BAC Home Loans Servicing, LP v. Semper Investments L.L.C.
230 Ariz. 587
| Ariz. Ct. App. | 2012Background
- Russo purchased property in Aug 2004 with a secured loan for $716,000 from First Magnus, later assigned to Chase; in Nov 2005 Russo obtained a $400,000 HELOC secured by a deed of trust; Dec 2005 Russo executed a $700,000 revolving loan to D'Esprit, Inc. Profit Sharing Plan; Aug 2006 Russo borrowed $1,000,000 from First Magnus (BAC loan) with MERS as beneficiary and used proceeds to satisfy prior loans; D'Esprit deed of trust was re-recorded and assigned to Semper; Semper later acquired the D'Esprit deed and loan; Russo defaulted, Semper sought to foreclose, and BAC sought equitable subrogation priority; trial court granted BAC summary judgment and denied Semper’s cross-motion, holding subrogation would improve Semper’s position and no notice to intervening lienholders was required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equitable subrogation permits BAC to take priority over Semper | Semper argues subrogation does not apply given intervening lien | BAC contends subrogation applies and preserves priority | Yes; BAC entitled to priority under subrogation |
| Whether Semper is prejudiced by subrogation and whether notice is required | Semper asserts prejudice and need for notice | Notice not required; prejudice evaluated by risk to intervening lienholder | No actionable prejudice shown; notice not required; subrogation upheld |
| How disparate loan terms affect prejudice analysis under subrogation | Differences in interest rates and terms prejudicial to Semper | Prejudice not established; original rates allowed range; subrogation permitted | Disparity alone does not preclude subrogation; subrogating loan within historical rate parameters not prejudicial |
Key Cases Cited
- Lamb Excavation, Inc. v. Chase Manhattan Mortgage. Corp., 208 Ariz. 478, 95 P.3d 542 (App. 2004) (prejudice analysis; corrective substitution in priority)
- Peterman-Donnelly Eng'rs & Contractors Corp. v. First Nat'l Bank of Ariz., 2 Ariz. App. 321, 408 P.2d 841 (1965) (subrogation scope; extent of funds credited to priority debt)
- Continental Lighting & Contracting, Inc. v. Premier Grading & Utils., LLC, 227 Ariz. 382, 258 P.3d 200 (App. 2011) (Restatement guidance on subrogation prejudice)
- United Ins. Co. v. Lutz, 227 Ariz. 411, 258 P.3d 229 (App. 2011) (affirmative basis for affirming correct judgment)