A federal court in Kentucky has dismissed a suit against the Mortgage Electronic Registration System (MERS) brought by that state’s county clerks.

The court dismissed the case "with prejudice" meaning it cannot be resubmitted.

"There is nothing in the plain language of the statute that indicates that the statute was designed to be enforced by the county clerk," the court wrote, saying that the registration system was intended to make prospective purchasers aware of potential liens against property. While a failure to do so might give such a purchaser a legitimate complaint, the court ruled, the clerks were not an injured party under the law and could not bring suit.

"The harm for which the plaintiffs seek to recover is recording fee revenue from assignments of mortgages," the court wrote in its decision. "The purpose of the statutes cited by plaintiffs is to assure that liens are discharged when an underlying loan is paid off, to give subsequent purchasers and lenders notice of recorded liens, and to allow creditors to give notice of their secured interest in the property. The General Assembly has enacted statutory provisions allowing certain governmental agencies to collect unpaid fees and charges. However, the General Assembly did not provide a statutory mechanism for the recovery of fees for unfiled assignments by county clerks. Had the General Assembly wanted to allow county clerks to file lawsuits regarding recording fees, it certainly knew how to do so."

MERS representatives hailed the decision as an important precedent. The company faces several suits in different jurisdictions around the country by county clerks aimed at recovering lost fees. Last week, the county governments in Plymouth, Norfolk, and Bristol Counties announced they intend to file just such a class action suit.

"This is a significant and precedent-setting decision for MERS," said MERS Spokeswoman Janis Smith. "The court determined that county clerks lack standing to sue or collect damages from MERS."