Court determines which lender holds priority for the purposes of enforcing a lien against a defaulting developer

CHARLES BLALOCK & SONS, INC. v. FAIRTENN, LLC ET AL. (Tenn. Ct. App. December 27, 2012)

Branch Banking and Trust Company (“BB&T”) provided financing for a construction project and recorded a deed of trust. The excavation contractor, Charles Blalock & Sons, Inc., started work on the project and had done substantial work when Marshall & Ilsley Bank (“M&I Bank”) made a loan and recorded its trust deed. BB&T was paid off out of the proceeds of the loan from M&I Bank. Blalock was also paid current with the proceeds from the M&I Bank loan. BB&T released its trust deed.

The developer later defaulted, and Blalock filed this action to enforce its statutory lien. M&I Bank’s assignee, Cay Partners, LLC, filed a counterclaim asserting that it should be entitled to the priority position of BB&T. Blalock and Cay filed competing motions for summary judgment. The trial court granted Blalock’s motion. Cay appeals. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/blalockc_122712.pdf

Court reviews whether a bank had a duty to inspect construction prior to disbursing funds

JIM SUZICH v. FRANK BOOKER and wife, BEVERLY BOOKER and JOHN S. BOMAR, Trustee, KATIE WINCHESTER, Trustee, and FIRST CITIZENS NATIONAL BANK (Tenn. Ct. App. July 27, 2012)

This appeal involves a construction loan obtained by the plaintiffs for the construction of a new home. The loan proceeds were exhausted prior to the completion of the home. The plaintiffs then sued the lender bank for breach of contract, alleging that the bank had a duty to inspect the construction prior to disbursing funds, and that its failure to complete inspections resulted in improper disbursement of the loan funds. The trial court granted summary judgment to the bank upon concluding that the bank had no contractual duty to inspect the construction of the residence. The plaintiffs appealed. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/suzichj_072712.pdf

Court Reviews a Judgment in Favor of a Bank against Defaulting Borrowers

GREENBANK, F/K/A GREENE COUNTY BANK v. BARBARA J. THOMPSON, ET AL. (Tenn. Ct. App. December 29, 2010)

Bank provided a loan to Borrowers for the purchase of real property and construction of a log cabin home. After Borrowers defaulted on the loan, Bank sold the property at a foreclosure sale.

Bank then initiated a lawsuit alleging conversion, negligent business representation, and promissory fraud. Bank also sought a deficiency judgment for the difference in the amount owed on the loan and the foreclosure sale price. After a bench trial, the trial court awarded a judgment for $61,782.12 and a deficiency judgment for $300,644.92 in favor of Bank. Borrowers appeal. We affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/greenbank_122910.pdf