133 Conn. App. 669
Conn. App. Ct.2012Background
- The property at 26 Pamela Court in Tolland was owned by Francis DelMastro, son of Mary Lou DelMastro.
- On February 14, 2007, Francis obtained a $650,000 loan from New Century Mortgage Corporation secured by a mortgage on the property.
- On June 15, 2007, Francis executed a second mortgage for $325,000 in favor of Mary Lou DelMastro, who knew there was a prior lien, recorded June 19, 2007.
- On August 6, 2007, Francis refinanced with Saxon Mortgage, Inc. for $749,999; the February 2007 mortgage was released August 15, 2007; Saxon’s mortgage was assigned to Deutsche Bank.
- Foreclosure action was filed April 2008; Mary Lou DelMastro claimed priority; September 15, 2008 judgment of strict foreclosure issued.
- January 6, 2010, the court found Mary Lou DelMastro held the first priority lien; March 7, 2011 judgment set law days; Deutsche Bank appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equitable subrogation makes Deutsche Bank's mortgage first over Mary Lou's | DelMastro should be subordinate under equitable subrogation | Mary Lou's lien not subordinated; equities favor her | Court declined subrogation; equity did not require priority for Deutsche Bank |
| Whether general equitable principles justify Deutsche Bank's priority over Mary Lou's | Equity would place plaintiff first to avoid windfall | Court properly weighed equities; Mary Lou not complicit | Court did not abuse discretion; declined to override Mary Lou's priority |
| Whether Mary Lou's mortgage is void for lack of consideration | No consideration supporting Mary Lou's mortgage | Mary Lou provided consideration by guaranteeing and incurring detriment | Mary Lou's mortgage valid; consideration found in guarantor role |
Key Cases Cited
- Connecticut National Bank v. Chapman, 153 Conn. 393 (1966) (equitable subrogation may apply to prevent unjust enrichment)
- Independence One Mortgage Corp. v. Katsaros, 43 Conn. App. 71 (1996) (subrogation weighing equities; existing lienholders may be protected)
- Equicredit Corp. of Connecticut v. Kasper, 122 Conn. App. 94 (2010) (no ignorance of lien; windfall considerations in subrogation)
- Home Owners' Loan Corp. v. Sears, Roebuck & Co., 123 Conn. 232 (1937) (equity looks to substance and transacts fairly)
- General Electric Capital Corp. v. Transport Logistics Corp., 94 Conn. App. 541 (2006) (consideration defined; value of bargained-for exchange)