St. Louis v. Wilkinson Law Offices, P.C.

Theresa L. St. Louis and Dale T. St. Louis (borrowers) (plaintiffs) sued Stephen F. Jordan, LLC, doing business as Northstar Mortgage (Northstar) (codefendant), for losses incurred on the mortgage that Northstar brokered to secure the borrowers' loan from a third-party commercial lender. The borrowers had no prior experience with commercial loans. The borrowers also sued Wilkinson Law Offices, P.C. (the firm) (codefendant) for negligent misrepresentation. A third party selected Sarah Wilkinson, one of the firm's lawyers, to conduct the transaction's closing. Wilkinson's role at closing was only as settlement agent, and not as a lawyer for any of the parties. Wilkinson's duties at closing included reading a summary of the transaction's "funding details." One of those details summarized the promissory note's prepayment clause. Wilkinson read the summary and commented, accurately, only that prepayment clauses were common in commercial loans, and that at the summary's stated percentage, the prepayment penalty would be about $13,000. In fact, when the borrowers paid the loan off early, they incurred a penalty of over $100,000 plus costs. The case was tried before a judge, who entered judgment against Northstar and awarded damages to the borrowers. The judge dismissed the negligent misrepresentation claim against the firm, finding: (1) there was no evidence as to who prepared the summary, (2) with respect to the summary, Wilkinson's only duties as closing agent were to recite, represent, and affirm its contents, (3) Wilkinson accurately performed those duties, and (4) Wilkinson did not affirm the accuracy of the summary's contents. The borrowers appealed to the Maine Supreme Judicial Court.