Lender Liability Claims Rejected

Lender Liability Claims Rejected

      In a recent decision from the Kentucky Court of Appeals, it affirmed the trial court's determination that a variety of claims against a lender, namely breach of fiduciary duty, tortious interference with contractual relations and intentional infliction of emotional distress, should be dismissed. Seeger Enterprises, Inc. v. Town & Country Bank and Trust Company, No. 2015-CA-0011-MR, 2017 WL 1290631 (Ky. App. April 7, 2017).

      Seeger owned several pieces of property that were mortgaged to Town and Country Bank. In order to pay off those obligations, Seeger and his realtor began discussions with Hayden for a purchase/sale. It was alleged as well that they reached agreement as to the price, $1,650,000, but that agreement was never reduced to writing. When a written agreement was ultimately prepared and tendered to Hayden, he refused to sign it. The property was ultimately sold at a master commissioner sale with Town & Country the buyer for a price of $800,000. In the course of foreclosure, Seeger brought the claims that would ultimately be dismissed. The case went to trial, and after two days of evidence Town & Country was granted a directed verdict on those counterclaims.

Tortious Interference with Contractual Relationships

      The Court of Appeals affirmed the dismissal of this count based upon the absence of an enforceable contract. Hayden never signed the contract, and an oral agreement for the purchase of real estate is unenforceable under the statute of frauds. See KRS § 371.010. There being no contract with which to interfere, a claim for tortious interference automatically failed.

Breach of Fiduciary Duty

      After noting that, in most situations, a bank does not stand in the fiduciary relationship with its customers, it was observed that “Kentucky law permitted the trial court to impose a fiduciary duty upon Town & Country only if evidence at trial created the reasonable inference that it profited at Seeger's expense. Finding that Seeger had not introduced any evidence in support of the existence of fiduciary duties, the directed verdict against that claim was affirmed.”

Intentional Infliction of Emotional Distress

      The directed verdict on this count was affirmed on the basis that Seeger had not raised it in his initial brief, the court applying the rule that new matters may not be raised in life.

Amendment of the Pleadings

      The court also affirmed the denial of an amendment of the pleadings to include a new claim for tortious interference with prospective business advantage on the basis that

To have permitted the addition of such a distinct claim at the latest possible stage of trial would have deprived Town & Country of any ability to present distinct and directly responsive evidence in defense of the new claim.