Fishman v. Murphy
72 A.3d 185
Md.2013Background
- Urban conveyed the Pasadena property to Street by deed on 30 May 2007; the Estate filed suit asserting the deed was procured by Street through fraud.
- Street obtained a $91,350 loan from 1st Chesapeake; funds paid off Urban’s CitiFinancial mortgage on the Pasadena property, with $59,086.72 applied to the prior loan and the balance to Street.
- The circuit court created a constructive trust on 23 March 2010 to convey the property to the Estate, without expressly voiding the Urban-to-Street deed ab initio.
- Midfirst Bank, as assignee of Street’s note and deed of trust, foreclosed on the Pasadena property after Street defaulted; the Estate moved to stay and dismiss, which was denied.
- The Court of Special Appeals held Petitioners were not bona fide purchasers and equitable subrogation was unavailable; the Maryland Supreme Court reversed on bifurcated issues: lis pendens defeats bona fide purchaser status; equitable subrogation applies to recover the loan amount used to retire the prior Urban mortgage.
- The Court remanded to enter judgment in favor of the Trustees for $59,086.72 under equitable subrogation, and to grant the stay/dismiss relief consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Petitioners are bona fide purchasers despite lis pendens notice | Murphy argues lis pendens defeats purchaser status | Street/ Petitioners contend constructive trust does not void title | No; lis pendens negates BFP status for Petitioners |
| Whether equitable subrogation provides a remedy despite lis pendens | Murphy seeks subrogation to recover loan payoff | Petitioners seek subrogation but not as refinance lender | Yes; equitable subrogation applies for $59,086.72 |
Key Cases Cited
- Bowie v. Ford, 269 Md. 111, 304 A.2d 803 (Md. 1973) (constructive trusts and bona fide purchaser protections)
- Borne, - (-) (constructive trust conveyance rights to bona fide purchasers)
- Cottman v. Cottman, 56 Md.App. 413, 468 A.2d 131 (Md. Ct. App. 1983) (transferee from a constructive trustee enjoys BFP status)
- DeShields v. Broadwater, 338 Md. 422, 659 A.2d 300 (Md. 1995) (lis pendens creates priority in plaintiff; BFP status defeated when notice given)
- Levenson, 338 Md. 227, 657 A.2d 1170 (Md. 1995) (equitable subrogation can apply where subrogee pays to protect its own rights without actual knowledge of intervening lien)
- Levenson (Gain/Levenson), 338 Md. 227, 657 A.2d 1170 (Md. 1995) (absence of actual knowledge; rule on subrogation priority)
- Milholland v. Tiffany, 64 Md. 455, 2 A. 831 (Md. 1886) (legal subrogation where payer protects own interests; not a volunteer)
- Schlossberg, Greenpoint Mortg. Funding, Inc. v. Schlossberg, 390 Md. 211, 888 A.2d 297 (Md. 2005) (lis pendens binds subsequent purchasers; priority if plaintiff prevails on merits)
- Matthews, People’s Banking Co. of Smithsburg v. Fid. & Deposit Co. of Maryland, 165 Md. 657, 170 A. 544 (Md. 1934) (definition of bona fide purchaser; void vs voidable title guidance)
- Roberts v. Total Health Care Inc., 349 Md. 499, 709 A.2d 142 (Md. 1998) (statutory subrogation discussed; relevance to subrogation categories)
- George L. Schnader, Jr. Inc. v. Cole Building Co., 236 Md. 19, 202 A.2d 328 (Md. 1964) (equitable subrogation for reimbursement when protecting own interests)