J. A03037/15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

BOKF, N.A. D/B/A BANK OF OKLAHOMA, : IN THE SUPERIOR COURT OF

: PENNSYLVANIA

Appellant :

:

v. :

:

FNB OF PENNSYLVANIA, FORMERLY :

KNOWN AS GUARANTY BANK, NA :

:

Appellee : No. 772 MDA 2014

Appeal from the Order April 21, 2014

In the Court of Common Pleas of Luzerne County 

Civil Division No(s).: 12737-2011

BEFORE: MUNDY, STABILE, and FITZGERALD,*JJ.

MEMORANDUM BY FITZGERALD, J.: FILED MAY 27, 2015

Appellant, BOKF, N.A., doing business as Bank of Oklahoma, appeals 

from the order granting the preliminary objections in the form of a demurrer

raised by Appellee, FNB of Pennsylvania, formerly known as Guaranty Bank, 

N.A. Appellant contends the trial court should have permitted it to proceed 

on its theories of equitable subrogation and unjust enrichment. We affirm.

We adopt the facts and procedural history set forth by the trial court’s 

decision. See Trial Ct. Op., 9/8/14, at 1-4. We add that the court’s October 

2, 2013 order permitted Appellant to file an interlocutory appeal. Order, 

10/2/13. Appellant filed a petition for permission to file an interlocutory 

appeal with the trial court on October 31, 2013. On April 21, 2014, before 

 

*

Former Justice specially assigned to the Superior Court.
J. A03037/15

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the trial court ruled on Appellant’s petition, the parties filed a joint motion 

for entry of final order permitting Appellant to withdraw the remaining claim 

in its complaint. The trial court entered an order on April 21, 2014, which 

granted the parties’ joint motion and resolved all outstanding claims. Order, 

4/21/14. Appellant timely appealed on May 5, 2014, and timely filed a 

court-ordered Pa.R.A.P. 1925(b) statement.

Appellant raises the following issues:

Did the trial court improperly determine that [Appellant] 

had acted carelessly with regard to the failure to discover 

[Appellee’s] loan?

Did the trial court improperly determine that [Appellant] 

acted as [sic] “volunteer” when entering into [Appellant’s] 

second loan?

Did the trial court improperly determine that [Appellee] 

would be prejudiced if [Appellant] was found to be entitled 

to equitable subrogation?

Did the trial court improperly determine that [Appellant] 

was not entitled to seek a claim under the theory of unjust 

enrichment?

Appellant’s Brief at 4.

We summarize Appellant’s arguments for all of its issues. Appellant 

contends it did not act carelessly or imprudently by issuing the Second Loan. 

Appellant states that the borrowers did not disclose the FNB loan and a title 

report similarly did not identify any lien from the FNB loan. It insists the 

trial court should not impute the conduct of third parties to it. Appellant 

maintains that by refinancing the First Loan, it was not a “volunteer.” It 
J. A03037/15

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avers that FNB would not be prejudiced by any equitable subrogation. 

Lastly, Appellant opines the trial court should have permitted its claim for 

unjust enrichment. Appellant, we hold, is due no relief.

Our standard of review follows:

An appellate court should affirm an order of a trial court . . 

. sustaining preliminary objections in the nature of a 

demurrer where, when all well-pleaded material facts set 

forth in the complaint and all inferences fairly deducible 

from those facts are accepted as true, the plaintiff is not 

entitled to relief. The court need not, however, accept any 

of the complaint’s conclusions of law or argumentative 

allegations. Where a doubt exists as to whether a 

demurrer should be sustained, this doubt should be 

resolved in favor of overruling it.

Krentz v. Consol. Rail Corp., 910 A.2d 20, 26 (Pa. 2006) (citations and 

punctuation marks omitted). “We will reverse a trial court’s decision to 

sustain preliminary objections only if the trial court has committed an error 

of law or an abuse of discretion.” Lerner v. Lerner, 954 A.2d 1229, 1234 

(Pa. Super. 2008) (citation omitted).

