This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).






Superior Construction Services, Inc., et al.





Ovetta Moore,



Debra Beeksma, et al.,



Washington Mutual Bank, et al.,



Filed June 26, 2007


Parker, Judge[*]


Hennepin County District Court

File No. 27-CV-05-008974


Joseph M. Capistrant, Patrick J. Kelly, Skelly & Capistrant, P.A., 1724 Selby Avenue, Suite 100, St. Paul, MN 55104 (for appellants)


Nell E. Mathews, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondents Washington Mutual Bank, et al.)


Ovetta Moore, 1011 Walnut Street, Darby, PA 19023 (pro se respondent)


            Considered and decided by Lansing, Presiding Judge; Stoneburner, Judge; and Parker, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant contractors argue that the district court erred in granting summary judgment in favor of respondent bank on their negligence claim for wrongful disbursement of funds to respondent homeowner, whose home the contractors repaired. The contractors argue that (1) because the bank demanded and received control over the funds, it had a duty to exercise care in disbursing the funds; and (2) fact issues exist as to whether the bank’s disbursal of funds to the homeowner was reasonable and whether the bank’s act was the proximate cause of the contractors’ damages.  We affirm.


Appellants Superior Construction Services, Inc. and Specialty Contracting Services, Inc., d/b/a Service Master (contractors), argue that the district court erred in granting summary judgment in favor of respondent Washington Mutual Bank (bank).  On appeal from a grant of summary judgment, this court asks two questions: (1) whether there are any genuine issues of material fact, and (2) whether the district court erred in applying the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  “[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party’s case to permit reasonable persons to draw different conclusions.”  DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997).  A motion for summary judgment shall be granted if the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to judgment as a matter of law.”  Minn. R. Civ. P. 56.03.

            Here, the contractors repaired respondent Ovetta Moore’s (homeowner) property. The homeowner’s casualty insurer issued checks for the repairs made payable to the homeowner, the contractors, and the bank that serviced the homeowner’s mortgage.  The homeowner sent the checks to the bank.  The bank returned the unendorsed checks to the homeowner with a letter explaining the procedure the bank would follow to relinquish its interest in the insurance proceeds.  The bank requested copies of lien waivers from the contractors, a letter of satisfaction from the homeowner, and notification of when repairs had been completed in order to have an inspection.  The contractors sent the checks, now endorsed by the contractors and the homeowner, back to the bank along with lien waivers.  The bank deposited the checks in an escrow account.  Following an inspection, the bank issued a check to the homeowner.

            The contractors filed a complaint alleging, among other things, that the homeowner breached their contract and that the bank was negligent for failing to exercise reasonable care when it issued a check only to the homeowner.  The district court granted the bank’s motion for summary judgment, concluding that the bank did not owe a duty to the contractors.  The contractors received a default judgment against the homeowner in the amount of $71,450.27 and received an order for a sheriff’s sale of the property.

The contractors argue that the bank was negligent by issuing a check only to the homeowner when the checks from the insurer were made payable to the homeowner, the contractors, and the bank.  To establish negligence, a party must demonstrate that a duty of care existed, the duty was breached, and the breach was the proximate cause of an injury.  State Farm Fire & Cas. v. Aquila, Inc., 718 N.W.2d 879,887 (Minn. 2006).  Ordinarily, a defendant in a negligence action is entitled to summary judgment when the record reflects a complete lack of proof on any of the four essential elements of the claim.  Gradjelick v. Hance, 646 N.W.2d 225, 230 (Minn. 2002).  The contractors argue that a duty existed under two theories:  assumed-duty theory, and special-relationship theory.  

Assumed Duty

The contractors argue that the bank assumed a duty by demanding control over the funds.  “[O]ne who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all.”  State by Humphrey v. Philip Morris Inc., 551 N.W.2d 490, 493 (Minn. 1996). 

The Restatement [(Second) of Torts § 323 (1965)] has reflected this principle as follows:


One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other’s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if      

(a) his failure to exercise such care increases the risk of such harm, or

(b) the harm suffered because of the other’s reliance upon the undertaking. 493-94.  Thus, a duty may be assumed when one did not exist and liability can result from the failure to exercise due care in the performance of the dutyCracraft v. City of St. Louis Park,279 N.W.2d 801, 806 (Minn. 1979). 

