Tort/Negligence – Breach of Fiduciary Duty Claim – Banks & Banking – Construction Loan – Disbursements – Unlicensed Contractor — Unfair Trade Practices Claim – Fraud Claim

Rider v. Aderhold (Lawyers Weekly No. 13-16-0719, 13 pp.) (Robert C. Hunter, J.) Appealed from Henderson County Superior Court (Bradley B. Letts, J.) N.C. App. Unpub.

Holding: Even though a bank employee promised to be the plaintiff-borrowers’ eyes and ears while their home was being built, the bank did not owe plaintiffs a fiduciary duty. The loan agreement clearly states that the bank had no fiduciary or other special relationship with plaintiffs.

We affirm partial summary judgment for the bank.

The bank did not breach its contractual duties by disbursing money to plaintiffs’ contractor, who, it turns out, was unlicensed. The loan agreement says, “The Lender may disburse construction advances upon the request and at the direction of (i) the Borrower,  … or (iv) any person designated or authorized by the Borrower.” Moreover, the loan agreement goes on to say, “Unless the Borrower gives written instruction to the [l]ender to the contrary, the Lender is authorized, in its discretion, to disburse construction advances directly to any Borrower, to the account of any Borrower, to any Borrower and any contractor, subcontractor or provider of materials or supplies.”

The bank was permitted to make the disbursements, in its discretion, unless plaintiffs gave written instructions to the contrary. With regard to five of the seven payments at issue, plaintiff Tom Rider gave the bank written instructions to make the disbursements. Plaintiffs never instructed the bank to withhold any of the payments at issue. Plaintiffs failed to forecast evidence that the bank breached any of the terms of the loan agreement.

Plaintiffs also failed to prove unfair trade practices. A bank exercising its rights under a loan agreement does not engage in a deceptive or unfair practice. Even if the bank had breached its contractual duties, a mere breach of contract is not sufficiently unfair or deceptive to sustain an action under G.S. § 75-1.1, and plaintiffs allege no aggravating circumstances.

Finally, plaintiffs’ fraud claim is premised on their contention that the bank failed to inform them that defendant RAD Construction Management, Inc. did not have a general contractor’s license but was, instead, operating under defendant Boston/South Investments, Inc.’s license. However, plaintiffs could have discovered that RAD did not have a contractor’s license; Mr. Ryder testified that he could have requested a copy of RAD’s contractor’s license but never did. Moreover, plaintiffs have failed to plead that they were denied the opportunity to investigate or that they could not have learned the true facts by reasonable diligence.

Affirmed.