Why did this teacher think so highly of me as a student?

I'm probably over-thinking this but it's just such a weird situation. It's the first time something like this has ever happened to me. Last year, one of my teachers told another teacher that I was the smartest person in class and way above average. He actually thought I needed more challenging material. It was flattering but I don't even know how he thought that. I always have either a low C or a high D average. I completely failed the final for the class too. He's also one of those teachers who can be somewhat judge-y regarding grades. For example, someone in my class had a 3.2 and he said it wasn't "that bad" and told her she should have been an A student. He didn't know what my GPA was (it was a 1.6 when I heard that) but I'm surprised he thought I was that good of a student? Quite a few people in that class had B averages. He asked me if I was in some Honors class once and I was like "my grades aren't good enough to be in anything Honors" in my mind lol.

Has this ever happened to anyone before? Has a teacher ever thought you were smarter than you actually were?

EDIT: Not sure if this is in the right subforum or not? Sorry if it isn't.