MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTION TO DISMISS

MARK W. BENNETT, District Judge.

                                TABLE OF CONTENTS

  I.  INTRODUCTION AND BACKGROUND.........................................1117
      A. Factual And Legal Allegations....................................1117
      B. The County's Claims..............................................1118
      C. The Motion To Dismiss............................................1120

 II.  LEGAL ANALYSIS......................................................1121
      A. Standards For A Motion To Dismiss................................1121
      B. The Allegations Of Recording Requirements........................1122
      C. The Iowa Recording Scheme........................................1123
      D. Requirements For An Unjust Enrichment Claim......................1125

III.  CONCLUSION..........................................................1127

In this putative class action, filed on February 23, 2012, in state court, then removed to this federal court on March 9, 2012,1 Plymouth County, Iowa, (the County) seeks to pursue claims on its own behalf and on behalf of all other similarly situated counties in the State of Iowa against Mortgage Electronic Registration Systems, Inc. (MERS) and its parent company, MERSCORP, Inc. (MERSCORP), the owner and operator of a national registry that tracks ownership interests and servicing rights associated with residential mortgage loans, and against various mortgage companies and John Doe defendants (the Member Defendants), which are alleged to be members of MERS, shareholders of MERSCORP, or both.2 The County's claims arise from the defendants' "intentional failure to record all mortgage assignments and instruments that affect real estate in county recording offices and pay the attendant recording fees, as required by Iowa law." Class Action Petition (docket no. 3), ¶ 1. The County asserts claims for unjust enrichment, civil conspiracy, piercing the corporate veil, declaratory judgment, and injunctive relief. The defendants have moved to dismiss this class action on various grounds, including that the Iowa recording statutes create no private cause of action in favor of the County, that there is no obligation to record mortgages or assignments of mortgages under Iowa law, that the County has suffered no compensable injury that would give it standing, and that the County's allegations fail to state claims upon which relief can be granted. The County resists the motion to dismiss.

I. INTRODUCTION AND BACKGROUND

A. Factual And Legal Allegations

The factual background here must be drawn from the County's Class Action Petition. See Section II.A., infra. The Class Action Petition succinctly summarizes the nature of the action and the factual and legal basis for it, as follows:

Class Action Petition at ¶¶ 1-7 (emphasis added); and compare id. at ¶¶ 58-77 (describing the defendants' "scheme" in greater detail). The Class Action Petition later identifies the Class on behalf of which it is brought as "comprised of each of the 99 counties of the State of Iowa." Id. at ¶ 94.

The County's assertion that the defendants failed to record mortgage assignments as required by Iowa law rests primarily on the following allegations regarding portions of Iowa's recording statutes:

Class Action Petition at ¶¶ 33-35 (emphasis added, unless otherwise indicated).3

B. The County's Claims

The County alleges, in Count I of its Class Action Petition, that all of the prior allegations in its Petition give rise to a claim of "unjust enrichment" against all defendants, as follows:

Class Action Petition, ¶¶ 106-114 (emphasis added).

In Count II of the Class Action Petition, the County asserts a claim of "civil conspiracy" against the Member Defendants (including the John Doe Defendants), based on their allegation that the Member Defendants "conspired with each other to violate Iowa Code § 558.11 and unlawfully withhold recording fees due to each Class member." Id. at ¶ 116; see generally id. at ¶¶ 115-120. In Count III, the County asserts a claim for "agency and corporate veil piercing" against the Member Defendants (including the John Doe Defendants), in which it "seeks to pierce the corporate veils of MERS and MERSCORP and impose liability upon the Member Defendants and John Doe Defendants 1-100 (the `Count III Defendants') for the actionable conduct of MERSCORP and MERS alleged herein." Id. at ¶ 122; see generally id. at ¶¶ 120-130. In Count IV, the County seeks "declaratory judgment" against all defendants "that Iowa Code § 558.11 requires the recording of written instruments that convey or assign mortgages and deeds of trust on real estate located in Iowa ... in the county office of the recorder in which such real estate is situated." Id. at ¶ 133; see generally id. at ¶¶ 131-133. In Count V, the County seeks "injunctive relief" against all defendants "permanently enjoining the Defendants from failing to record mortgages, deeds of trust, and assignment of mortgages and deeds of trust on real estate located in the State of Iowa with the county office of the record where such real estate is situated." Id. at ¶ 135; see generally id. at ¶¶ 134-136.

