Diserio Martin O'Connor & Castiglioni LLP

DMOC Wins Judgment After Trial In Connecticut Superior Court Case Involving Two Stalled Hotel Construction Projects in Wallingford and Norwich

September 9, 2013

Richard E. Castiglioni and co-counsel, Linda Clifford Hadley of Krasow Garlick and Hadley, successfully defended the priority of two first mortgages against equitable subordination claims made by a mechanic’s lienor. The subcontractor had argued that its liens should take priority over the security interests of the construction lender, and its successors, based on theories of estoppel, unjust enrichment, and de facto ownership. The cases were consolidated for trial in the Hartford Superior Court, Complex Litigation Docket.

The Court ruled in favor of the Lender on all counts and found that the predecessor-lender’s policy of conducting regular site inspections prior to  approving all advances, was standard procedure for construction loans of this size. In addition to rejecting the theory of the Lender’s de facto ownership of the properties, the Court similarly dismissed all equitable subordination claims in that there was no evidence of bad faith by the Lender or detrimental reliance on the part of the subcontractor.