            Here, the bank did not undertake to render services for the contractors.  The bank serviced the mortgage on the homeowner’s property; it was not undertaking to provide services to the contractors by directing the homeowner to submit the insurance payments.  Additionally, the bank was not protecting the contractors or their belongings; the bank was protecting its own interest by placing the funds in escrow until the repairs had been satisfactorily completed.  Finally, the contractors did not suffer a physical harm.  This court held in Northfield Ins. Co. v. St. Paul Surplus Lines Ins. Co. that the assumed-duty theory applies when there is property damage or personal injury, not financial loss.  545 N.W.2d 57, 63 (Minn. App. 1996), review denied (Minn. June 19, 1996).  Northfield  argued that St. Paul was liable for breaching a gratuitously assumed duty to keep Northfield informed of all trial developments. 62.  This court held that “this tort applie[s] to property damage and personal injury.” 63.  And that “[a]pplication of the theory is inappropriate [here] . . . because the instant case involved financial loss, not property damage or personal injury.”  Id. Therefore, because the contractors suffered financial loss, and not property damage or personal injury, the bank did not assume a duty to the contractor.  The district court did not err in finding that an assumed duty did not exist.

            Special Relationship

            The contractors also argue that the bank had a duty created by a special relationship because the bank took custody of the funds.  “The fact that an actor realizes or should realize that action on his part is necessary for another’s aid or protection does not of itself impose upon him a duty to take such action.”  Delgado v. Lohmar, 289 N.W.2d 479, 483 (Minn. 1979) (citing Restatement (Second) of Torts § 314 (1965)).  “Whether a duty exists depends upon two factors: (1) the existence of a special relationship between the defendant and the third person which imposes a duty to control, or between the defendant and the other which gives the other the right to protection; and (2) the foreseeability of the harm.”  Errico v. Southland Corp., 509 N.W.2d 585, 587 (Minn. App. 1993), review denied (Minn. Jan. 27, 1994).  The issue of foreseeability need not be reached when there is no special relationship.  Id.

A special relationship creates a duty to protect another typically when there is “some degree of dependence.”  H.B. by Clark v. Whittemore, 552 N.W.2d 705, 708 (Minn. 1996).  Instances when a special relationship creates a duty involve situations when “one who has custody of another under circumstances where the party seeking protection is deprived of or lacks the capacity for normal opportunities of self-defense.”  Id.  A special relationship is also “found on the part of common carriers, innkeepers, [and] possessors of land who hold it open to the public.”  Id.  And a special relationship may exist when one individual has in some way entrusted his or her safety to another and the other has accepted that entrustment.  Erickson v. Curtis Inv. Co.,447 N.W.2d 165, 168 (Minn. 1989).  A special relationship also assumes that the harm represented by the third person, or criminal, is something that the other is in a position to protect against and should be expected to protect against.  Id.  But the law is “cautious and reluctant” to impose a special-relationship duty on a business enterprise, and a mere merchant-customer relationship, for example, is generally not enough.  Errico, 509 N.W.2d at 587. 

            Here, the contractors did not entrust their safety to the bank.  Additionally, the bank did not accept any kind of responsibility to protect the contractors by requiring that the funds be held in escrow in order to protect its interests in the property.  The contractors also had the capacity to protect themselves.  When the contractors submitted the endorsed checks and lien waivers, they did not direct the bank to send the check to them.  The bank also notes that it was not uncommon for homeowners to pay for repair work before receiving insurance proceeds.  Thus, without any instruction, it was not unreasonable for the bank to submit the check to the homeowner.  This is also true because after the contractors received a third check from the insurer, they submitted this check to the bank with instructions to send the insurance proceeds to them and the bank did.  Additionally, this is a business-enterprise situation—these are not the types of parties deemed to be vulnerable that would require protection.

            Finally, the contractors argue that genuine issues of material fact exist regarding whether it was reasonable for the bank to disburse funds to the homeowner and whether the disbursement of funds was the proximate cause of their loss.  But because no duty existed, these additional issues do not need to be reached.  No duty existed, and without that element, the contractors do not have a negligence claim against the bank and summary judgment was appropriate.            



[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.