Sam Fantino v. Lenders Title and Guaranty Company

On January 11, 1990, plaintiffs, Sam and Lorrie Fantino (the
Fantinos), entered into a contract with Miles Ross and Associates,
Inc. (MRA), for the construction of a house. Financing was
provided through First Financial Bank F.S.B. (First Financial).
On February 3, 1990, the Fantinos and MRA executed a document
entitled "Instructions to General Contractor and Borrower for
Construction Escrows and Draws" (Instructions). Defendant did not
execute this document, nor was it a party to the document. On March
29, 1990, the Fantinos and First Financial executed the "Construction
Loan Agreement." Paul Seligman, vice-president and partial owner of
defendant, signed the document only as a witness, not as a party
to the document. However, the Fantinos, First Financial, and
Seligman for defendant executed a document on the same date
wherein defendant was to set up an escrow account to pay funds
deposited by the Fantinos and First Financial to the general
contractor (Escrow Agreement). Construction was to begin on March
31, 1990, and be completed by November 1, 1990.

Three disbursements totaling $302,738.49 were made by
defendant to MRA through September 20, 1990. Soon after, several
subcontractor lien claims were filed. The house received an
occupancy permit on November 1, the date called for in the
contract. However, much work remained to be done on the house.
On November 26, defendant notified MRA that it could not fund the
request for the final draw, as the escrow account contained
$12,791.95 less than the contractor's statement requested and
proper paperwork had not been filed. Furthermore, subcontractor
and materialmen liens continued to be filed. The Fantinos
eventually fired MRA and hired other contractors to finish
construction and to repair MRA's faulty work. The lienholders
brought suit against the Fantinos and eventually settled for the
approximately $97,000 that remained in escrow. The Fantinos
brought a claim against MRA pursuant to an arbitration provision
in their contract with MRA; the parties do not tell the outcome.
Randy Forrest, the owner of MRA, was charged criminally in the
matter and convicted of forgery; restitution of $14,000 to the
Fantinos was part of his sentence.

The Fantinos also filed a two-count complaint against
defendant for breach of contract and breach of fiduciary duty.
Defendant filed a counterclaim seeking attorney fees incurred in
the subcontractor litigation.

Judgment for plaintiffs in the amount of $129,780 on plaintiffs' claim and for plaintiffs on defendant's counterclaim.

None

None

Reversed by the Appellate Court of Illinois, Second District. See: 707 N.E.2d 756 (Ill.App. 2 Dist. 1999). The date shown above is the date of the appellate court decision and not the trial date.