Infante v. Bank of America, N.A.
130 A.3d 773
Pa. Super. Ct.2015Background
- Matthew Infante purchased a 1.121-acre lot in 2003 and gave a mortgage in 2004 for $152,503.93 (the 2004 mortgage).
- Matthew refinanced with Countrywide in 2008, obtaining a $200,200 loan; only Matthew signed the 2008 note and mortgage, which was recorded and later assigned to Bank of America (BOA).
- The 2008 loan paid off the 2004 mortgage and other personal debts; Countrywide’s settlement instructions had required all persons on title to sign and sought a first-position mortgage.
- Therese (wife) took title as tenant by the entireties in 2004, was unaware of the 2008 refinancing, and stopped mortgage payments after Matthew’s death in 2011; she sued seeking a declaration that the 2008 mortgage was not a valid lien on the property.
- BOA counterclaimed seeking equitable subrogation and an equitable lien to recover the amount of the 2004 mortgage it paid off via the 2008 loan; the trial court granted equitable subrogation and imposed an equitable lien for $152,503.93 plus interest.
- Therese appealed, arguing Superior Court precedent bars equitable subrogation where the mortgagee failed to discover intervening interests; BOA and the trial court relied on Pennsylvania Supreme Court decisions permitting subrogation in similar facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BOA is entitled to equitable subrogation for paying off the 2004 mortgage via the 2008 loan | Therese: Superior Court cases (Crouse, Heller, Carr) bar subrogation where lender failed to discover or secure first priority and thus acted negligently/voluntarily | BOA: Supreme Court precedents (Haverford, Gladowski) permit subrogation where loan proceeds actually discharged an existing lien and lender was not a volunteer; unjust enrichment would result otherwise | Court affirmed equitable subrogation: BOA entitled to step into prior mortgage’s priority and an equitable lien for amount of 2004 mortgage |
| Whether BOA acted as a volunteer or was primarily liable for the debt (a subrogation prerequisite) | Therese: Countrywide/BOA were volunteers because Matthew alone signed and title issues make lender negligent | BOA: Loan was made to discharge an existing valid incumbrance; Countrywide acted pursuant to borrower agreement and settlement instructions—not a volunteer | Court held BOA/Countrywide were not volunteers; subrogation prerequisites satisfied |
| Whether allowing subrogation would unjustly injure third parties or Therese | Therese: Subrogation would impair her interests as title owner who did not sign the 2008 mortgage | BOA: Denying subrogation would unjustly enrich Therese by letting her retain property free of debt the loan actually paid off | Court held denial would cause unjust enrichment; equitable lien appropriate |
| Whether Superior Court precedents (Crouse/Heller/Carr) control over Supreme Court precedents | Therese: Those Superior Court cases compel reversal | BOA: Supreme Court cases control and are factually closer to this case | Court held Supreme Court precedents govern and distinguish the Superior Court cases; affirmed judgment |
Key Cases Cited
- Haverford Loan & Bldg. Ass'n of Philadelphia v. Dougherty, 37 A. 179 (Pa. 1897) (permits subrogation where loan proceeds discharged a prior valid incumbrance and lender was not a volunteer)
- Gladowski v. Fefczak, 31 A.2d 718 (Pa. 1943) (allows equitable lien/subrogation when lender advances funds to discharge a lien on property that turns out to have defective title to prevent unjust enrichment)
- General Casmir Pulaski Bldg. & Loan Ass'n v. Provident Trust Co., 12 A.2d 336 (Pa. 1940) (restitution/unjust enrichment supports reimbursement and equitable relief to lender)
- 1313466 Ontario, Inc. v. Carr, 954 A.2d 1 (Pa. Super. 2008) (denies subrogation where lender’s title search failed to reveal intervening mortgage and lender’s negligence bars relief)
- First Commonwealth Bank v. Heller, 863 A.2d 1153 (Pa. Super. 2004) (refuses subrogation when lender negligently failed to discover an intervening lien)
- Home Owners' Loan Corp. v. Crouse, 30 A.2d 330 (Pa. Super. 1943) (denies subrogation for voluntary lender who was under no obligation to pay and failed to discover intervening judgment)
- Shaffer v. O'Toole, 964 A.2d 420 (Pa. Super. 2009) (standard of review for non-jury cases: trial court findings viewed for evidentiary support; conclusions of law reviewed de novo)