equitable subrogation doctrine in California

2024The doctrine of equitable subrogation “‘is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.’ [Citations.]” (Caito v. United California Bank (1978) 20 Cal.3d 694, 704 .) The Bank’s third cause of action for equitable lien by subrogation stems from the use of the Bank’s loan proceeds to satisfy the Company’s pre- existing debts, not Ultimate Action’s filing of this action.

2020Co. v. Cleveland Wrecking Co. (2019) 182 Cal.App.4th 23 , 31–32 (Cleveland Wrecking).) “ ‘ “As now applied [the doctrine of equitable subrogation] is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.” [Citations.]’ (Caito v. United California Bank (1978) 20 Cal.3d 694, 704 .)” (Fireman’s Fund Ins.

1999Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1291 [ 77 Cal.Rptr.2d 296 ].) As further explained in that opinion: “By undertaking to indemnify or pay the principal debtor’s obligation to the creditor or claimant, the ‘subrogee’ is equitably subrogated to the claimant (or ‘subrogor’), and succeeds to the subrogor’s rights against the obligor. [Citation.] In the case of insurance, subrogation takes the form of an insurer’s right to be put in the position of the insured in order to pursue recovery from third parties legally responsible to the insured for a loss which the insurer has bo

1999Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279, 1291 [ 77 Cal.Rptr.2d 296 ].) As further explained in that opinion: “By undertaking to indemnify or pay the principal debtor’s obligation to the creditor or claimant, the ‘subrogee’ is equitably subrogated to the claimant (or ‘subrogor’), and succeeds to the subrogor’s rights against the obligor. [Citation.] In the case of insurance, subrogation takes the form of an insurer’s right to be put in the position of the insured in order to pursue recovery from third parties legally responsible to the insured for a loss which the insurer has bo

2017(See Simon Newman Co. v. Fink, supra, 206 Cal. at p. 146 [holder of new security who pays off prior creditor will be subrogated to that creditor’s rights under that creditor’s security].) Because appellant’s right is derivative, it is governed by the statute of limitations that would apply to respondent’s rights under the January 31, 2006 deed of trust. *949 In the trial court, appellant argued that the equitable subrogation claim was subject to the statute of limitations in Civil Code section 882.020, which applies to the right to proceed under a power of sale in a deed of trust whether or no

2012(Simon Newman Co. v. Fink (1928) 206 Cal. 143, 147 [ 273 P. 565 ] [equitable subrogation applied though party did not search records].) The Supreme Court stated the general rule applicable to a lender’s entitlement to equitable subrogation almost 84 years ago: “ ‘One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incumbrance, either on the express understanding, or under circumstances from which an understanding will be implied, that the advance made is to be secured by a first lien on the property, is not a mere

2023(See Carter v. Pulte Home Corp. (2020) 52 Cal.App.5th 571 , 579 [trial court’s determination whether a defendant’s equitable position is inferior to an insurer’s is reviewed for abuse of discretion]; Die den v. Schmidt (2002) 104 Cal.App.4th 645, 654 [because “the trial court should be given the opportunity to balance the equities and exercise its discretion,” reviewing court would “not consider [doctrine of equitable subrogation] in the first instance”].) Moreover, because RNA did not argue in the trial court its equitable position was superior to WFG’s position, RNA deprived WFG of the oppor

2007(Dieden v. Schmidt (2002) 104 Cal.App.4th 645, 654 [ 128 Cal.Rptr.2d 365 ].) We conclude plaintiff’s complaint fails to allege a viable claim for application of the doctrine of equitable subrogation, and therefore plaintiff is not entitled to have the trial court balance the equities. *696 We conclude the trial court properly sustained the demurrer without leave to amend.

1985Relying on the doctrine of equitable subrogation, State contends that, to the extent of the three encumbrances which were senior to Smith’s, State is subrogated to and may assert the priorities of the former senior encumbrances. *1096 The elements of this doctrine are summarized in Katsivalis v. Serrano Reconveyance Co. (1977) 70 Cal.App.3d 200, 210 [ 138 Cal.Rptr. 620 ]: “ ‘ “One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incum-brance, either on the express understanding, or under circumstances from which an

1985Relying on the doctrine of equitable subrogation, State contends that, to the extent of the three encumbrances which were senior to Smith’s, State is subrogated to and may assert the priorities of the former senior encumbrances. *1096 The elements of this doctrine are summarized in Katsivalis v. Serrano Reconveyance Co. (1977) 70 Cal.App.3d 200, 210 [ 138 Cal.Rptr. 620 ]: “ ‘ “One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incum-brance, either on the express understanding, or under circumstances from which an

1980Co. (1943) 244 Wis. 317 [ 12 N.W.2d 59, 61 ] Rest., Restitution, § 162.) Rights of subrogation may grow out of a contract but need not depend for their existence upon the express grant of the contract as they are created by law to avoid injustice. "`As now applied [the doctrine of equitable subrogation] is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.'" ( Caito v. United California Bank (1978) 20 Cal.3d 6