C. The Motion To Dismiss

On May 1, 2012, the defendants filed the Joint Motion To Dismiss Plaintiff's Class Action Petition (docket no. 37) now before me. As noted above, the defendants assert several grounds for dismissal. However, I find it necessary to focus on only one of those grounds, the defendants' contention that there is no requirement to record mortgages or assignments of mortgages under Iowa law, notwithstanding the County's contention that the viability of its claims does not depend upon whether or not there is such a requirement.

The defendants assert that all of the County's claims depend upon allegations that they were required to record mortgage assignments. They assert, however, that IOWA CODE § 558.11, on which the County principally relies, simply imposes no such requirement. They argue that this statute requires that "evidence of title" shall be recorded, but that a mortgage or an assignment does not transfer title in real property under Iowa law. Furthermore, they argue, § 558.11 does not even require the recording of a deed, because, as between the original parties, a deed is valid even if it is not recorded. Similarly, the defendants argue that § 558.41, on which the County also relies, plainly does not require the recording of a mortgage or assignment, but only specifies that an unrecorded mortgage or assignment is not valid against a subsequent purchaser without notice. They also assert that the Iowa Supreme Court has expressly held that mortgage assignments do not have to be recorded. The defendants argue that, absent a requirement to record mortgage assignments, the County's claims must fail, because their conduct was entirely consistent with Iowa's recording statutes. More specifically, they argue that, in the absence of a statutory requirement to record assignments, there was nothing "unjust" about their conduct, and there was no benefit conferred by the County by which they were unjustly enriched.

The County contends, however, that this is not a statutory violation case, so that the defendants' contention that Iowa statutes do not require recordation of mortgages or mortgage assignments is a "straw man" argument. Rather, the County contends that it has alleged that the Member Defendants "(a) recorded initial mortgages to obtain the protection, i.e., a first lien, provided by the Iowa recording statute; (b) leveraged the protection afforded by the initial recordation by registering the mortgage loan on the MERS® System, and assigning the mortgages without paying fees; (c) which allowed MERS Members to represent at each stage in the securitization process that they were transferring first lien mortgages; and (d) which, but for MERS, they could have done only by recording assignments and paying the attendant fees in conjunction therewith." Plaintiff's Brief (docket no. 54-7), 20 (citing Class Action Petition, ¶¶ 62-65, 74). The County argues that these allegations underlie all of its claims and none rely on an alleged legal requirement to record assignments. The County argues that Iowa law does require the recording of mortgages and assignments to ensure priority of the mortgage. The County points out that the defendants do not dispute that they did record initial mortgages to secure the protections of § 558.41. The County also argues that, once a mortgage is recorded, § 558.45 requires that any subsequent assignment be reflected in county land records. The County argues that § 558.41 is consistent with Iowa Supreme Court declarations that secret or clandestine assignments are open to abuse, so all assignments should be made a matter of record to comply with the spirit, if not the letter, of Iowa's recording law. The County also argues that the defendants' scheme improperly separates the mortgage from the debt it secures. Finally, on this issue, the County contends that it has adequately pleaded an unjust enrichment claim, because the benefit does not have be directly conferred by the plaintiff on the defendant, the benefit to the defendant just has to be at the expense of the plaintiff, and no violation of a statute is required for enrichment to be "unjust."

In reply, the defendants reiterate that the County's claims all depend upon there being a duty to record mortgages and mortgage assignments under Iowa law, the County's recharacterization of its claims notwithstanding, but there is no such duty. They point out that the relief that the County seeks is payment of recording fees for all assignments and declarations and injunctions requiring payment of recording fees for all assignments. They point out that the County's allegation in support of its "unjust enrichment" claim that they behaved "unjustly" is that they did not pay required recording fees. They argue that the County's attempt to recharacterize its claims as based on using initial recording of a mortgage to obtain first lien protection states nothing more than what anyone recording a mortgage seeks, and that the allegation that they then "leveraged" initial recordings by transferring mortgages without paying recording fees is no allegation of wrongdoing, where there was no requirement to record assignments. The defendants argue that, to the extent that they are allegedly taking a risk by not recording mortgage assignments to other Member Defendants, it is a lawful risk and of no concern to the County. Similarly, they argue that their ability to represent that they are transferring first lien mortgages is also of no concern to the County. Indeed, they point out that the mortgages do remain first lien mortgages until the debt is satisfied or the mortgage is released. Although the defendants recognize the possibility that the mortgagee (MERS) could release the mortgage to a subsequent purchaser without notice, thus reducing the priority of the assigned mortgage, they argue that possibility has nothing to do with the County's claim for recording fees. Thus, they argue that the MERS System complies with Iowa law.

