Houston v. Bank of America Federal Savings Bank

OPINION

This appeal raises the issue of whether a lender who pays off a prior note is equitably subrogated to the former lender’s priority lien position. We conclude that the subsequent lender succeeds to the prior lender’s priority lien position as long as an intervening lien holder is not prejudiced. Therefore, we affirm the district court’s order granting summary judgment to Bank of America.

FACTS

Appellants, Edward R. Houston and Regina Houston, paid David Boone $740,000 for investment services. Boone converted the $740,000 to his own use. Shortly thereafter, on May 13, 1998, Boone and his…