A demurrer is an assertion that a complaint does not set 

forth a cause of action or a claim on which relief can be 

granted. A demurrer by a defendant admits all relevant 

facts sufficiently pleaded in the complaint and all 

inferences fairly deducible therefrom, but not conclusions 

of law or unjustified inferences. In ruling on a demurrer, 

the court may consider only such matters as arise out of 

the complaint itself; it cannot supply a fact missing in the 

complaint. Where the complaint fails to set forth a valid 

cause of action, a preliminary objection in the nature of a 

demurrer is properly sustained.

Id. at 1234-35 (citations omitted).
J. A03037/15

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“Subrogation is defined as the substitution of one entity in the place of 

another with reference to a lawful claim, demand, or right, so that the one 

who is substituted succeeds to the rights of the other in relation to the debt 

or claim, and its rights, remedies or securities.” 46 Pa. Law Encyclopedia 

2d, Subrogation § 1 (2009) (emphasis added and footnote omitted); accord 

Pub. Serv. Mut. Ins. Co. v. Kidder-Friedman, 743 A.2d 485, 488 (Pa. 

Super. 1999); Molitoris v. Woods, 618 A.2d 985, 989 (Pa. Super. 1992); 

Home Owners’ Loan Corp. v. Crouse, 30 A.2d 330, 331 (Pa. Super. 

1943). The doctrine “is invoked to enable the person paying the debt to use 

the original creditor’s remedies against the primary debtor.” 46 Pa. Law 

Encyclopedia 2d, Subrogation § 2. Instantly, Appellant seeks to subrogate 

itself, as its own Second Loan was used to repay its own First Loan. 

Appellant is not substituting another entity—it seeks to substitute itself. By 

definition, subrogation is unavailable to Appellant. See 46 Pa. Law 

Encyclopedia 2d, Subrogation § 1 (2009).

Regardless, assuming Appellant can subrogate itself, after careful 

review of the parties’ briefs, the record, and the decision of the Honorable 

Lesa S. Gelb, we affirm based on the trial court’s opinion. See Trial Ct. Op. 

at 6-8 (holding, inter alia, that Appellant failed to fulfill all four criteria for 

equitable subrogation; and unjust enrichment was unavailable to Appellant). 

We add that the instant case is analogous to First Com. Bank v. Heller, 
J. A03037/15

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863 A.2d 1153 (Pa. Super. 2004). In Heller, a search of the public records 

would have revealed three mortgages:

1. Central Bank’s 1990 mortgage

2. Mid-State’s 1995 mortgage

3. First Commonwealth Bank’s 2000 mortgage

Id. at 1154. Ameriquest Mortgage Company overlooked the 2000 mortgage 

and extended a mortgage in 2001 to Heller, which was used to pay off the 

senior Central Bank and Mid-State mortgages. Id. Thus, the below 

mortgages were of record:

1. Mid-State’s 1995 mortgage [paid off but not closed]

2. First Commonwealth Bank’s 2000 mortgage

3. . . . Ameriquest Mortgage Company’s 2001 mortgage

Id. First Commonwealth Bank moved to foreclose on its 2000 mortgage and 

Ameriquest moved to invoke equitable subrogation because its 2001 

mortgage was used to repay the senior Central Bank and Mid-State 

mortgages. Id. at 1156.

The Heller Court held Ameriquest could not use equitable subrogation 

to move its 2001 mortgage ahead of First Commonwealth Bank’s 2000 

mortgage. Id. at 1158. The Heller Court reasoned that we are bound by 

precedent rejecting equitable subrogation under these circumstances, i.e., 

permitting “a person who pays off an encumbrance to assume the same 

priority position as the holder of the previous encumbrance.” Id. at 1156. 
J. A03037/15

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Ameriquest, the Heller Court concluded, had a secured interest in the 

property, albeit subordinate to First Commonwealth Bank’s mortgage, and 

could still foreclosed but could not “assume the same priority position” as 

Central Bank or Mid-State. Id. at 1156, 1160. Instantly, Appellant—akin to 

Ameriquest—has moved to assume the same priority position of the holder 

of the 1998 mortgage because its 2003 mortgage was used to repay the 

1998 mortgage. Cf. id. Bound by Heller, we must similarly reject 

Appellant’s attempt to invoke equitable subrogation. Cf. id. Accordingly, 

after accepting as true all well-pleaded facts, we discern no abuse of 

discretion or error of law by the trial court and thus affirm the order below. 