II. LEGAL ANALYSIS

A. Standards For A Motion To Dismiss

"When ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Thus, the factual background to a motion to dismiss must necessarily be drawn from the plaintiffs' factual allegations. On the other hand, on a motion to dismiss, courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). Thus, the accuracy of a plaintiff's legal allegations is a matter for the court to determine. Indeed, I find that whether or not dismissal is appropriate in this case turns entirely on the truth of the County's legal allegations.

B. The Allegations Of Recording Requirements

The County's assertion that it is not alleging a statutory violation as the basis for its claims is blatantly contrary to the allegations in its Class Action Petition. In its Class Action Petition, the County explains the nature of its action as "caused by Defendants' intentional failure to record all mortgage assignments and instruments that affect real estate in county recording offices and pay the attendant recording fees, as required by Iowa law," Class Action Petition at ¶ 1 (emphasis added); that recording is "mandated" for a "valid assignment of a mortgage" under Iowa law, id. at ¶ 3; and that the defendants broke the transparent chain of title by "creating gaps through the assignment of mortgages and deeds of trust that were required to be but were not recorded," id. at ¶ 7 (emphasis added). Similar allegations of a "requirement" to record assignments, pursuant to specific statutory provisions, and "violation" of those statutes or a "requirement" to record assignments can be found in paragraphs 9, 33, 46, 58, 96(a), and 96(b) of the Class Action Petition.

The "unjust enrichment" claim in Count I also specifically alleges that the defendants transferred mortgages without paying the "attendant" recording fees, that, but for the existence of MERS, such transfers would have been recorded, that the "required" recording fees would have been paid, and that it is under these circumstances that the defendants have been unjustly enriched. See id. at ¶¶ 107, 108, and 112. These allegations assume that any assignment or transfer that changes the mortgagee of record must be recorded, and that it is only by keeping MERS as the mortgagee of record that such a requirement is avoided. Such a claim necessarily requires proof of a requirement that an assignment of a mortgage must be recorded, even if it does not change the mortgagee of record.

The other counts are, if anything, even more explicitly based on an alleged violation of a requirement to record assignments: the "civil conspiracy" claim in Count II expressly alleges that the defendants "conspired with each other to violate Iowa Code § 558.11 and unlawfully withhold recording fees due to each Class member," see id. at ¶ 116 (emphasis added); the "agency and corporate veil piercing" claim in Count III expressly alleges that the Member Defendants are liable for the actionable conduct of MERSCORP and MERS, which was previously pleaded as failing to record mortgage assignments as required by law, see id. at ¶ 122; the "declaratory judgment" claim in Count IV seeks a declaration against all defendants "that Iowa Code § 558.11 requires the recording of written instruments that convey or assign mortgages and deeds of trust on real estate located in Iowa ... in the county office of the recorder in which such real estate is situated," id. at ¶ 133 (emphasis added); see generally id. at ¶¶ 131-133; and the "injunctive relief" claim in Count V seeks "injunctive relief" against all defendants "permanently enjoining the Defendants from failing to record mortgages, deeds of trust, and assignment of mortgages and deeds of trust on real estate located in the State of Iowa with the county office of the record where such real estate is situated," id. at ¶ 135 (emphasis added); see generally id. at ¶¶ 134-136. Thus, each such claim depends upon an alleged requirement to record mortgage assignments and seeks as relief either the declaration of a requirement to do, injunctive enforcement of a requirement to do so, or damages for failure to do so.

In the face of these specific allegations in the Class Action Petition, the County's attempt to recharacterize its claims as in no way dependent upon a requirement to record mortgage assignments is disingenuous at best. The claims plainly are based on such an alleged requirement.

C. The Iowa Recording Scheme

There is, however, no such requirement in Iowa law. I have noted that the Iowa Supreme Court has explained Iowa rules of statutory construction as follows:

Schadendorf v. Snap-On Tools Corp., 757 N.W.2d 330, 337-38 (Iowa 2008); see Dorr v. Weber, 635 F.Supp.2d 937, 945 (N.D.Iowa 2009) (quoting the above from Schadendorf). With these rules of statutory construction as a starting point, I have observed that, under Iowa law,

Dorr, 635 F.Supp.2d at 945-46.

