Opinion ID: 4521723
Heading Depth: 2
Heading Rank: 2

Heading: the fiduciary duty claim

Text: “The powers and duties of a trustee in a deed of trust, given to secure the payment of a debt, are limited and defined by the instrument under which he acts.” Powell v. Adams, 179 Va. 170, 174 (1942). However, this Court has recognized that “a trustee under a deed of trust owes both the debtor and the creditor certain implied fiduciary duties.” Crosby v. ALG Trustee, LLC, 296 Va. 561, 569 (2018). A trustee is “the agent of both debtor and creditor,” and “[i]t is incumbent upon him to act toward each with perfect fairness and impartiality.” Powell, 179 Va. at 175. “[T]he requirement of impartiality means that a trustee under a deed of trust must balance the conflicting positions of the creditor and debtor such that a benefit to one cannot come at a disproportionate expense of the other.” Crosby, 296 Va. at 569. Young-Allen’s amended complaint alleged that Equity breached its duty of impartiality when it conducted the foreclosure sale after it had been informed that a condition precedent to foreclosure had not been satisfied. Although Equity had notice of the alleged breach of the deed 1 We note that the complaint also failed to allege that Young-Allen could avoid another foreclosure sale if she obtained the remedy of rescission. Therefore, the remedy requested by Young-Allen may have ultimately been futile. 7 of trust and the litigation between Young-Allen and Bank of America, Young-Allen’s amended complaint failed to plead sufficient facts to establish that Equity breached the fiduciary duty that it owed to Young-Allen. Equity was not required to postpone or cancel the foreclosure sale based solely on the alleged breach of the deed of trust, especially when Young-Allen failed to plead that she could cure her default and prevent the foreclosure sale from occurring. The amended complaint stated that Young-Allen filed a notice of lis pendens regarding the underlying litigation before the foreclosure sale was conducted. A notice of lis pendens, however, is not an injunction. 2 A notice of lis pendens is “merely a notice of the pendency of the suit to anyone interested and a warning that he should examine the proceedings therein to ascertain whether the title to the property was affected or not by such proceedings.” Harris v. Lipson, 167 Va. 365, 372 (1937); see also Bryan v. Jackson, 178 Va. 123, 130 (1941) (“A lis pendens makes static the record as it is when it is filed.”); Kent Sinclair and Leigh B. Middleditch, Jr., Virginia Civil Procedure § 3.14, at 381 (6th ed. 2014) (A lis pendens is “merely a notice that a claim which affects the property has been asserted.”). Standing alone, the notice of lis pendens did not prevent Equity from conducting the scheduled foreclosure sale. While Young-Allen’s amended complaint alleged that she advised Equity of the breach of the deed of trust, the complaint did not allege that Young-Allen told Equity that she had the ability to cure her default. In the absence of such an allegation, the foreclosure sale appeared to be inevitable. Young-Allen’s amended complaint did not contest the fact that she was in default, and it expressly admitted that she “fell behind on her payments.” Under these circumstances, 2 Notably, Young-Allen’s initial complaint did not request an injunction to prohibit Equity from conducting the scheduled foreclosure sale. 8 Equity did not breach any fiduciary duty that it owed to Young-Allen when it proceeded with the foreclosure sale. As Young-Allen’s amended complaint failed to plead facts establishing that Equity breached its fiduciary duty when it conducted the foreclosure sale, the circuit court did not err by sustaining the demurrer to Young-Allen’s breach of fiduciary duty claim.