice and fair enforcement - depends in part
on the nature of the enactment...” the courts have “greater
tolerance of enactments with civil rather than criminal penalties
because the consequences of imprecision are qualitatively less
severe.”

Kreimer v. Bureau of Police for the Town of Morristown,

958 F.2d 1242, 1267 (3d Cir. 1992).

See also, Village of Hoffman

Estates v. Flipside, Hoffman Estates, 455 U.S. 489, 498-99, 102
S. Ct. 1186, 1193, 71 L. Ed. 2d 362 (1982)(same).
That Pennsylvania courts assess vagueness challenges to
their own statutes under the same standards as those articulated
by the federal courts is clear.

See, e.g., Commonwealth v.

7

Mayfield, 574 Pa. 460, 832 A.2d 418 (2003)(plain language of
institutional sexual assault statute “is sufficiently definite
that ‘ordinary people can understand what conduct is
prohibited’... ‘and is not so vague that men of common
intelligence must necessarily guess at its meaning and differ as
to its application.’” [quoting Commonwealth v. Mikulan, 504 Pa.
244, 470 A.2d 1339, 1342 (1983) and Kolender v. Lawson, 461 U.S.
352, 357, 103 S. Ct. 1855, 75 L. Ed. 2d 903 (1983)]);
Commonwealth v. Heinbaugh, 467 Pa. 1, 354 A.2d 244, 246
(1976)(“...a statute which either forbids or requires the doing
of an act in terms so vague that men of common intelligence must
necessarily guess at its meaning and differ as to its application
violates the first essential of due process of law.” [quoting
Connollay v. General Constr. Co., 269 U.S. 385, 391, 46 S. Ct.
126, 70 L. Ed. 322 (1926)]).

It is also noteworthy that there is

a strong presumption that legislation is constitutional.
Commonwealth v. Habay, 934 A.2d at 737 (citing Pennsylvanians
Against Gambling Expansion Fund, Inc. v. Commonwealth of
Pennsylvania, 538 Pa. 275, 877 A.2d 383, 393 (2005)).

A party

challenging legislation bears a heavy burden to prove otherwise
and accordingly, a court will strike a statute on constitutional
grounds only if that party convinces it that the challenged
statute clearly, palpably and plainly violates the federal or
state constitutions.

Id, at 738( citing Commonwealth v. McCoy,

8

895 A.2d 18, 30 (Pa. Super. 2006)).
In application of the foregoing, we observe at the outset
that this case does not implicate any First Amendment issues and
consequently we review the statute at issue as applied to the
defendants’ particular conduct and with due consideration for the
fact that it is a civil - not a criminal enactment which is under
scrutiny here.

In particular, Defendants assert that Section 351

is unconstitutionally vague as applied insofar as it fails to
define essential terms and details such as what actions need be
taken, who must undertake to perform those actions, when they
must be accomplished and what standards are applicable to
determine if the required acts have been properly performed.

In

reviewing the statute, we simply cannot agree.
Rather, we find it patently clear that the action which
Section 351 requires to be taken is the recording of all deeds,
conveyances, contracts, and “other instruments of writing” by
which the parties who execute those documents intend to “grant,
bargain, sell and convey any lands, tenements, or hereditaments
situate in this Commonwealth.”

Given that tenements and

hereditaments are generally defined as encompassing interests in
real or personal property that may or may not be capable of being
inherited2, and that the Pennsylvania Supreme Court has

2

According to WEBSTER’S II NEW RIVERSIDE UNIVERSITY DICTIONARY
(1994), “hereditament” is defined as “Property that can be inherited,” and a
“tenement” is “...(4) Law. Permanent property, as land, rents, or franchises,

9

determined that mortgages and mortgage assignments are
conveyances and transfers of property under Pennsylvania law3, we
discern nothing vague in the text of the law with regard to what
action it requires for compliance.
Second, we reject Defendants’ claim that the statute should
be held unconstitutionally vague because it fails to specify the
necessary elements of “who” and “when.”

Indeed, under the

Pennsylvania Statutory Construction Act, “[s]tatutes or parts of
statutes are in pari materia when they relate to the same persons
or things or to the same class of persons or things” and

that may be held by one person for another.”
BLACK’S LAW DICTIONARY (6 th ed. 1990) is similar: “hereditaments” are:
Things capable of being inherited, be it corporeal or incorporeal, real,
personal, or mixed, and including not only lands and everything thereon
but also heirlooms and certain furniture which, by custom, may descend
to the heir together with the land. Things which may be directly
inherited, as contrasted with things which go to the personal
representative of a deceased.”
The term “tenement”
“in its common acceptation, is only applied to houses and other
buildings, but in its original, proper and legal sense it signifies
everything that may be holden, provided it be of a permanent nature,
whether it be of a substantial and sensible, or of an unsubstantial,
ideal, kind. Thus, liberum tenementum, frank tenement, or freehold, is
applicable not only to lands and other sold objects, but also to
offices, rents, commons, advowsons, franchises, peerages, etc. At
common law, ‘tenements’ included lands, other inheritances, capable of
being held in freehold, and rents.”
Black’s Law Dictionary further provides that “freehold,” is “an estate
for life or in fee. ... A ‘freehold estate’ is a right of title to land. ...
An estate in land or other real property, of uncertain duration; that is,
either of inheritance or which may possibly last for the life of the tenant at
the least (as distinguished from a leasehold); and held by a free tenure (as
distinguished from copyhold or villenage).”
3

Pines v. Farrell, 577 Pa. 564, 848 A.2d 94 (2004).