See Lerner, 954 A.2d at 1234; Krentz, 910 A.2d at 26.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 5/27/2015
~ 

·- ·~ 

Filing ID: 1946798 

2011-12737-0054 Order with Rule 236 

Luzerne County Civil Records 

9/8/2014 10:53:18 AM 

cw~,r~:z 

1111 r~~i~11~~•11111 

John M. Gallagher, Esquire 

Robert S. Sensky, Esquire 

Laputka, Bayless, Ecker & Cohn, P.C. 

1 S. Church Street, Suite 301 

Hazleton, PA 18201 

Thomas J. Mosca, Esquire 

345 Pierce Street 

Kingston, PA 18704 

cc: 

BY THE COURT: 

and transmit the record to the Superior Court. 

attached OPINION to the parties/counsel ofrecord pursuant to Pa. R.C.P. 236 as well as file 

Records/Prothonotary is ORDERED AND DIRECTED to mail a copy of this ORDER and 

ORDER 

NOW THIS yv day of September, 2014, the Division of Judicial 

Defendant NO: 12737 of2011 

FIRST NATIONAL BANK OF 

PENNSYLVANIA, formerly known as 

GUARANTY BANK, N.A. 

v. 

Plaintiff CIVIL ACTION--EQUITY 

BOKF, N.A. d/b/a BANK OF OKLAHOMA IN THE COURT OF C01'v1MON PLEAS 

OF LUZERNE COUNTY 

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1 (b) Interlocutory appeals by permission.--When a court or other government unit, in making an interlocutory order in a matter in 

which its final order would be within the jurisdiction of an appellate court, shall be of the opinion that such order involves a 

controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the 

~:~:: ::~:~~:~~%i~::::~~:~~ ~t=~:~:~r;!:t~~:hofntt:;1::~!~i~:::~'. so state,;, :1\\';(';;,t~;iiiil1 II I 

Filing ID: 1946799_ . 

2011-12737-0055 Opinion 

ty Civil Records 

Luzerne Coun ·43 AM 

9/B/2014 1 o:54. 

42 Pa.C.S. § 702(b)1 On August 22, 2013, the June 27, 2013 order was vacated and held 

interlocutory order requesting that this Court amend its order to include a statement per 

motion for reconsideration. On July 24, 213, BOFK filed its motion for amendment of 

granted the preliminary objections on June 27, 2013 and on July 2, 2013 BOFK filed a 

preliminary objections to the second amended complaint on March 28, 2013. This Court 

filed their second amended complaint on January 28, 2013. Thereafter, FNB filed 

preliminary objections and directed BOFK to file another amended complaint. BOFK 

objections to the amended complaint and on August 31, 2012 this Court granted the 

amended complaint on January 31, 2012. On May 21, 2012, FNB filed preliminary 

Pennsylvania ("FNB") by filing a complaint on October 12, 2011. BOFK filed an 

Bank of Oklahoma ("BOFK") brought this action against First National Bank of 

OPINION 

Defendant NO: 12737 of 2011 

FIRST NATIONAL BANK OF 

PENNSYLVANIA, formerly known as 

GUARANTY BANK, N.A. 

v. 

Plaintiff CIVIL ACTION--EQUITY 

IN THE COURT OF COMMON PLEAS OF 

LUZERNE COUNTY 

BOKF, N.A. d/b/a BANK OF OKLAHOMA 

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2 

2 This allowed time for a mediation to take place but to no avail. 

On March 14, 2003 BOFK refinanced the BOFK I" Loan with the Donninis 

with a new loan in the amount of $205,300.00 ("BOFK 2nd Loan"). The Donninis did 

not represent to BOFK that they had pledged their Property to FNB nor do we know if 

they were asked that question. BOFK did require and received title insurance from 

Guarantee Title and Trust Company on the BOFK 2nd Loan, but did not select the title 

agent or the title company as the Donninis selected the title agent. The title insurance 

policy issued to BOFK for this loan unfortunately did not reveal the existence of the 

