“Breach of fiduciary duty” is a type of business tort that involves one party breaching its legal duties to another party. When two parties agree to work together and act within each other’s best interests, they owe a fiduciary duty to one another. If one party acts in a way that contradicts this duty, that party may be guilty of a breach.
A breach of fiduciary duty can arise between parties in a number of business relationships, from attorneys and clients to board members and shareholders. If you believe you have a breach of fiduciary duty on your hands, talk to the business tort lawyers at Butler Wooten & Peak LLP. We can help with the three elements of this type of claim:
The first element is duty. The defendant must have owed you a fiduciary duty at the time of the alleged breach. In the U.S. legal system, a relationship between two parties that obligates one to act only in the interests of the other is a fiduciary duty. You must have had some kind of business or contractual relationship with the defendant. The defendant may have been your business partner, attorney, stockholder, trustee, executor, doctor, director, etc.
Any individual or entity that owed you a higher than usual degree of care due to a business arrangement, contract, or agreement between the two parties may be in a fiduciary relationship with you. However, the relationship and duties must be legally enforceable to have a case against the party. For example, a contract or law must have created the relationship, or it must have factual evidence supporting its existence.
There are a number of ways one party could breach its fiduciary duty to the other party. The scope of the business relationship and the type of duties owed will determine what constitutes a breach. If the defendant committed actions that contradicted the best interests of his/her client, did something out of his/her own interests, or failed to disclose vital information (e.g. a conflict of interest), he or she might be guilty of breach of fiduciary duty.
For example, a financial advisor takes on a client and agrees to design an investment portfolio for her. The advisor then purposely sells the client complex financial products knowing that he would make a profit from the sale. The client then loses a substantial amount of money, although she never realized the risks of the purchase. The financial advisor has breached his duty to give his client sound financial advice for his own personal gain.
Finally, you must prove that the defendant’s breach of fiduciary duty caused you real damages. Otherwise, you would have no reason to file the claim since you didn’t suffer any losses from the experience. Damages can take a variety of forms. They don’t necessarily have to be financial, or economic, although this is a common reason to file a claim. Damages can also be harms to your business’s reputation, lost opportunities in your industry, loss of business, or personal injury pain and suffering, as may be the case in a doctor-patient breach of fiduciary duty. Speak to an attorney to fully realize your harms and create an accurate estimate of your losses.
If you answered yes to all three of these questions, you most likely have grounds to file a claim against the offending party for breaching its fiduciary duties to you. Contact our attorneys at Butler Wooten & Peak LLP if you believe your business partner, associate, or other party committed a breach of fiduciary duty that harmed you. Call (800) 242-2962 to schedule your free consultation.