Bank of New York Mellon Trust Co., N.A. v. Tysons Financial, LLC (In re Botero-Paramo)
- Summarized by Brooke Schumm , Daneker, McIntire, Schumm, et al.
- 12 years 7 months ago
- Citation:
- Bank of New York Mellon Trust Co., N.A. v. Tysons Financial, LLC (In re Botero-Paramo), Slip Opinion, June 8, 2012, Case No. 11-1886 (4th Cir. 2012).
- Tag(s):
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- Ruling:
- The Fourth Circuit Court of Appeals affirmed the District Court which had affirmed the Bankruptcy Court. In an extremely fact specific unpublished opinion, all of the courts considering the facts and law refused to invalidate a somewhat sloppily granted first lien of Tysons, held that a release which did not expressly release a property was not effective as a release as to that unnamed property, and refused to grant a claim for equitable subrogation even though the "Secured Lending" (later BONY) proceeds were used to pay off one of the Tysons' debts secured by the property. The Court relied on Virginia law in concluding that failure to properly name a trustee does not render a mortgage unenforceable, but can create an equitable mortgage.The release which named only one property was only effective as to that property. Equitable subrogation was not appropriate because it would prejudice outstanding lienholders and create a first lien position 18 months after it was recorded. An attorney's fees award for fees apparently allowable under the deed of trust was affirmed. An affidavit of a local attorney was not required to substantiate the fee award.
- Procedural context:
- The Bankruptcy Court granted summary judgment to defendant Tysons as to a complaint brought by a junior lender to invalidate Tysons' lien. The District Court and Fourth Circuit affirmed.
- Facts:
- The facts are so complex that the opinion has little precedential value and is therefore unpublished. The debtor sought to sell a "spec" home referred to as the New Ascot Drive Property. Facially, FSM had the first lien on the New Ascot property to secure payment of 2.79 MM dollars. While refinancing a debt secured by the Debtor's Lawyers Road home, the closing was mishandled, and the existing lender, CFUSA (whose later successor, Tysons, was the Appellee), only ended up with a new lien on the new Ascot Drive property. it does not appear the old lien was released. Later, in order to refinance the Lawyers Road property, Tysons released its Lawyers Road lien (although the opinion suggests that perhaps a release of New Ascot Road was also intended). In 2007, BONY, the Appellant, refinanced the very first 2.79MM deed of trust, but the title search did nto pick up the pre-existing CFUSA/Tysons lien. Yet another entity, Secured Lending took a second Deed of Trust on the New Ascot Drive Property. The dispute was whether Tysons had released its lien on New Ascot Drive. The Bankruptcy Court determined that the somewhat fouled up Tysons refinance deed of trust was in fact valid to create a lien, and that because the release did not mention New Ascot Property, there was no release. When BONY claimed it should be equitably subrogated as a result of its refinancing the former first lien, the Bankrutpcy Court refused to re-order the lien priority, and also noted that BONY was not a holder in due course because it bought its interest during litigation.
- Judge(s):
- Chief Judge Traxler, Circuit Judges King and Duncan.
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