FNB mortgage against the Property. BOFK did not request a subordination agreement 

from FNB for the BOFK 2nd Loan to remain the first lien holder against the Property 

BOFK Second Amended Complaint set forth claims for equitable subrogation and 

unjust enrichment. Resource One CDC loaned money to Joseph and Ann Donnini 

(hereinafter referred to as the "Donninis") on or about March 26, 1998 in the amount of 

$211,000.00, which was assigned to BOFK on March 21, 1999 ("BOFK I" Loan"). This 

loan was secured by a mortgage against the Donninis residence with an address of 97 Old 

Ashley Road, Wilkes-Bane, Pennsylvania ("Property"). On or about December 27, 2000 

FNB made a $250,000.00 loan to Donninico, Inc., a Pennsylvania Corporation, and this 

loan was guaranteed by the Donninis who pledged a second position lien to FNB in their 

Property by way of a mortgage ("FNB Loan"). The FNB Loan was also secured by 

additional commercial property located at 507-509 South Main Street, Wilkes-Bane, 

Pennsylvania ("Commercial Property"). 

in abeyance until October 2, 2013 at which time the June 27, 2013 order was 

confirmed.2 

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3 

possible." Mistick Inc. v. Northwestern National Casualty Company, 806 A.2d 39, 42 (Pa. 

demurrer is whether, on the facts averred, the law says with certainty that no recovery is 

omitted), appeal denied, 572 Pa. 725, 814 A.2d 678 (2002). "The question presented by the 

plaintiffs complaint.".Sexton v. FNC Bank 792 A.2d 602, 604 (Pa. Super. 2002) (citation 

"Preliminary objections in the nature of a demurrer test the legal sufficiency of the 

"In considering preliminary objections, we must consider as true all well-pleaded 

material facts set forth in the petition and all reasonable inferences that may be 

drawn from those facts. Sheffield v. Department of Corrections, 894 A.2d 836 (Pa. 

Commw. 2006). Preliminary objections will be sustained only where it is clear 

and.free.from doubt that the facts pleaded are legally insufficient to establish a 

right to relief Id. We need not accept as true conclusions oflaw, unwarranted 

inferences from facts, argumentative allegations, or expressions of opinion. Myers 

v. Ridge, 712 A.2d 791 (Pa. Commw. 1998)." (emphasis added). Richardson v. 

Beard 942 A.2d 911, 913 (Pa. Commw. 2008) 

guidelines for examining legal insufficiency of a pleading (demurrer) as follows: 

submissions of the parties. The Commonwealth Court in Richardson v. Beard provides the 

This Court granted the Preliminary Objections of the FNB based upon the 

policy due to the title 

claim. 

Title & Trust Company paid approximately $70,000.00 to BOFK under the lenders title 

the representations made by counsel for BOFK at the June 20, 2013 hearing, Guarantee 

when the Donninico, Inc failed to make payments under the BOFK 2nd loan. According to 

2nd Loan being a second position lien and not a first position lien as set forth in the policy 

2nd Loan. BOFK made a claim under the lender's policy of title insurance due to the BOFK 

Guarantee Title & Trust Company issued the title insurance policy for the BOFK 

does set forth and identify that it would have a second position lien against the Property. 

due to the fact that it was unaware of the FNB mortgage. The FNB commitment letter 

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4 

Equitable subrogation is one of two legal theories relied upon by the Plaintiffs. 

According to the Restatement, equitable subrogation is "an equitable remedy designed 

to avoid a person's receiving an unearned windfall at the expense of another." 

Restatement (Third) Of Property. Mortgages. § 7.6 (1997). Put more simply, equitable 

subrogation allows "a person who pays off an encumbrance to assume the same priority 

position as the holder of the previous encumbrance." First Commonwealth Bank v. 

Catharine Heller. 863 A.2d 1153, 1156 (PA. Super 2004) (quoting Houston v. Bank of 

America Fed. Say. Bank. 119 Nev. 485. 78 P.3d 71. 73 (2003)). The law of the land in 

Pennsylvania is Home Owners' Loan Corporation v. Crouse et al. 30 A.2d 330 (PA. 

