Cross-Office Team Secures Summary Judgment for Clients in Construction Loan Fraud Case

St. Louis, Mo./Fort Lauderdale, Fla. (April 7, 2025) - St. Louis Partner Alejandro P. Frank and Ft. Lauderdale Partner Katina Hardee, with assistance from St. Louis Associate Aidan Hayward, recently secured summary judgment in the Circuit Court for Palm Beach County, Florida on behalf of two clients in a construction loan fraud case. The Court accurately determined that neither of the Lewis Brisbois clients owed a duty to the plaintiffs to prevent the alleged fraud from occurring.

The case arose out of a residential construction project and the loan associated with the same. The construction loan agreement required the plaintiff-borrowers and their general contractor to submit draw requests to one of the Lewis Brisbois clients, the disbursing agent, in order to facilitate the construction loan draw process. However, the plaintiffs and their general contractor permitted the construction manager to submit the draw requests without supervision by either the plaintiff-borrowers or the general contractor. The construction manager then allegedly defrauded the plaintiff-borrowers, who were not paying attention to the loan disbursement process. The other Lewis Brisbois client, a draw request inspector, and the disbursing agent were only in privity of contract with the lender, and had no interactions with the plaintiff-borrowers or the general contractor throughout the construction process.

Lewis Brisbois' attorneys moved for summary judgment. arguing that the disbursing agent and the draw request inspector only owed contractual duties to the lender, and not to the plaintiff-borrowers, pursuant to all the agreements involved in the residential construction loan project. The plaintiffs pushed back, arguing that under certain circumstances extracontractual duties can be created. 

While the Court observed that “Florida recognizes a common law cause of action against professionals based on their acts of negligence despite the lack of a direct contract between the professional and the aggrieved party,” the Court reasoned that two interrelated determinations must be made prior to finding the existence of a duty: 1) “the existence of ‘supervisory duties’ or responsibilities” by the professional; and, 2) a “close nexus” between the third party professional and the injured party. See Uddin, Inc. v. Singer Architects, Inc., 278 So. 3d 89, 92 (Fla. 4^th DCA 2019). Thus, it intuitively follows that, where the third-party professional’s supervisory duties are minimal and the nexus between the third party professional and injured party is disconnected, liability on the third-party professional will not be imposed. Id.

The Court did not mince words in its finding that the plaintiff-borrowers “have not presented facts showing there was any kind of relationship, let alone a special relationship between themselves and the” Lewis Brisbois clients and that neither of the Lewis Brisbois clients “are liable as third party professionals because the undisputed facts demonstrate an absence of a special relationship between the plaintiff-borrowers and the [Lewis Brisbois clients].” The Court went even further to state that “[e]ven assuming, arguendo, the [plaintiff-borrowers] could demonstrate the existence of a close nexus between themselves and the [Lewis Brisbois clients], they still fail to show [the Lewis Brisbois clients] had supervisory duties that would subject them to heightened duties of care.” 

Accordingly, and because the Lewis Brisbois clients did not owe any duty to the plaintiff-borrowers, they were entitled to summary judgment, which the Court granted.