Massachusetts Appellate Court Allows Foreclosure Judgment to Stand Based on Judicial Estoppel and Equitable Subrogation, Despite Owner Not Being Named on Mortgage

The Appeals Court of Massachusetts recently affirmed a lender’s judgment of foreclosure against a homeowner based on the doctrines of judicial estoppel and equitable subrogation, even though she was not named as a borrower on the mortgage.  See 21st Mortg. Corp. v. Lapham, 98 Mass. App. Ct. 1112 (2020).  In 2002, a husband and wife encumbered their home with a mortgage securing a note for $160,000.  In 2005, the husband executed a note in the face amount of $191,000, the proceeds of which were used to pay off the 2002 mortgage.  The wife did not sign the note, nor did the mortgage name her as a borrower, although she purportedly executed the mortgage.  The couple later divorced and the husband quitclaimed the property to the wife.  In 2010, the mortgage assignee realized the wife was not named as a borrower on the mortgage and brought an action seeking reformation or equitable subrogation.  Although the wife claimed she never signed the mortgage and was not a party to it, the trial court granted the mortgagee summary judgment on its equitable subrogation claim because the proceeds of the 2005 mortgage paid off the 2002 mortgage on which the wife was liable.  The court denied summary judgment on the reformation claim, and the mortgagee dropped the claim.  In 2017, the mortgagee filed a foreclosure action and sold the home.  The wife then brought a motion alleging that the mortgagee failed to follow the notice requirements in the mortgage and misstated the amount of the debt owed.  The trial court denied these motion, and the wife appealed.

On appeal, the Court affirmed.  First, it found that the doctrine of judicial estoppel barred the wife from seeking protection under the mortgage’s notice requirements, because she previously had claimed to not be a party to the mortgage and the trial court had denied summary judgment on the lender’s reformation claim as a result.  “[T]he Housing Court judge did not abuse her discretion in deciding that judicial estoppel precluded the wife from claiming rights under the mortgage that she had previously disavowed.”  Second, the Court found that the mortgagee did not misstate the amount of the debt.  The Court held that the equitable subrogation judgment did not affect the amount owed on the debt, and just affected the lender’s priority position.  “[T]o avoid a windfall to the wife, the subrogation judgment placed 21st Mortgage in a priority position to receive from any foreclosure sale the $148,133.84 paid on the wife’s behalf. . . . nothing in the equitable subrogation judgment affected the amount of the underlying debt or how it was serviced. . . . [and it] simply established the priority position of 21st Mortgage’s security interest in the property.”

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Anthony Lombardo at