Edelman v. Belco Title & Escrow, L.L.C.
The plaintiffs invested $3 million in a multi‐use real‐estate project in Caseyville, Illinois, called Forest Lake, having previously worked with the developers. Their agreement with the developers promised a first‐priority mortgage, but they received only a junior mortgage. Meridian Bank had acquired a mortgage on Forest Lakes ($20 million) in 2005. When the bank foreclosed in 2009, the plaintiffs lost everything. They sued Belco, which had been created to carry out title work for the Forest Lakes transactions, including the Meridian mortgage. None of the plaintiffs’ $3 million were ever escrowed with Belco, but went directly to the developer. Belco never contacted the plaintiffs, before, during, or after the closing. After the development failed, the plaintiffs alleged Illinois state‐law claims of breach of fiduciary duty against Belco, claiming that as the “closing agent” for the transaction, Belco owed a duty to disclose that they were not receiving the first‐priority mortgage. The magistrate judge granted summary judgment for Belco, finding that Belco was the plaintiffs’ agent for the purposes of the escrow and closing, but, under Illinois law, owed only the very limited duty “to act only according to the terms of the escrow instructions.” Belco complied with the terms of the escrow agreement in that the funds were disbursed according to the agreement. The Seventh Circuit affirmed. View "Edelman v. Belco Title & Escrow, L.L.C." on Justia Law