1980Co. (1943) 244 Wis. 317 [ 12 N.W.2d 59, 61 ] Rest., Restitution, § 162.) Rights of subrogation may grow out of a contract but need not depend for their existence upon the express grant of the contract as they are created by law to avoid injustice. "`As now applied [the doctrine of equitable subrogation] is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter.'" ( Caito v. United California Bank (1978) 20 Cal.3d 6

1998Co. v. Maryland Casualty Co. (1994) 21 Cal.App.4th 1586, 1595-1596 [ 26 Cal.Rptr.2d 762 ].) In the insurance context, the doctrine “permits the paying insurer to be placed in the shoes of the insured and to pursue recovery from third parties responsible to the insured for the loss for which the insurer was liable and paid.” (Id. at p. 1596.) According to CIGA, it was like the “paying insurer,” having paid covered claims as required by statute, and was thereby entitled to pursue subrogation.

1995Co. v. Maryland Casualty Co., supra, 21 Cal.App.4th 1586 .) With respect to the equitable subrogation claim, we concluded Fireman’s Fund did not state a cause of action because (1) Kelly had released Maryland before Fireman’s Fund settled with Homeowners/Kelly, thereby precluding Fireman’s Fund from asserting a claim against Maryland on Kelly’s behalf; and (2) Fireman’s Fund had no obligation to make the settlement payment and was instead a mere “volunteer” based on Fireman’s Fund’s claim that none of the construction defects occurred during its policy period.

1978The doctrine of equitable subrogation is, of course, well recognized in California (see, e.g., Offer v. Superior Court, 194 Cal. 114, 118 [ 228 P. 11 ]; Meyers v. Bank of America etc. Assn., 11 Cal.2d 92 [ 77 P.2d 1084 ]; Patent Scaffolding Co. v. William Simpson Constr.

1978The doctrine of equitable subrogation is, of course, well recognized in California (see, e.g., Offer v. Superior Court, 194 Cal. 114, 118 [ 228 P. 11 ]; Meyers v. Bank of America etc. Assn., 11 Cal.2d 92 [ 77 P.2d 1084 ]; Patent Scaffolding Co. v. William Simpson Constr.

2017(Miller v. Provost (1994) 26 Cal.App.4th 1703, 1708 [ 33 Cal.Rptr.2d 288 ].) Under that statute, a deed of trust expires 10 years after the maturity date of the obligation if that date “is ascertainable from the recorded evidence of indebtedness,” or 60 years after recordation of the deed, if “the last date fixed for payment of the debt ... is not ascertainable from the recorded evidence of indebtedness.” (Civ.

2017(Miller v. Provost (1994) 26 Cal.App.4th 1703, 1708 [ 33 Cal.Rptr.2d 288 ].) Under that statute, a deed of trust expires 10 years after the maturity date of the obligation if that date “is ascertainable from the recorded evidence of indebtedness,” or 60 years after recordation of the deed, if “the last date fixed for payment of the debt ... is not ascertainable from the recorded evidence of indebtedness.” (Civ.

1998They point out that the Labor Code's subrogation provisions are a legislative recognition of the common law doctrine of equitable subrogation, and therefore they should be construed in accordance therewith. ( Breese v. Price (1981) 29 Cal.3d 923, 930 , 176 Cal.Rptr. 791 , 633 P.2d 987 .) Plaintiffs rely on automobile insurance cases holding common law equity principles prohibit a carrier from recovering payments made to its insured from a third party tortfeasor, where the insured had not yet been made whole. ( Sapiano v. Williamsburg Nat.

1998They point out that the Labor Code's subrogation provisions are a legislative recognition of the common law doctrine of equitable subrogation, and therefore they should be construed in accordance therewith. ( Breese v. Price (1981) 29 Cal.3d 923, 930 , 176 Cal.Rptr. 791 , 633 P.2d 987 .) Plaintiffs rely on automobile insurance cases holding common law equity principles prohibit a carrier from recovering payments made to its insured from a third party tortfeasor, where the insured had not yet been made whole. ( Sapiano v. Williamsburg Nat.

2017The doctrine of equitable subrogation is an exception to the first in time, first in right rule and applies in those situations where equity requires a different result. [Citation.] [¶] The Supreme Court stated the general rule applicable to a lender’s entitlement to equitable subrogation almost 84 years ago: ‘ “One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incumbrance, either on the express understanding, or under circumstances from which an understanding will be implied, that the advance made is to be secur

2017The doctrine of equitable subrogation is an exception to the first in time, first in right rule and applies in those situations where equity requires a different result. [Citation.] [¶] The Supreme Court stated the general rule applicable to a lender’s entitlement to equitable subrogation almost 84 years ago: ‘ “One who advances money to pay off an encumbrance on realty at the instance of either the owner of the property or the holder of the incumbrance, either on the express understanding, or under circumstances from which an understanding will be implied, that the advance made is to be secur

2016Co. v. Liberty Mutual Insurance Co. (2015) 135 Haw. 449, 456 [ 353 P.3d 991 ] [in a case involving a postverdict settlement in excess of primary limits, ‘“the public interest in encouraging reasonable settlement is best served by permitting an excess insurer to seek relief under the doctrine of equitable subrogation”]; Scottsdale Ins.

