Court Opinion

ID: 9527278
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:29:04.667888+00
Date Added: 2024-06-11T13:25:40.835678
License: Public Domain

STATON, Sr. Judge,
dissenting
I dissent. A duty was created at the mortgage closing when National City Bank obtained knowledge of the money owed Town and Country for building materials. Where the relationship of the parties creates a justifiable reliance upon one of them and the circumstances are completely controlled by the party relied upon, a duty to use reasonable care exists.8 National City Bank as the mortgagee was experienced in making mortgage loans. Its closing agent, Tom Generis, had been advised by Fellows, the mortgagor, of his concerns that Town and Country had supplied building materials for his home and that the builder of his home had not paid for the building materials. Generis advised Fellows that the matter would be taken care of at the closing. Woods, the builder, was present at the mortgage closing and admitted to Generis that he had not paid for the building materials. Woods promised to pay Town and Country later - after he received his check at the closing. Instead of following the general practice and cutting a separate check payable to Town and Country, Generis permitted Woods to sign a closing affidavit stating that there were no unpaid claims for materials on Fellows’ home. Later, the mortgage was signed and the previously prepared checks by National City Bank were disbursed. Woods took his check but never paid Town & Country for the building materials as he had promised at the closing.
It has been said that “courts will find a duty where ... reasonable persons would recognize it and agree that it exists.” Gariup Construction Co v. Foster, 519 N.E.2d 1224, 1227 (Ind.1988) (quoting PROSSER & Keeton on Torts § 53, at 359 (5th ed.1984)). Recognizing the difficult task it can be to apply such a nebulous legal principle, our supreme court has provided a framework for determining the existence of duty. A court should balance three factors in determining whether to impose a duty in a negligence action: (1) the relationship between the parties, (2) the reasonable foreseeability of the harm, and (3) public policy concerns. Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind.1991), reh. denied, Indiana Bell Telephone Co. v. Maynard, 705 N.E.2d 513, 514 (Ind.Ct.App.1999), trans. denied.
A relationship that gives rise to a duty does not necessarily have to emanate from a contract. “In determining whether a *1015legal duty arises, consideration must be given to the nature of the relationship between people and whether the party being charged with negligence had knowledge of the situation or circumstances surrounding that relationship.” T.S.B. v. Clinard, 553 N.E.2d 1253, 1256 (Ind.Ct.App.1990).
In the case at hand, National City Bank knew that Woods owed money to Town and Country for building materials used on Fellows’ home. It had this knowledge during the closing when it permitted Woods to falsify an affidavit stating that he did not owe money to building suppliers and then delivered a check to Woods, the builder. This closing procedure was a departure from the custom and practice of other mortgagees in the area. This departure from the custom and practice placed Town & Country and National City Bank at risk. National City Bank created a relationship with Town & Country by its conduct.
The harm to Town & Country was foreseeable as well. “An analysis of the foreseeability component of duty involves two considerations: whether the injured person was a foreseeable victim and whether the type of harm actually inflicted was reasonably foreseeable.” Indiana Bell, 705 N.E.2d at 514. National City’s agent, Generis, was well aware that Town & Country had not been paid when he handed the builder his check at the closing of the mortgage loan; therefore, the victim was foreseeable. Although Generis did not know the builder would renege on his promise to pay the amount that he owed to Town & Country, the possibility was most certainly created by his conduct. Therefore, I conclude that the type of harm was also reasonably foreseeable. That harm being that Town & Country would never receive the approximately $30,000.00 due it.
Finally, public policy concerns weigh in favor of concluding that National City Bank owed Town & Country a duty of care. As noted by Judge Sullivan in his concurrence, National City Bank’s “conduct represents a total disregard for the interests of persons known to have an interest in the proceeds of the real estate closing and in addition flies in the face of well established custom and practice in the lending industry.” Concurring opinion at 1013. National City Bank was in the best position to protect both Fellows and Town & Country, but it failed to protect either. I conclude that National City Bank owed Town & Country a duty.
Because the trial court concluded that no such duty existed, it did not decide whether this duty had been breached or whether any breach proximately caused the damages suffered by Town & Country. Accordingly, I would reverse and remand for a new trial as to those issues.

. Town and Country did not request that its amended complaint or its trial brief be included in the record. Thus, the record does not reveal the precise arguments that Town and Country made before the trial court. However, the findings of the trial court indicate that Town and Country argued the negligence of National City Bank. In the interest of justice, I choose to address this issue.