10

“[s]tatutes in pari materia shall be construed together, if
possible, as one statute.”

1 Pa. C. S. A. §1932(a), (b); Holland

v. Marcy, 584 Pa. 195, 206, 883 A.2d 449, 455 (2005); MacElree v.
Chester County, 667 A.2d 1188, 1194 (Pa. Cmwlth. 1995).

See

also, Erie School District Appeal, 155 Pa. Super. 564, 573, 39
A.2d 271, 275 (1944)(“statutes are to be construed in connection
and in harmony with the existing law and as a part of a general
and uniform system of jurisprudence”); Miners Nat. Bank of
Wilkes-Barre v. Kuhns, 32 Luz. L. Rep. 185 (1939)(“This section
[§351] and §§444 and 445 of this title as to recording of deeds
and conveyances, and protecting the liens of judgments, must be
read together”).

21 P.S. § 444 states the following in relevant

part with regard to the recording of deeds and conveyances within
the Commonwealth:
All deeds and conveyances, which, from and after the passage
of this act, shall be made and executed within this
commonwealth of or concerning any lands, tenements or
hereditaments in this commonwealth, or whereby the title to
the same may be in any way affected in law or equity, ...
shall be recorded in the office for the recording of deeds
where such lands, tenements or hereditaments are lying and
being within ninety days after the execution of such deeds
or conveyance, ...
As to the recording of mortgages, 21 P.S. §621 provides:
No deed or mortgage, or defeasible deed, in the nature of
mortgages, hereafter to be made, shall be good or sufficient
to convey or pass any freehold or inheritance, or to grant
any estate therein for life or years, unless such deed be
acknowledged or proved and recorded within six months after
the date thereof, where such lands lie, as hereinbefore
directed for other deeds.

11

As a consequence of reading these statutes together, we
conclude that the answer to the “when to record” question is
easily discerned: recording should be effectuated in the office
of the recorder of deeds for the county where the property is
situate within ninety days of execution, notwithstanding that
there is a grace period of an additional ninety days before a
deed, mortgage or defeasible deed may be deemed insufficient to
convey good title.
We likewise have little difficulty in ascertaining “who”
should record from a reading of the statute and the available
caselaw construing it.

To be sure, the verbiage of the statute

itself is instructive: if it is the intention of the parties
executing the deed, conveyance, contract or other written
instrument to grant, bargain, sell and convey any real estate or
interest in property located in the Commonwealth, it is incumbent
upon those parties to record.

Moreover, because mortgages are

recorded to provide notice to the entire world of the person or
entity who encumbers title to the property and the failure to
timely record a mortgage and/or mortgage assignment could impact
the validity and/or priority of the mortgage as against
subsequent purchasers or mortgagees for valid consideration,
common sense suggests that it would be in the mortgagee’s best
interest to record so as to ensure that its interests are
properly protected.

See, e,g., In re Fisher, 320 B.R. 52, 63

12

(E.D. Pa. 2005)(citing Salter v. Reed, 15 Pa. 260, 263 (1850));
In re Holler, 342 B.R. 212, 229 (Bankr. W.D. Pa. 2006)).
Finally, we find Defendants’ last assertion that Section 351
is unconstitutionally void inasmuch as it purportedly lacks
objective standards which leads to arbitrary application and
enforcement to be somewhat confusing.

Again, we find the statute

to be clear: it requires “deeds, conveyances, contracts, and
other instruments of writing wherein it shall be the intention of
the parties executing the same to grant, bargain, sell, and
convey any lands, tenements, or hereditaments situate in this
Commonwealth” to “be recorded in the office for the recording of
deeds in the county where such lands, tenements and hereditaments
are situate.”

Failure to so properly record renders the

unrecorded interest fraudulent and void as to any subsequent bona
fide purchaser, mortgagee or holder of a judgment which is
thereafter recorded in the office of the county prothonotary
and/or insufficient to convey an interest therein.
§§351, 621.

21 P.S.

Hence the standard is very simple: if the holder of

an interest in land wishes to protect and maintain that interest,
it must record the document by which that interest is
memorialized.

We find nothing vague about it.

For all of these reasons, Defendants’ motion for summary
judgment on vagueness grounds is denied pursuant to the attached
order.

13

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
MONTGOMERY COUNTY, PENNSYLVANIA,
RECORDER OF DEEDS, by and through
Nancy J. Becker in her official
capacity as Recorder of Deeds of
Montgomery County, on its own
behalf and on behalf of all others
similarly situated,
Plaintiff,
v.
MERSCORP, INC., and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.,
Defendants.

:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:

CIVIL ACTION
NO. 11-CV-6968

ORDER

AND NOW, this

21st

day of April, 2014, upon

consideration of the MERS Defendants’ Motion for Summary Judgment
that 21 P.S. §351 is Unconstitutionally Vague as Applied (Doc.
No. 87), it is hereby ORDERED that the Motion is DENIED for the
reasons set forth in the preceding Memorandum Opinion.
BY THE COURT:

/s/ J. Curtis Joyner
J. CURTIS JOYNER,

J.