Heard: February 5, 2015.
Appeal from Greenville County. Charles B. Simmons, Jr., Master-in-Equity. Appellate Case No. 2013-000915.
D. Sean Faulkner, of Greenville, C. Mitchell Brown and Mattison Bogan, both of Columbia, all of Nelson Mullins Riley & Scarborough, LLP., for Petitioner.
Mary Leigh Arnold, of Mt. Pleasant, for Respondents.
JUSTICE PLEICONES. TOAL, C.J., BEATTY, KITTREDGE and HEARN, JJ., concur.
[411 S.C. 606] ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
[411 S.C. 607] PLEICONES,
We granted certiorari to consider the Court of Appeals' decision in this mortgage priority case. Independence Nat'l Bank v. Buncombe Prof'l Park, L.L.C., 402 S.C. 514, 741 S.E.2d 572 (Ct.App. 2013). We reverse the Court of Appeals' decision and reinstate the master's judgment because we find petitioner Independence National Bank (Bank) is entitled to be equitably subrogated to the original first mortgage on the property.
Respondent DeCarlis is the sole member of respondent Buncombe Professional Park, L.L.C. (Buncombe), which owned an undeveloped parcel of land. In 2007, DeCarlis, as Buncombe's representative, executed a note and mortgage with Bank. At the same time, DeCarlis executed a personal guaranty. As part of this transaction, Bank satisfied the existing first mortgage at closing.
Buncombe ceased paying on the 2007 mortgage. As Bank prepared this foreclosure suit, it learned in 2010 that DeCarlis held what had been, prior to Bank's satisfaction of the original first mortgage, a second mortgage on the property executed and properly recorded in 2006. The same attorney represented both Bank and Buncombe at the 2007 mortgage closing, and had actual notice of DeCarlis' 2006 mortgage at the time of the 2007 closing since he had conducted the title search. The attorney testified at the hearing in this matter that he erroneously neglected to have DeCarlis execute a satisfaction, release, or subordination of his 2006 mortgage at the 2007 closing in order to effectuate the parties' agreement that Bank was to have a first mortgage. Since no such document was executed, DeCarlis' 2006 second mortgage became the first lien, with priority over Bank's 2007 mortgage.
Bank brought this foreclosure action against both Buncombe and DeCarlis. The master " reformed" both Bank's [411 S.C. 608] 2007 and DeCarlis' 2006 mortgage, subordinating DeCarlis'
mortgage to that of Bank. In a post-trial order following the parties' Rule 59 motions, the master found Bank was equitably subrogated to the original first mortgage which Bank had satisfied as part of the 2007 closing, thus giving Bank's 2007 ...