Riley Bldg. Sup. v. First Cit. Nat. Bank

I

This appeal arises in a familiar context. The owner of a construction project defaults and the construction lender and materialmen scramble to minimize their losses. Today we are asked to decide whether such a construction lender owes, in favor of one holding an unperfected materialman's lien, a duty of reasonable diligence in disbursing to an owner proceeds of a construction loan, such that the materialman might recover for losses proximately caused thereby. We hold that the construction lender has no such duty, nor has the unperfected materialman any such correlative right.

The Circuit…