A couple obtained a loan from Farm Service Agency (FSA) to purchase a farm. Despite some concerns about the property, the buyers went through with the purchase. The morning after the closing, the buyers tried to rescind the sale. The seller initially agreed to rescind the sale, then refused. The buyers brought several tort claims against FSA under the Federal Tort Claims Act and argued that the loan officer breached her fiduciary duty. See 28 U.S.C. § 2674.   

Although a lender does not typically have a fiduciary relationship with a borrower, a lender may owe a fiduciary duty to a subservient borrower. The courts will consider the borrower's age, mental capacity, education, and business experience to determine whether the borrower is subservient. Here, the borrowers did not have any physical or mental impairments. They both had post-secondary degrees and many years of farm experience. Because the borrowers failed to show that FSA acted a fiduciary, the district court granted FSA’s motion for summary judgment.

Karl v. United States, 2023 WL 4762827 (W.D. Wis. July 26, 2023).