Do Bankers Ever Have Fiduciary Duties To Their Customers?

If a bartender serves a visibly intoxicated customer with even more alcohol and the customer then causes an accident while driving drunk, the bartender can be liable under North Carolina's Dram Shop Act, N.C. Gen. Stat §18B-120, et seq.  But if a banker showers cash on a borrower to fund a  deal which goes bad, does the borrower have any claim against the banker for not cutting him off?

 The short answer is that bartenders are held to a higher standard than bankers.  A claim against a lending bank for anything other than a violation of the terms of the loan documents -- say such as a claim for breach of fiduciary duty -- is almost always doomed to dismissal  Judge Gale of the Business Court last week did exactly that to the borrower's claim in Wells Fargo Bank, N.A. v. Vandorn, 2012 NCBC 6, saying that "[I]n an ordinary lender-borrower relationship, the lender does not owe any duty to its borrower beyond the terms of the loan agreement[,]" Op. ¶__. (quoting Branch Banking & Trust Co. v. Thompson, 107 N.C. App. 53, 418 S.E.2d 694, 699 (1992)).

Wells Fargo had sued Vandorn, Cook and an LLC formed by the two individuals to collect on a defaulted loan made for the LLC  to buy a lot in a high-end resort development called Laurelmor.  Laurelmor was billed as a 6,000 acre golf resort, with the course designed by PGA great Tom Kite, to be developed in the North Carolina mountains.  The Winston-Salem Journal says that Laurelmor "collapsed under the bad economy and a massive loan."

Read this article in its entirety on North Carolina Business Litigation Report, a blog for lawyers focusing on issues of North Carolina business law and the day-to-day practice of business litigation in North Carolina courts.

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