Children are not afraid of specific people for no reason at all, unless there is an anxiety issue involved. Since both your posts have left out information about your son, it is hard to tell what the root could be, and my experience with schools is that there is going to be significant information from this teacher (unfounded or not) that she will use as a justification for why this is all your son's fault, and she has done what she should.
That being said, retention is a bad thing for kids, and if he has failed all year, then she was obligated to teach him in a different way or to call for an evaluation to find out why he was having so much difficulty, even if that difficulty was emotional.
This just seems so out of the ordinary to me Jenn. If the teacher is hiding everything from you, and you don't have other details about any of this, then you really need to camp out in your principals office and get them today. I would no more send my second grader into a classroom where I had zero clue why he was terrified, than I would allow a teacher to fail him because of reasons unknown.
What is really up?
M.