Tort/Negligence – Breach of Fiduciary Duty Claim – Banks & Banking – Real Property – Mortgages – Foreclosure – Right of Redemption

Lynn v. Federal National Mortgage Association (Lawyers Weekly No. 14-07-0660, 12 pp.) (Robert N. Hunter Jr., J.) Appealed from Union County Superior Court (W. David Lee, J.) N.C. App.

Holding: A debtor’s attempt to act upon the statutorily created right of redemption does not change an ordinary debtor-creditor relationship into a fiduciary relationship. Defendant’s response to plaintiffs’ request for a redemption amount – asking plaintiffs to make an offer – was not a breach of any fiduciary duty.

We affirm the trial court’s dismissal of plaintiffs’ complaint.

The right of redemption may arise in any typical foreclosure proceeding; it is a statutorily created right to terminate a power of sale. G.S. § 45-21.20. Nothing about the statute indicates that the moment a debtor attempts to act upon its right of redemption is anything other than an ordinary part of a debtor-creditor relationship during foreclosure proceedings. As this is an ordinary feature of debtor-creditor relationships, the debtor or creditor must show some additional fact which tends to elevate the relationship above that of a typical debtor and creditor.

Here, plaintiffs simply assert that a fiduciary relationship is created by plaintiffs’ invocation of the right of redemption or defendants’ response email requesting that plaintiffs make an offer to pay off the loan. Merely invoking a statutorily created right in a debtor-creditor transaction does not alone create a fiduciary relationship. As plaintiffs fail to disclose any additional facts supporting the existence of a fiduciary relationship, dismissal was proper under N.C. R. Civ. P. 12(b)(6), as this was a normal debtor-creditor relationship.

As no facts indicate that the trustee or substitute trustee was joined as a defendant, no party owing a fiduciary duty to plaintiffs is a party to this breach of fiduciary duty claim. Accordingly, dismissal under Rule 12(b)(6) was proper.

Affirmed.