Lynn v. Federal National Mortgage Ass'n
235 N.C. App. 77
| N.C. Ct. App. | 2014Background
- Plaintiffs Gregory S. Lynn and Renee J. Lynn appeal a Rule 12(b)(6) dismissal in a foreclosure-related case against Fannie Mae and Seterus.
- Loan: 2007 promissory note to Chase for $360,000 secured by a deed of trust with Trustee Constance R. Stienstra; Chase named as lender/beneficiary.
- Servicers and holder: Seterus became servicer in 2011; Fannie Mae later identified as holder; a substitute trustee (Trustee Services of Carolina) referenced but not identified as a party.
- Procedural history: Foreclosure process began in 2011; bankruptcy filing in late 2011; relief from automatic stay granted to Fannie Mae and Seterus; loan modification offered and rejected due to short payment; foreclosure sale occurred in 2012; 12 CVS 2676 enjoined the sale; 2013 discovery led to payoff quotes but upset period passed; final complaint filed 30 May 2013 seeking injunction, breach of fiduciary duty, misrepresentation, and UTPA; trial court dismissed on 12 July 2013; Plaintiffs appealed.
- Court affirmed dismissal, holding no fiduciary relationship established under the facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether redemption rights created a fiduciary duty. | Lynn asserts a fiduciary duty arises from the statutory right of redemption. | Fannie Mae/Seterus argue ordinary debtor–creditor relationship; no fiduciary duties arise from redemption rights. | No fiduciary relationship; redemption rights do not, by themselves, create one. |
| Whether a trustee fiduciary duty existed given the foreclosure context. | Plaintiffs contend trustee/substitute trustee owed fiduciary duties to both debtor and creditor. | No party acting as trustee or substitute trustee was joined; no fiduciary duty owed by defendants. | No trustee fiduciary duty established; dismissal proper due to absence of trustee party. |
Key Cases Cited
- Branch Banking & Trust Co. v. Thompson, 107 N.C. App. 53, 418 S.E.2d 694 (1992) (no fiduciary duty where borrower relies on outside counsel/advisors; arm's-length lender relation often lacks fiduciary duty)
- Dalton v. Camp, 353 N.C. 647, 548 S.E.2d 704 (2001) (fiduciary duty requires special confidence and good faith in a context beyond ordinary relations)
- In re Vogler Realty, Inc., 365 N.C. 389, 722 S.E.2d 459 (2012) (trustee has fiduciary duty to debtor and creditor in foreclosure; power to foreclose by trustee)
- Pearce v. Watkins, 219 N.C. 636, 14 S.E.2d 653 (1941) (early recognition of trustee/foreclosure fiduciary duties; relevance to trustee duties)
- Carcano v. JBSS, LLC, 200 N.C. App. 162, 684 S.E.2d 41 (2009) (fiduciary relationship generally a question of fact; applicable to foreclosure context)