Leonard Sheppard, Jr., Trustee v. Interbay Funding, LLC
The appellate court affirmed a modified summary judgment in a dispute over real property lien priority. Appellant Leonard Sheppard, Jr., Trustee, challenged the trial court's ruling that Interbay Funding, LLC held an equitable first lien after refinancing a loan for Julian Kimble. The core issue was whether Interbay's refinanced loan maintained its senior lien position over a subordinate lien held by Sheppard, even after the original Interbay lien was released. The court, applying the Restatement (Third) of Property (Mortgages) § 7.3, determined that Interbay was contractually entitled to retain a first lien for the amount used to discharge the prior debt, as Sheppard suffered no prejudice. Consequently, the judgment was modified to remove the term "equitable" from Interbay's first lien, thereby affirming its priority.