2016Co. v. Liberty Mutual Insurance Co. (2015) 135 Haw. 449, 456 [ 353 P.3d 991 ] [in a case involving a postverdict settlement in excess of primary limits, ‘“the public interest in encouraging reasonable settlement is best served by permitting an excess insurer to seek relief under the doctrine of equitable subrogation”]; Scottsdale Ins.

2014(See Caito v. United California Bank (1978) 20 Cal.3d 694, 704 [“‘[T]he doctrine of equitable subrogation . . . is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter’”]; see also Roylance v. Doelger (1962) 57 Cal.2d 255, 257-258, 262 [insurer permitted to file cross-complaint for declaratory relief seeking a determination it would have subrogation rights against third parties in the event it was found liable on

2002(Ibid.) “ ‘From the very nature of equity, a wide play is left to the conscience of the chancellor in formulating his decrees.’” (Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 770-771 [ 110 Cal.Rptr.2d 861 ].) Assuming the doctrine of equitable subrogation even applies in this case (see 11 Witkin, Summary of Cal. Law, supra, Equity, § 172, pp. 853-854 [no recovery against innocent third party]), the trial court should be given the opportunity to balance the equities and exercise its discretion.

2002(Ibid.) “ ‘From the very nature of equity, a wide play is left to the conscience of the chancellor in formulating his decrees.’” (Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 770-771 [ 110 Cal.Rptr.2d 861 ].) Assuming the doctrine of equitable subrogation even applies in this case (see 11 Witkin, Summary of Cal. Law, supra, Equity, § 172, pp. 853-854 [no recovery against innocent third party]), the trial court should be given the opportunity to balance the equities and exercise its discretion.

2002Both contentions became moot when the trial court found Schmidt’s lien had terminated upon Benjamin Dieden’s death. *654 First Nationwide, however, citing the principle that this court may affirm a summary judgment on any correct legal theory (Kramer v. State Farm Fire & Casualty Co. (1999) 76 Cal.App.4th 332, 335 [ 90 Cal.Rptr.2d 301 ]), asks this court to direct the trial court to grant summary adjudication in First Nationwide’s favor on the issue of priority of the liens.

2002Both contentions became moot when the trial court found Schmidt’s lien had terminated upon Benjamin Dieden’s death. *654 First Nationwide, however, citing the principle that this court may affirm a summary judgment on any correct legal theory (Kramer v. State Farm Fire & Casualty Co. (1999) 76 Cal.App.4th 332, 335 [ 90 Cal.Rptr.2d 301 ]), asks this court to direct the trial court to grant summary adjudication in First Nationwide’s favor on the issue of priority of the liens.

1998Co. v. Auto Spring Supply Co. (1976) 59 Cal.App.3d 860, 864 [ 131 Cal.Rptr. 211 ]; Fireman’s etc. Co. v. State Comp. etc. Fund, supra, 93 Cal.App.2d at p. 412 ; 16 Couch on Insurance, supra, Subrogation, §§ 61:2, 61:36, at pp. 75-76, 118-120; 11 Witkin, Summary of Cal. Law, supra, Equity, § 169, pp. 848-850.) “ ‘As now applied [the doctrine of equitable subrogation] is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by th

1998Co. v. Auto Spring Supply Co. (1976) 59 Cal.App.3d 860, 864 [ 131 Cal.Rptr. 211 ]; Fireman’s etc. Co. v. State Comp. etc. Fund, supra, 93 Cal.App.2d at p. 412 ; 16 Couch on Insurance, supra, Subrogation, §§ 61:2, 61:36, at pp. 75-76, 118-120; 11 Witkin, Summary of Cal. Law, supra, Equity, § 169, pp. 848-850.) “ ‘As now applied [the doctrine of equitable subrogation] is broad enough to include every instance in which one person, not acting as a mere volunteer or intruder, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by th

1995Co. (1990) 219 Cal.App.3d 111, 117 [ 268 Cal.Rptr. 193 ] [excess insurer paid the settlement unreasonably rejected by the primary insurer and then sued the primary under the doctrine of equitable subrogation].) We find this conclusion somewhat puzzling.

1995Co. (1990) 219 Cal.App.3d 111, 117 [ 268 Cal.Rptr. 193 ] [excess insurer paid the settlement unreasonably rejected by the primary insurer and then sued the primary under the doctrine of equitable subrogation].) We find this conclusion somewhat puzzling.