Super 1943) and remains binding precedent on this Court with some distinctions from 

the Rest (3rd) of Property, Mortgages Section 7.6. 

According to Home Owners, the courts of equity will not relieve a party from 

the consequences of an error due to his own ignorance or carelessness when there were 

available means which would have enabled him to avoid the mistake if reasonable care 

had been exercised." Id. at 332 (citing Felin v. Futcher, 51 Pa.Super. 233, 1912 WL 4727 

(Pa.Super.1912)). 

Super. 2002). ( citation omitted) "Preliminary objections in the nature of a demurrer require 

the court to resolve the issues solely on the basis of the pleadings; no testimony or other 

evidence outside of the complaint may be considered to dispose of the legal issues 

presented by the demurrer." (citation omitted) Cooper v. Frankford Health Care System 

Inc., 960 A.2d 134, 143 {Pa. Super. 2008). Any doubt as to the legal sufficiency of the 

complaint should be resolved in favor of overruling the demurrer. Kane v. State Farm Fire 

& Casualty Company, 841 A.2d 1038 Pa. Super. 2003). 

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5 

In Home Owners, W. H. Mitchell acquired in 1909 title to a parcel of 

property upon which he subsequently built a house where he and his family resided. 

On April 29, 1925 the First Savings and Trust Company of Derry (the "Trust 

Company") entered a judgment against Mitchell and his wife, in the sum of $5,460, 

which was a first lien the property. This judgment was revived on March 19, 1930, in 

the sum of $4,880. On June 4, 1925, Homer Crouse caused a judgment in the sum of 

$682.50 to be entered against Mitchell, which was properly revived. Mitchell and his 

wife on March 8, 1934, filed with the Home Owners' Loan Corporation ("Home 

Owners") a written application for a loan for the purpose of paying the liens against 

their home. They set forth therein that their property was encumbered by a judgment, 

a first lien on the property, in favor of the trust company and there were also liens for 

the 1932, 1933, and 1934 County, Township, and School taxes, but no reference was 

made to the Crouse judgment and it appeared Home Owners had no knowledge of it. 

On March 16, 1934, J. M. Nicholson caused a judgment to be entered against the 

Mitchells in the sum of $113. The Trust Company, through its trustees and assignees 

who, in the meantime, had been appointed pursuant to a plan of reorganization, 

agreed to accept $3,958.66 in payment and satisfaction of its judgment and Nicholson 

consented to postpone and subordinate his lien to the mortgage to be executed by the 

Mitchells as security for a loan granted by Home Owners for $4, 193 .81. Home 

Owners paid from the proceeds of this loan the Trust Company's judgment, which 

was satisfied, and the taxes together with certain costs. In the early part of 1939 

Home Owners learned of the existence of the Crouse judgment. A request was then 

made that Crouse subordinate his lien to that of the Home Owner's mortgage, which 

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BOFK fails to meet three of the four criteria required for an equitable subrogation 

claim to survive preliminary objections. BOFK admits that it made the second loan to 

BOFK pleaded that with respect to the first criteria that it acted to protect its own 

commercial interests by making the 2nd loan to the Donninis. It then argued that it was not a 

stranger to the property and was not a volunteer in light of already having made its first loan 

to the Donninis; and thus meets the second criteria. Clearly the Donninis are the only parties 

liable for the Debt of the BOFK 2nd Loan with regard to the third criteria. With respect to the 

fourth criteria, BOFK argues that since FNB was originally in a second position when it 

made its loan, and by putting the BOFK 2nd loan as the first position lien it will not deprive 

FNB of its rights. 

1. The claimant paid the creditor to protect its own interest; 

2. The claimant did not act as a volunteer; 

3. The claimant was not primarily liable for the debt; and 

4. Allowing subrogation will not cause injustice to the rights of others. 

Crouse refused to do. The complainant of Home Owners averred in part that Crouse 

was unjustly enriched at its expense. The Pennsylvania Superior Court held" [i]f the 

appellant was unaware of the Crouse judgment it was not due to the fault of Crouse. It 

can be attributed only to its own negligence in failing to search or discover what 

clearly appeared on the public records." 30 A.2d 334. It went on to hold that Crouse 

had a superior lien position than that of Home Owners. 

