Branscomb v. JPMorgan Chase Bank, N.A.
223 Cal. App. 4th 801
Cal. Ct. App.2014Background
- Navjot owned property in San Rafael; WaMu held a 2005 first DOT and was refinanced in 2007 with a new first DOT, later recorded; MMB held a 2006 second DOT and refinanced in 2007 with a new second DOT; Branscomb loaned Navjot $500,000 in May 2007 secured by a DOT recorded later for $100,000; discrepancy in loan amount vs. recorded DOT due to Menon’s actions; Branscomb believed his lien was in second position but it was recorded in third; refinances were processed with the lender defendants requiring retention of their first and second positions; the escrow agent submitted a zero payoff demand to reconvey Branscomb’s lien, which was forged by Menon; ultimately, the record still showed Branscomb’s $100,000 lien in first position due to reconveyance issues, leading to litigation on lien priorities and potential reformation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equitable subrogation entitles Chase and MMB to first/second priority | Branscomb argues lack of subrogation due to lender knowledge and improper handling | Chase not foreclosed from subrogation; sought to maintain priority via doctrine | Yes, equitable subrogation applies; lenders entitled to priority via subrogation |
| Whether lender knowledge or escrow negligence negates subrogation | Knowledge of lien or escrow negligence precludes subrogation | Neither knowledge nor escrow negligence defeats subrogation under precedent | No; neither knowledge nor escrow negligence precludes subrogation |
| Whether Branscomb’s deed of trust can be reformed to $500,000 despite subrogation | Reformation appropriate to reflect actual debt | Reformation not needed if subrogation alters priority | Not addressed on appeal due to subrogation ruling; reform not necessary to decide now |
| Whether the lender defendants are bona fide encumbrancers | If bona fide, reformation may be barred | They may be bona fide encumbrancers; challenge preserved | Not reached; court left issue open since subrogation determined |
| Whether costs and attorney fees against Navjot survive | Fees justified if Branscomb prevails in foreclosure | Fees may prejudice lender interests | Remanded on costs; fees issue not resolved due to subrogation ruling |
Key Cases Cited
- Simon Newman Co. v. Fink, 206 Cal. at 143 (Cal. 1928) (subrogation principles and first lien revival)
- JP Morgan Chase Bank, N.A. v. Banc of America Practice Solutions, Inc., 209 Cal.App.4th 855 (Cal. App. 2012) (equitable subrogation and lender remedies; balancing equities)
- Katsivalis v. Serrano Reconveyance Co., 70 Cal.App.3d 200 (Cal. App. 1977) (equity of subrogation and lien priorities)
- Feldsher v. Lawyers Title Ins. Corp., 42 Cal.App.4th 41 (Cal. App. 1996) (role of bona fide encumbrancers; subrogation nuance)
- Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co., 27 Cal.4th 705 (Cal. 2002) (escrow duties; no general duty to police escrow deposits)
- Lee v. Title Ins. & Trust Co., 264 Cal.App.2d 160 (Cal. App. 1968) (escrow holder duties; limited to escrow instructions)