JP Morgan Chase Bank v. Banc of America Practice Solutions, Inc.

This case involves the application of equitable subrogation. JP Morgan Chase Bank, N.A. (Chase), made a loan to Jon and Julie Siems to pay off their first and second deeds of trust on their residence. Chase intended its loan to be secured by a new first deed of trust. Indeed, its escrow instructions specifically forbade disbursement of the funds if its deed of trust would not be in the primary position.

Unbeknownst to Chase, Jon Siems also sought a business loan from Sky Bank, Banc of America Practice Solutions, Inc.’s (Banc) predecessor in interest, about the same time. 1 While that loan was primarily secured by the personal property assets of Jon Siems’s medical practice, it was also to be secured by a deed of trust on the Siemses’ real property, as the Siemses guaranteed the business loan. Banc, knowing the real property was already secured by first and second deeds of trust that were in place before the Siemses applied for the Chase loan and the medical corporation applied for the Banc loan, anticipated its loan would be secured by a third deed of trust on the property.

*858 When the Chase and Banc loans were funded, Banc obtained and filed a deed of trust before…