No. 14-8117 IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT MONTGOMERY COUNTY, PENNSYLVANIA, RECORDER OF DEEDS, by and through NANCY J. BECKER, in her official capacity as the Recorder of Deeds of Montgomery County, Pennsylvania, Plaintiff/Appellee, v. MERSCORP, INC., and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants/Appellants. MOTION OF PLAINTIFF/APPELLEE MONTGOMERY COUNTY, PENNSYLVANIA, RECORDER OF DEEDS TO CERTIFY QUESTIONS OF STATE LAW TO THE SUPREME COURT OF PENNSYLVANIA Plaintiff/Appellee Nancy J. Becker, in her official capacity as Montgomery County, Pennsylvania, Recorder of Deeds ( Recorder ), respectfully moves this Court to certify the following novel and important questions of Pennsylvania law to the Supreme Court of Pennsylvania pursuant to Local Appellate Rule 110.1 and Pennsylvania Rule of Appellate Procedure 3341: 1. Whether 1925 Pa. Laws 613, 25 P.S. 351 ( Section 351 ) requires the recording of land conveyances, including mortgage assignments. 2. Whether a Pennsylvania County Recorder of Deeds, in an official capacity, may bring an action to enforce the requirements of Section 351.
ARGUMENT Certification of controlling questions of state law is provided for in Local Appellate Rule 110.1: When the procedures of the highest court of a state provide for certification to that court by a federal court of questions arising under the laws of that state which will control the outcome of a case pending in the federal court, this court, sua sponte or on motion of a party, may certify such a question to the state court in accordance with the procedures of that court. LAR 110.1. The United States Supreme Court has stated that certification of state law questions can help save time, energy, and resources, and helps build a cooperative judicial federalism. Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974). Certifying a question rests in the sound discretion of the federal court. Id. The Pennsylvania Supreme Court has established procedures and criteria for the certification of questions to it from federal courts. Pennsylvania Rule of Appellate Procedure 3341 provides for certification of questions to the Pennsylvania Supreme Court where there are special and important reasons therefor, including, but not limited to, any of the following: (1) The question of law is one of first impression and is of such substantial public importance as to require prompt and definitive resolution by the Supreme Court; (2) The question of law is one with respect to which there are conflicting decisions in other courts; or 2
(3) The question of law concerns an unsettled issue of the constitutionality, construction, or application of a statute of this Commonwealth. Pa.R.App.P. 3341(c). The Pennsylvania Supreme Court accepts certification only where all facts material to the question of law to be determined are undisputed, and the question of law is one that the petitioning court has not previously decided. Pa.R.App.P. 3341(c). All of these criteria are met in this case. 1 The District Court, in adjudicating the case at bar involving Pennsylvania s recording statute and the public land records of the Commonwealth, predicted the Supreme Court would answer the above questions in the affirmative: We predict that the Pennsylvania Supreme Court would conclude that the statute does make recording of conveyances compulsory (JA 85); We therefore predict that the Pennsylvania Supreme Court would conclude that the Act's substantive definition of who may sue to compel recordation continues to govern who may bring Rule 1061(b)(3) actions. (JA 94); When Appellant MERS filed its Petition for Permission to Appeal to this Court pursuant to 28 U.S.C. 1292(b) (Docket 14-8117), it stated the questions involved were matters of first impression and of great importance: There is no dispute that the Decision and Order certified for interlocutory appeal [by the District Court] resolved 1 The Pennsylvania Supreme Court s Internal Operating Procedures provides that petitions for certification should be accepted or rejected within 60-days of the petition. Pa. Supreme Ct. IOP 8. 3
controlling questions of Pennsylvania law that are a matter of first impression [and] that are of great importance to the entire mortgage industry. MERS Petition, p. 1 (Doc. 003111545153). The Petition further stated: In its Decision and Order, the district court made numerous purely legal rulings of first impression under Pennsylvania Law. (Petition, p. 2). See also Petition at pp. 4, 9. The Questions raise important state governance concerns that are best addressed by the Pennsylvania Supreme Court, including (i) the requirements of the Pennsylvania statute for recording land conveyances and (ii) the authority of Pennsylvania Recorders of Deeds to enforce the laws charging them with maintaining the public land records. Several other federal courts have certified similar issues to the highest courts of their respective forum states, recognizing the novel and important state law issues implicated by the MERS system. See Jackson v. Mortgage Electronic Registration Sys., Inc., 770 N.W.2d 487, 493 (Minn. 2009) (considering the effect of a note transfer under the MERS system); Brandrup v. ReconTrust Co., N.A., 303 P.3d 301 (2013) (same); Cf. Bain v. Metropolitan Mortg. Group, Inc., 85 P.3d 34 (Wash. 2012) (en banc) (considering whether MERS was a lawful beneficiary of a mortgage note). Certification is no less appropriate here. Certification would also promote the efficient conduct of the Pennsylvania MERS litigation. There are presently pending in three Pennsylvania counties 4
