Bel Air Carpet v. Korey Homes Bldg Grp, 245 A.3d 64

Bel Air Carpet, a subcontractor, contracted with Korey Homes to supply and install flooring for 12 custom homes; Korey Homes did not pay Bel Air for completed work.
Hamilton Bank financed seven of those homes and issued draw payments to Korey Homes; Bel Air alleged the bank disbursed funds without requiring mechanic’s lien releases, requisitions, or adequate inspections.
Bel Air sued Korey Homes and others; its seventh count asserted negligence against Hamilton Bank for failing to ensure loan disbursements were used to pay subcontractors.
Hamilton Bank moved to dismiss, arguing no contractual privity or ‘‘intimate nexus’’ existed and that imposing such a duty would conflict with the economic loss doctrine and public policy.
The circuit court granted dismissal with prejudice for failure to state a negligence claim and certified the order as final; Bel Air appealed.
The Court of Special Appeals affirmed: Maryland law does not recognize a general duty by a construction lender to ensure unknown subcontractors are paid absent privity or equivalent linking conduct; dismissal before discovery was not an abuse of discretion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a construction lender owes a duty to subcontractors to ensure draw proceeds are used to pay them	Bel Air: bank had a duty to ensure loan funds were used for intended purpose and breached it by not requiring lien releases/inspections	Hamilton: no privity or intimate nexus with subcontractors; economic-loss rule bars tort duty; imposing duty would chill lending	Court: No general duty; complaint failed to plead privity or linking conduct showing the bank knew or should have known of Bel Air’s reliance; negligence claim dismissed
Whether dismissing the negligence claim before discovery was premature	Bel Air: discovery might show facts establishing a relationship or privity-equivalent	Hamilton: duty is a legal question; dismissal appropriate on the pleadings	Court: Existence of duty is a legal determination; dismissal on the four corners of the complaint was proper and not an abuse of discretion

Balfour Beatty Infrastructure, Inc. v. Rummel Klepper & Kahl, LLP, 451 Md. 600 (Md. 2017) (adopted/clarified application of economic loss doctrine and emphasized need for linking conduct to show privity-equivalent)
Jacques v. First Nat’l Bank of Md., 307 Md. 527 (Md. 1986) (introduced intimate nexus/privity-equivalent analysis for economic-loss negligence claims)
Walpert, Smullian & Blumenthal, P.A. v. Katz, 361 Md. 645 (Md. 2000) (adopted Credit Alliance three-part test for privity-equivalent linking conduct)
100 Inv. Ltd. P’ship v. Columbia Town Ctr. Title Co., 430 Md. 197 (Md. 2013) (applied privity-equivalent analysis in title company context)
Chicago Title Ins. Co. v. Allfirst Bank, 394 Md. 270 (Md. 2006) (found intimate nexus where bank knew title company was relying on proper application of funds)
Richard F. Kline, Inc. v. Signet Bank/Maryland, 102 Md. App. 727 (Md. Ct. Spec. App. 1995) (rejected duty to notify subcontractors of borrower default; warned against making lenders "insurers" of subcontractors)
Iglesias v. Pentagon Title & Escrow, LLC, 206 Md. App. 624 (Md. Ct. Spec. App. 2012) (no duty where plaintiff failed to show sufficient linking conduct or privity-equivalent)
Ashburn v. Anne Arundel County, 306 Md. 617 (Md. 1986) (no duty to control a third person’s conduct absent a special relationship)