Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 9

While employed to handle the refinancing of two mortgages for Credit Union Central Falls (CUCF), attorney Lawrence Groff embezzled more than $200,000. CUCF provided funds to Goff. Goff would get title insurance for the refinanced loan from Mortgage Guarantee Title Insurance Company and pay the difference between the prior loan and the CUCF loan to the mortgagors. He was to pay off the prior loans, but he kept the money instead. CUCF filed claims on the title insurance policies and Mortgage Guarantee paid $223,410 to pay off the prior loans. Mortgage Guarantee then alleged it was subrogated to CUCF's claims in accordance with the terms of the title insurance policies. However, Doris Riendeau had obtained a judgment of $85,476.41 against Groff for misappropriation in another matter and also claimed any funds that Groff had left. Should Mortgage Guarantee now "stand in the shoes" of CUCF?