A federal judicial panel denied a motion to include the Dallas County district attorney's lawsuit against Merscorp in the ongoing multidistrict litigation against the private loan registry in Phoenix.
In its motion, Merscorp, the Reston, Va.-based parent company of the Mortgage Electronic Registration Systems, argued the claims in the Dallas County case are common with the other MDL cases and meet the panel's requirements that consolidation would promote the convenience and "just and efficient conduct of the action." But the judicial panel ruled there are important distinctions between the MDL and Dallas County cases.
"Most importantly, all existing MDL actions were brought by homeowners or borrowers who brought suit concerning their impending or completed foreclosure. In contrast, Dallas County involves the propriety of the MERS system's failure to pay recordation fees under Texas's recording statutes," the judges' order reads.
"Dallas County is pleased with the decision of the Judicial Panel on Multidistrict Litigation denying MERS' efforts to have Dallas County's pending action transferred to Arizona," said Stephen Malouf, the outside counsel retained by Dallas County, in an email statement. "Dallas County believes that the case is properly pending in Dallas and looks forward to presenting its case to the court in which the case is pending."
Merscorp did not respond to a request for comment.
The motion was filed on Nov. 7, days after the office of Dallas County DA Craig Watkins refiled its suit as a class action for all the counties of Texas, Merscorp filed a motion to transfer the Dallas case to the MDL, where a series of 72 lawsuits that were filed by mortgage borrowers and foreclosed homeowners against MERS are being considered en masse.
The common thread among the MDL cases is the allegation that "the various participants in MERS formed a conspiracy to commit fraud and/or that security instruments are unenforceable or foreclosures are inappropriate due to MERS's presence as a party," according to court documents.
In October, Merscorp successfully argued to have the 72 MDL cases dismissed. Had the motion to transfer the Dallas case to the MDL been granted, it is likely the same rulings would have been applied in that case.
The judicial panel also ruled on a "friend of the court," motion filed by a Dallas-area watchdog group requesting U.S. Judge W. Royal Furgeson Jr. recuse himself from Merscorp case because Dallas' attorney Malouf is his brother-in-law. The panel denied the motion as moot because Furgeson did not attend the panel's hearing and "had already decided not to participate in the decision on this matter."