Here, it could not be plainer that none of the statutes upon which the County relies imposes a requirement on a party assigning a mortgage or receiving such an assignment to record the assignment. See id. (statutory interpretation under Iowa law begins with the plain meaning of statutory language). Section 558.11 imposes no such requirement, because what it plainly does is require the recorder to record "evidence of title," see IOWA CODE § 558.11, but under Iowa law, a mortgage, and hence an assignment of a mortgage, does not transfer title in real property. See, e.g., Norwest Credit, Inc. v. City of Davenport, 626 N.W.2d 153, 156 (Iowa 2001) ("As Iowa is a lien theory state, title does not pass to the mortgagee. See Iowa Code § 557.14."); Bates v. Pabst, 223 Iowa 534, 273 N.W. 151, 152 (1937) ("No doubt the execution of the mortgage to plaintiff transferred no estate in or title to the land. It merely created a specific lien or charge thereon in favor of the plaintiff."); Sheakley v. Mechler, 199 Iowa 1390, 203 N.W. 929, 930 (1925) ("We have long since relegated to the legal rag bag of the past the common-law theory of a mortgage, and have adopted the equitable or lien theory. The mortgagee is a mere lienholder. He acquires no legal right to the property as such....").

Section 558.41 does state that "[a]n instrument affecting real estate is of no validity against subsequent purchasers for a valuable consideration, without notice, ... unless the instrument is filed and recorded in the county in which the real estate is located, as provided in this chapter." Even so, plainly absent from that statement of the consequences of not recording such an instrument is any requirement that an assignment be recorded. Dorr, 635 F.Supp.2d at 945-46 (statutory interpretation begins with plain meaning). The incentive to avoid possible loss of validity against subsequent purchasers without notice does not amount to a requirement that an assignment must be recorded by either a mortgagee or an assignee.

Finally, § 558.45 imposes no duty or requirement on a mortgagee or assignee to record an assignment; what it plainly does is impose upon the recorder a duty to record any such assignment presented to the recorder. IOWA CODE § 558.45 ("Where any mortgage, contract, or other instrument constituting an encumbrance upon real estate shall be assigned or released by a separate instrument, it shall be the duty of the recorder to make a notation where the instrument was originally indexed, indicating the nature of such assignment or release and a document reference number of the record where the same is recorded.").

Indeed, the Iowa Supreme Court observed the better part of a century ago,

Shoemaker v. Ragland, 202 Iowa 947, 211 N.W. 564, 566 (1926) (emphasis added); Shoemaker v. Minkler, 202 Iowa 942, 211 N.W. 563, 564 (1926) ("There is no requirement of statute that mortgage assignments be placed of record, in order to protect the assignee against the payment of the notes secured thereby to the assignor who does not have possession thereof."). Thus, the Iowa Supreme Court has not recognized any requirement to record assignments implicit in the statutory scheme. There is simply no requirement to record assignments of mortgages under Iowa law.

To the extent that the County's claims rely on such a requirement, they fail to state claims upon which relief can be granted. Because Counts II (conspiracy), IV (declaratory judgment), and V (injunctive relief) explicitly rely on the contention that recording of assignments is a requirement of Iowa law, and that reliance is misplaced, those Counts are plainly subject to dismissal. What these claims seek is an extension of the recording statutes, under the guise of construction, that completely changes the meaning of the statutes, but the courts cannot impose such a construction. See Schadendorf, 757 N.W.2d at 337 (quoting Auen, 679 N.W.2d at 590).

The County attempts to salvage its "unjust enrichment" claim in Count I (and, hence, its "agency and corporate veil piercing" claim in Count III) by asserting that those counts do not rely on a requirement to record assignments. I will give some further consideration to that contention.

D. Requirements For An Unjust Enrichment Claim

"To recover for unjust enrichment [under Iowa law], [the plaintiff] must show: `(1) [the defendant] was enriched by the receipt of a benefit; (2) the enrichment was at the expense of [the plaintiff]; and (3) it is unjust to allow the defendant to retain the benefit under the circumstances.'" Lakeside Feeders, Inc. v. Producers Livestock Mktg. Ass'n, 666 F.3d 1099, 1112 (8th Cir.2012) (quoting State ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 149 (Iowa 2001)); Waldner v. Carr, 618 F.3d 838, 848 (8th Cir.2010) (stating the elements in a similar way (quoting State ex rel. Palmer, 637 N.W.2d at 154-55)). The Iowa Supreme Court has explained that "unjust enrichment is a broad principle with few limitations." State ex rel. Palmer, 637 N.W.2d at 155. Thus, the benefit in question need not "be conferred directly by the plaintiff," because "[t]he critical inquiry is that the benefit received be at the expense of the plaintiff." Id.

