This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
IN COURT OF APPEALS
Superior Construction Services, Inc., et al.
Debra Beeksma, et al.,
Washington Mutual Bank, et al.,
Filed June 26, 2007
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.)
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.
D E C I S I O N
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 (
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 (
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 (
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
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).
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 (
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 (
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.