First Federal Savings and Loan Association of Lake County (First Federal) (plaintiff) loaned Raleigh Rice and his wife (defendants) $12,000 to help fund the construction of a building in Florida. First Federal took a mortgage on the property. First Federal deducted a 1 percent fee from the mortgage payment to cover costs of inspecting the construction. After the project was completed, defects in construction caused the building walls to crack. The cracks created significant damage. The Rices defaulted on the mortgage payments, and First Federal sued in foreclosure. The Rices did not dispute that the mortgage payments were in default. However, the Rices counterclaimed that First Federal conducted the inspections for the benefit of the Rices as mortgagors and that the inspections, performed in exchange for a 1 percent fee, created a contractual duty on the part of First Federal. Thus, the Rices argued that First Federal should be held liable for damages following the negligent inspections. The trial court ruled that the inspections conducted at the request of First Federal and paid in part by the Rices did not create any contractual duty on First Federal to pay the Rices for damages resulting from the negligent inspections. The court ordered the property to be foreclosed. The Rices appealed.