On Friday, December 18, 2015, the North Carolina Supreme Court issued an opinion affirming the dismissal of a lender, and its appraiser, from a lawsuit alleging breach of fiduciary duty, fraud, violation of North Carolina’s Mortgage Lending Act, and other causes of action. Arnesen, et al. v. Rivers Edge Golf Club & Plantation, Inc., et al. The case arises out of several developments located on North Carolina’s coast, in which individuals purchased undeveloped lots prior to the recession. BB&T was the primary lender for the purchasers, and BB&T obtained appraisals for several of the lots. The homeowners alleged that BB&T and the appraiser failed to disclose that the appraisals allegedly overstated the value of the lots and that the bank had a duty to discover and disclose this information.
The Court began by stating the existing rule that a lender generally does not owe its borrower any duty beyond its contractual obligations. The purchasers in this case did not rely on the bank or appraiser for any information and obligated themselves to purchase the lots independent of the loan process. In short, the Court found that the purchasers alleged nothing more than a typical debtor-creditor relationship and, as a result, the bank has no duties outside of the contract. Continue Reading