97 Mass. App. Ct. 325
Mass. App. Ct.2020Background
- Kelly owned Boston property subject to a recorded first mortgage (Chevy Chase/MERS) and later granted a second mortgage to JPMorgan; both closings involved attorney Roseann Conti.
- JPMorgan purchased a title insurance policy from Stewart Title; Conti (Stewart Title's agent) did not disclose the existing first mortgage to JPMorgan.
- Land Court reformed the second mortgage in 2013 (default judgment to JPMorgan). JPMorgan later demanded Kelly discharge the first mortgage within 10 days per the second mortgage; Kelly did not do so and stopped paying JPMorgan.
- In December 2015 Stewart Title (claiming under its policy) paid approximately $268,084.83 to discharge the first mortgage; Stewart Title later recovered only part of that amount from Conti via malpractice settlement.
- Stewart Title sued Kelly for breach of contract (claiming subrogation to JPMorgan's rights under the second mortgage) and unjust enrichment; the Superior Court granted summary judgment to Kelly and denied Stewart Title's motion for reconsideration; the Appeals Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Express subrogation / breach of contract | Stewart Title is JPMorgan's subrogee under the title policy (or its omitted "jacket") and can enforce the second mortgage against Kelly | Kelly: Stewart Title is not subrogee, has no contractual relationship with Kelly, and was not a party to the Land Court judgment | Held for Kelly — the submitted policy contained no express subrogation clause; Stewart (bearing the burden) failed to prove express subrogation; SJ affirmed |
| Implied subrogation | If express subrogation fails, implied subrogation should apply to prevent a windfall to JPMorgan | Kelly: Stewart Title's own negligence (failure to disclose lien) and the equities foreclose subrogation; Kelly not primarily liable | Held for Kelly — implied subrogation denied because Stewart Title's negligence and equitable considerations do not support subrogation; JPMorgan had a contractual remedy under the mortgage |
| Unjust enrichment | Stewart Title conferred a measurable benefit by paying off the first mortgage and reasonably expected repayment from Kelly | Kelly: He had no actual or constructive knowledge of Stewart Title's payment and thus no duty to compensate | Held for Kelly — third element (defendant's knowledge/expectation) fails; SJ proper |
| Motion for reconsideration / newly produced "jacket" | Stewart Title submitted a late affidavit and policy "jacket" containing an express subrogation clause and sought reconsideration | Kelly: He had consistently disputed Stewart Title's subrogation; evidence was not newly excusable | Held for Kelly — denial of reconsideration affirmed; Stewart failed to show excusable neglect or justification for late submission |
Key Cases Cited
- Frost v. Porter Leasing Corp., 386 Mass. 425 (1982) (describing insurer subrogation principles and limits)
- GMAC Mtge., LLC v. First Am. Title Ins. Co., 464 Mass. 733 (2013) (explaining title insurance as indemnity against preexisting title defects)
- Pinti v. Emigrant Mtge. Co., 472 Mass. 226 (2015) (de novo review of summary judgment)
- Kourouvacilis v. General Motors Corp., 410 Mass. 706 (1991) (summary judgment when opposing party bears burden at trial)
- Madsen v. Erwin, 395 Mass. 715 (1985) (party cannot rely on mere allegations at summary judgment)
- Cullen Enters., Inc. v. Massachusetts Property Ins. Underwriting Ass'n, 399 Mass. 886 (1987) (standards for relief from judgment and excusable neglect)