Court Opinion

ID: 9860421
Source: CourtListenerOpinion
Date Created: 2023-09-24 23:21:36.210162+00
Date Added: 2024-06-11T11:22:26.334054
License: Public Domain

JUSTICE SCHMIDT, specially concurring: The dissent presumes providers paid by LaSalle had valid mechanic’s liens. If that were the case, the dissent would be correct. However, it is hornbook law that a subrogee by virtue of subrogation gains no more rights than those of his subrogor. There is no evidence that the contractors paid by LaSalle perfected mechanic’s liens. LaSalle argued that it would do an injustice and create an absurdity to require a contractor to perfect a mechanic’s lien before being paid by a bank. It was not necessary for the contractor to have perfected a mechanic’s lien before payment. Again, every first-year law student recognizes that a subrogee steps into the shoes of his subrogor. LaSalle, after payment, could have filed mechanic’s liens as subrogee of whatever contractors it paid. In a petition for rehearing, LaSalle also argues that our decision is unfair and improperly favors the contractors over the bank. It argues that we should relax the normal hornbook rules of subrogation and do what is equitable. There is nothing inequitable about this decision. To the contrary, LaSalle was in on the ground floor of this construction project. It had every opportunity to protect itself by examining not only the owners/mortgagors’ ability to successfully complete the project, but also the feasability of the project itself before making the construction loan. It obviously failed at that since this project failed before it was even completed. LaSalle declared the mortgage in default before the project was completed. On the other hand, the contractors had no such ability to protect themselves. What the contractors did know in agreeing to the contract was that LaSalle had made a construction loan to the owners which would fund the project. Who should most suffer the consequences of bad business decisions by LaSalle and the owners? At trial, the testimony was that the most feasible alternative in dealing with this property in the future would be to demolish all the buildings and site improvements because a new developer would find it easier and more feasible to start from scratch. One could argue then that the contractors’ work added no value to the real estate, rather, a liability. However, the contractors did what they were hired to do. It is hardly their fault that the project failed before completion. In conclusion, for all these reasons and reasons set forth in Justice O’Brien’s opinion, there is nothing inequitable about applying normal subrogation rules. LaSalle is subrogated to the position of those it paid. However, those it paid did not have perfected mechanic’s liens and LaSalle, after becoming subrogated, did not seek to perfect mechanic’s liens. Therefore, it is subrogated to the position of one who provided materials and labor, but did not perfect a mechanic’s lien.