Sexton v. St. Clair Federal Savings Bank

653 So. 2d 959 (1995)

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Sexton v. St. Clair Federal Savings Bank

Alabama Supreme Court
653 So. 2d 959 (1995)

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Facts

William Jack Sexton and Marsha C. Sexton (plaintiffs) contracted with St. Clair Federal Savings Bank (defendant) for a loan, secured by a mortgage, to finance the construction of a house on their property. The contract provided that the bank would regularly monitor the builder's work and disburse funds as the construction progressed. All disbursements were to be for the sole purpose of financing the construction. Several weeks after construction began, the bank notified the Sextons that it would make no further disbursements, because the builder was rapidly depleting the loan and using very little of the money for construction-related purposes. The bank foreclosed when the Sextons were unable to continue construction and stopped payments on the loan. The Sextons sued the bank, claiming damages for the mental anguish they allegedly suffered due to the bank's breach of its contractual and fiduciary obligation to regularly monitor the builder's progress. The trial court entered summary judgment for the bank, and the Sextons appealed to the Supreme Court of Alabama.

Rule of Law

Issue

Holding and Reasoning (Kennedy, J.)

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