The defendant, Beverly MacPherson, held a second mortgage on a property.
The plaintiff, L-Jalco Holdings Inc., advanced funds to the mortgagor, Joseph Murano's company, which were used to pay out the first mortgage.
Prior to this refinancing, MacPherson had explicitly refused to postpone her mortgage.
L-Jalco's mortgage was subsequently registered in second priority.
L-Jalco initiated power of sale proceedings without notice to MacPherson, and the property was sold.
MacPherson signed a discharge believing the sale was in the ordinary course of business and she would be paid.
L-Jalco then sought equitable subrogation to assert first priority for the funds it advanced to pay out the original first mortgage and tax arrears.
MacPherson moved for summary judgment, arguing L-Jalco was aware of her prior charge and would be severely prejudiced.
The court granted summary judgment, dismissing L-Jalco's action and allowing MacPherson's counterclaim, finding that L-Jalco knowingly took the risk of not addressing MacPherson's prior charge and that granting equitable subrogation would severely prejudice MacPherson.