(Bucks, Delaware and Chester) actions brought by their respective Recorders of Deeds, raising the same issues as to MERS conduct and the construction of 21 P.S. 351. (Those cases are attached to Appellants merits brief List of Pending Related Cases as Nos. 3, 5 and 6). A decision by this Court will be of precedential value, but not binding in those actions, whereas a decision at this time by the Pennsylvania Supreme Court on the certified questions will simultaneously resolve the issues with finality in both this federal and related state-court litigation. If this Court declines to certify the Questions and instead predicts how the Pennsylvania Supreme Court would decide them, the State Court Cases would proceed to judgment and likely appeals through the Pennsylvania appellate courts. Certification of the Questions at this juncture would give the Pennsylvania Supreme Court an opportunity to decide these important issues of state law and policy in the first instance, thereby avoiding potentially erroneous predictions that could confuse, rather than clarify, the issues in the State Court Cases. Kendrick v. DA, 488 F.3d 217, 219 n.1 (3d Cir. 2007) (citing Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974) (Certification does... in the long run save time, energy, and resources and helps build a cooperative judicial federalism. ). Nor can MERS logically argue that Ms. Becker s request for certification is somehow inconsistent with her having chosen a federal, not a state, forum 5
initially. She did so because MERS as a matter of practice seeks to remove suits by recorder of deeds brought in a state court whenever it is able to do so. 2 (It sought to remove the Delaware County lawsuit, filed after this case, but ultimately could not do so because there was not complete diversity). 3 Here, there is both complete diversity and a sufficient amount in controversy, and MERS could have successfully removed the litigation. Ms. Becker decided not to waste judicial time and resources with needless removal litigation, and filed this lawsuit in the forum to which MERS would have removed it. Now, however, since the issues of Pennsylvania law that govern the disposition of the case have crystallized in the district court and meet the criteria for certification, it is appropriate to seek certification of those questions. 2 See e.g. Jackson v. Mortgage Elec. Registration Sys., Inc., 770 N.W.2d 487, 493 (Minn. 2009) (noting removal to the District of Minnesota before certification to Minnesota Supreme Court); County of Ramsey v. MERSCORP Holdings, Inc., 776 F.3d 947, 949 (8th Cir. 2014); Union Cnty., Ill. v. MERSCORP, Inc., 735 F.3d 730, 733 (7th Cir. 2013; Plymouth County, Iowa ex rel. Raymond v. MERSCORP, Inc., 774 F.3d 1155 (N.D. Iowa 2012); Fuller v. Mortgage Elec. Registration Sys., Inc., 888 F.Supp.2d 1257 (M.D. Fla. 2012); Macon County, Ill. ex rel. Ahola v. MERSCORP, Inc., 968 F.Supp.2d 959, aff d, 742 F.3d 711 (7 th Cir. 2014); Dallas County, Tex. v. MERSCORP, Inc., 2 F.Supp.3d 938 (N.D. Tex. 2014) Brown v. Mortgage Elec. Registration System, Inc., 903 F.Supp.2d 723 (W.D. Ark. 2012). 3 Delaware Cty, Pa. v. MERSCORP, Inc., No. 2:13 CV 6517 CDJ, 2014 WL 4545765 E.D. Pa. Sept. 14, 2014) (remanding after removal). Although MERS is not a party in the Washington County case, the defendant there also attempted to remove it. Washington Cty, Pa. v. U.S. Bank N.A., No. 11 1405, 2012 WL 3860474 (W.D. Pa. Aug. 17, 2012) (remanding improperly removed case). 6
CONCLUSION For the reasons set forth above, the Montgomery County, Pennsylvania, Recorder of Deeds, by and through Nancy J. Becker s Motion to Certify Questions of Law to the Pennsylvania Supreme Court should be granted. Dated: March 16, 2015 William H. Lamb James C. Sargent Maureen M. McBride LAMB MCERLANE PC 24 E. Market Street West Chester, PA 19381 (610) 430-8000 Gary E. Mason Jason S. Rathod WHITEFIELD BRYSON & MASON LLP 1625 Massachusetts Ave., NW, Suite 605 Washington, DC 20036 (202) 429-2290 Respectfully submitted, /s/ Robert J. LaRocca. Joseph C. Kohn Robert J. LaRocca William E. Hoese Craig W. Hillwig KOHN, SWIFT & GRAF, P.C. One South Broad Street, Suite 2100 Philadelphia, PA 19107-3304 (215) 238-1700 Jonathan W. Cuneo CUNEO GILBERT & LADUCA LLP 507 C Street, NE Washington, D.C. 20002 (202) 789-3960 7
CERTIFICATE OF SERVICE I hereby certify that on March 16, 2015, I electronically filed the foregoing documents with the Clerk of the Court using the ECF system which will send notification of such filing to the other parties ECF-registered counsel. /s/ Robert J. LaRocca Kohn, Swift, & Graf, P.C. One South Broad Street Suite 2100 Philadelphia, PA 19107 Tel: 215-238-1700 Fax: 215-238-1968 Email: rlarocca@kohnswift.com