First National Bank v. Wernhart

First National Bank, the mortgagee, appeals a judgment on a counterclaim in favor of Manfred and Beth Wernhart, mortgagors, for negligent distribution of construction loan funds to a residential contractor. The trial court first granted the bank a money judgment against the Wemharts based upon a foreclosure action but granted the Wemharts a partial offset based upon their counterclaim. The court concluded the bank breached its duty for payments made to the building contractor when it failed to inspect the project to determine the work was actually done and by failing to obtain lien waivers…