JP Morgan Chase Bank, N.A. v. Banc of America Practice Solutions, Inc
In JP Morgan Chase Bank, N.A. v. Banc of America Practice Solutions, Inc. (2012) 209 Cal.App.4th 855, Chase Bank invoked the doctrine of equitable subrogation where it had paid off existing first and second deeds of trust and expected a first deed of trust in return.
There was evidence that Chase Bank would not have made its loan otherwise, and that the escrow company was instructed not to disburse loan funds if Chase's deed of trust did not have first priority. But Banc of America Practice Solutions, Inc. (Banc) recorded its deed of trust prior to Chase's filing of its deed of trust. It knew of the two prior deeds of trust, and expected that it would be in third position. The Court of Appeal concluded that in these circumstances, the equities favored Chase. (Id. at p. 862.)
It reasoned that since equitable subrogation looks to the intentions of the parties, allowing Chase to invoke equitable subrogation gave both parties what they intended: priority to Chase and a subordinate position to Banc. (Ibid.)