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  • Jeff Vail

Breach of Fiduciary Duty

Breach of fiduciary duty is the ‘dark horse’ of business torts. It is my personal favorite—fiduciary duties are the strongest duties in the law, and they arise between business partners, within trusts, between parties to a transaction, and even between companies to their employees and officers far more often than most people realize. A fiduciary relationship—that gives rise to fiduciary duties—exists whenever one person is entrusted to act for the benefit of another and has legal power or authority to do so. The traditional fiduciary duties include loyalty, care, and candor.

The fiduciary duty of loyalty doesn’t mean treat your partners equally—it quite literally requires the fiduciary to put their partners’ interest above their own. The duty of care is means to act as a reasonable person would under the circumstances—essentially a negligence duty. And the duty of candor (sometimes called the duty of disclosure) imparts the requirement to share all information that is necessary to demonstrate full candor in a fiduciary’s handling of affairs.

The elements of a claim for breach of fiduciary duty are:

(1) The defendant was acting as a fiduciary to the plaintiff;

(2) The defendant breached a fiduciary duty to the plaintiff;

(3) The plaintiff has damages; and

(4) The defendant’s breach of fiduciary duty was a cause of the plaintiff’s damages.

CJI-Civ (2018).

Breach of fiduciary duty can result in both legal (damages and punitive damages) remedies, and potentially powerful equitable remedies such as constructive trusts, appointment of receivers, and disgorgement of profits earned by the breaching party (not just damages actually suffered by the plaintiff).

Breach of fiduciary duty can be an important cause of action in business litigation. At Vail Law, we use an open-source, Litigation Checklist approach to develop claims and defenses tailored to each unique situation. Often these include breach of negligent misrepresentation, fraud, breach of contract, and exotic statutory causes of action. Contact Jeff Vail at (303) 600-3730 or to discuss your specific case.

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