First, I reiterate that, as pleaded, the County's "unjust enrichment" claim relies on an alleged — but nonexistent — legal requirement to record assignments of mortgages, as the basis for the contention that the defendants' conduct somehow resulted in enrichment that was "unjust." See Lakeside Feeders, Inc., 666 F.3d at 1112. More specifically, the "unjust enrichment" claim specifically alleges that the defendants transferred mortgages without paying the "attendant" recording fees and that, but for the existence of MERS, such transfers would have been recorded, that the "required" recording fees would have been paid, and that it is under these circumstances that the defendants have been unjustly enriched. See id. at ¶¶ 107, 108, and 112 (allegations in Count III). As I stated above, these allegations assume that any assignment or transfer that changes the mortgagee of record must be recorded, and that it is only by keeping MERS as the mortgagee of record that such a requirement is avoided, but there is simply no requirement that an assignment of a mortgage must be recorded, whether or not it changes the mortgagee of record. Thus, as pleaded in Count I, this claim fails to state a claim upon which relief can be granted, because the legal proposition on which it is based is wrong. To put it another way, because the legal proposition is wrong, there is no circumstance pleaded that makes it "`unjust to allow the defendant to retain the benefit under the circumstances.'" Lakeside Feeders, Inc., 666 F.3d at 1112 (quoting State ex rel. Palmer, 637 N.W.2d at 149).

Nevertheless, the County contends that its "unjust enrichment" claim does not depend upon a requirement that assignments be recorded, because it has recharacterized or clarified that claim in its brief to be that the Member Defendants "(a) recorded initial mortgages to obtain the protection, i.e., a first lien, provided by the Iowa recording statute; (b) leveraged the protection afforded by the initial recordation by registering the mortgage loan on the MERS® System, and assigning the mortgages without paying fees; (c) which allowed MERS Members to represent at each stage in the securitization process that they were transferring first lien mortgages; and (d) which, but for MERS, they could have done only by recording assignments and paying the attendant fees in conjunction therewith." Plaintiff's Brief (docket no. 54-7), 20 (citing Class Action Petition, ¶¶ 62-65, 74 (allegations concerning "Defendants' Scheme")).

In this recharacterization, the "benefit" is the protection derived from recording the initial mortgages. Nevertheless, this clarification or recharacterization does not save the claim, because it still assumes that any assignment or transfer that changes the mortgagee of record must be recorded to maintain first lien status, and that it is only by keeping MERS as the mortgagee of record that such a requirement is avoided. In other words, the allegation of "unjust" enrichment is the same: assignments of mortgages without recording them. Again, there is simply no requirement that an assignment of a mortgage must be recorded, whether or not it changes the mortgagee of record.

Moreover, the lien created by a mortgage continues until the mortgage is released, whether or not the mortgage (or a subsequent assignment) is recorded. As the Iowa Supreme Court explained more than half a century ago,

Shalla v. Shalla, 237 Iowa 752, 23 N.W.2d 814, 822 (1946) (quoting Cherry v. Welsher, 195 Iowa 640, 192 N.W. 149, 151 (1923)); Johnson v. Myer, 197 Iowa 1110, 198 N.W. 654, 657 (1924) ("In the absence of an intentional release of the security, the lien of a mortgage continues until the debt is paid," so an unintentional release does not change the priority of the mortgage lien). Thus, despite unrecorded assignments, a mortgage would retain its first lien status, unless it was released and there was a subsequent purchase for value without notice. The effect of recording is only important as to subsequent purchasers without notice; interim assignees with notice, like Member Defendants, require no such protection, see Ragland, 211 N.W. at 566, and derive no unjust benefit from failing to record interim assignments.

Thus, even as recharacterized in the County's brief, the "unjust enrichment" claim fails to state a claim upon which relief can be granted, because the legal proposition on which it is based is wrong. Specifically, an allegation that the Member Defendants recorded only the original mortgage, with MERS as the mortgagee, then assigned the mortgage among Member Defendants without recording those assignments, does not allege any conduct that somehow resulted in enrichment that was "unjust." See Lakeside Feeders, Inc., 666 F.3d at 1112. Under these circumstances, the "unjust enrichment" claim in Count I and, hence, the "agency and corporate veil piercing" claim in Count III, must be dismissed for failure to state a claim upon which relief can be granted.

III. CONCLUSION

What the County seeks, on its own behalf and on behalf of the putative Class of Iowa Counties, under the guise of construction of recording statutes, is an extension of those statutes that completely changes the meaning of the statutes, but the courts have no power to grant such an extension. See Schadendorf, 757 N.W.2d at 337 (quoting Auen, 679 N.W.2d at 590). What the County seeks is a recording requirement that the legislature has declined to create.

THEREFORE, the defendants' May 1, 2012, Joint Motion To Dismiss Plaintiff's Class Action Petition (docket no. 37) is granted, and the County's Class Action Petition is dismissed in its entirety for failure to state claims upon which relief can be granted.

IT IS SO ORDERED.