Dreambuilder Investments, LLC v. MERSCORP Holdings, Inc.

Background

Dreambuilder Investments, LLC sued MERSCORP Holdings, Inc. after MERSCORP terminated Dreambuilder’s membership in the MERS® System, an electronic registry that tracks mortgage-loan servicing rights and beneficial ownership interests. Dreambuilder alleged tortious interference with prospective economic advantage, unjust enrichment, and breach of contract. It also sought a declaratory judgment concerning MERSCORP’s authority to release security interests and Dreambuilder’s ability to transfer loans from the registry.

MERSCORP counterclaimed for breach of contract. It alleged that Dreambuilder had agreed to follow the registry’s membership rules and procedures, including quality-assurance and document-execution requirements, and to indemnify MERSCORP for certain expenses. MERSCORP alleged that Dreambuilder failed to cure rule violations, leading to a $25,000 penalty and termination of its membership. It also sought reimbursement for legal fees, land-record research expenses, and other costs, along with authorization to release liens it held on Dreambuilder’s behalf.

Dreambuilder’s lawyer withdrew because of irreconcilable differences and failure to pay legal expenses and fees. The court gave Dreambuilder time to obtain new counsel and respond to MERSCORP’s motion for summary judgment, which asks the court to rule without a trial when there is no genuine dispute about a fact that could affect the result. Dreambuilder did not obtain counsel or file an opposition, so the motion was treated as unopposed. The court emphasized that it still had to review the motion and determine whether MERSCORP was legally entitled to judgment.

Court’s Analysis

Tortious Interference

Applying Virginia law, the court held that Dreambuilder had not identified a specific actual or prospective business opportunity with which MERSCORP interfered. Dreambuilder’s allegations concerned its ability to assign loans and MERSCORP’s threats regarding security instruments, but the complaint did not identify a specific business relationship or opportunity. The court found that this lack of specificity was fatal to the claim and granted summary judgment to MERSCORP on it.

Unjust Enrichment

The court held that the parties’ membership rules and procedures constituted an express contract. Under Virginia law, unjust enrichment is available only when there is no valid express contract governing the parties’ relationship. Because the contract existed, the court granted MERSCORP summary judgment on Dreambuilder’s unjust-enrichment claim.

Breach of Contract

The court granted MERSCORP summary judgment on Dreambuilder’s breach-of-contract claim because Dreambuilder had offered only general allegations and had not identified evidence creating a genuine factual dispute.

The court also granted MERSCORP summary judgment on its breach-of-contract counterclaim. MERSCORP submitted notices of rule violations, penalty notices, a notice of potential termination, follow-up communications, and the membership-termination notice. It also submitted documents supporting its claimed damages. The court concluded that MERSCORP had established each element of its contract claim and that no material factual dispute remained.

Declaratory Judgment

The court ruled that a request for a declaratory judgment is not an independent claim when it depends on underlying substantive claims. Because the court had granted summary judgment against Dreambuilder on those claims, it also ruled that Dreambuilder’s remaining declaratory-judgment cause of action should be dismissed and granted MERSCORP’s motion on that request.

Judgment and Disposition

MERSCORP requested $56,515.15, consisting of the $25,000 penalty, $9,013.05 in legal fees related to litigation involving Dreambuilder’s mortgages, $2,516.50 for land-record research, and $19,558 in attorneys’ fees for this action. The court found no material factual dispute concerning the request and granted MERSCORP’s motion for judgment.

Judge Ramos’s final order granted the motion for summary judgment, entered judgment for MERSCORP against Dreambuilder in the amount of $56,515.15, authorized MERSCORP to release all liens it held on Dreambuilder’s behalf, directed the clerk to terminate the motion, and closed the case.