In order to be successful under a cause of action for equitable subrogation, the 

Pennsylvania Superior Court in 1313466 Ontario. Inc. v. Carr, 2008 PA.Super. 135, 954 

A.2d 1 (2008) held that four criteria must be met. The criteria are: 

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protect its own commercial interests which in and of itself was a voluntary act of BOFK for 

its own benefit. The type of equities the Courts contemplate for equitable subrogation are 

more like that in the most recent case ofln re: Estate of Richard Devoe, deceased, appeal of 

James B. Mooney 74 A.3d 264 (PA Super. 2013). In that case the Trial Court found that 

James Mooney, a domestic partner of the deceased acted as a volunteer when he executed a 

mortgage in favor of a lender so he could retain a property he had a half interest in, and he 

was not entitled to equitable subrogation; the Superior Court said that was an abuse of 

discretion. The Appellate Court found Mooney had no choice but to pay the debt on the 

estate in order to protect his own interest in the residue, therefore he was not a volunteer. In 

the case herein using the analysis in James B. Mooney's appeal with regard to criteria two 

(in which claimant did not act as a volunteer) the second loan BOKF was indeed a 

voluntary act by the bank. It did not have to make the second loan to the Donninis but it 

chose to make the loan, ergo the BOFK 2nd Loan was made voluntarily by BOFK. In 

addition the proceeds from the Second BOFK Loan were used to pay the First BOFK Loan, 

so it did not involve a new or additional credit. Furthermore, BOFK obtained title 

insurance, which it did to protect its interest from exactly the type of issue in which it faced 

itself with the Donninis. 

At the time FNB made its loan, it knew it was going have a second position lien; 

however, that does not strip FNB of its rights under the law as it is in Pennsylvania. BOFK 

relied on to its detriment the title search of Guarantee Title & Trust Company, which failed 

to disclose the FNB mortgage. Had Guarantee Title & Trust Company not been faced with 

financial distress it would have paid BOFK the balance due and owing under the BOFK 2nd 

Loan. BOFK acknowledged at the June 20, 2013 hearing that it was paid approximately 

$70,000.00 from the title insurance policy. Had Guarantee Title & Trust Company had the 

financial ability to pay the entire claim; BOKF would not have instituted this action. 

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BOKF fails to meet the requirements for a claim for equitable subrogation; therefore 

its second claim under unjust enrichment is moot because it is dependent upon the equitable 

subrogation theory and cannot proceed in its absence in this case. Based upon the foregoing 

the Preliminary Objections of the Defendant are sustained. 

Allowing equitable subrogation to take place in this case, would cause injustice to FNB who 

issued its loan as a second position mortgage based upon the amount of the BOFK First 

Loan. The First BOKF Loan was satisfied, which per statute, placed FNB in a first position 

due to the Second BOFK Loan being recorded after the FNB Loan. Without requesting or 

obtaining a subrogation agreement from FNB, BOFK's Second Loan cannot be placed ahead 

of FNB's Loan because of an error in a title search. The FNB Loan was properly ofrecord 

in the Office of the Recorder of Deeds of Luzerne County prior to the BOFK Second Loan 

and thus the facts in this matter are very similar to those in the Home Owners case whereby 

the Superior Court held in favor Crouse, who was in substantially the same situation as FNB 

in this matter. 

BOKF also refers briefly to unjustly enrichment. The elements of unjust enrichment 

include 1) benefits conferred on defendant by plaintiff2) appreciation of such benefits by 

defendant; and 3) acceptance and retention of such benefits under such circumstances that it 

would be inequitable for defendant to retain benefit without payment of value. The application of 

unjust enrichment is dependent on the particular factual circumstances of the case. Mitchell v. 

Moore, 792 A.2d 1200, page (Pa. Super 1999). In this case this Court would reiterate that the law 

of equitable subrogation with these facts does not allow for unjust enrichment in that under Home 

Owners the Courts of equity will not relieve a party of the consequences of an error due to his 

ignorance and carelessness. The FNB loan was overlooked by the title search but it was available 

to be found. 

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;/ 

;/ 

By the Court: 

I 

/ 

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