Breach of Fiduciary Duty
Fiduciary relationships exist between a principal and an agent. The principal places trust or confidence in an agent, and in turn the agent is supposed to use the utmost good faith and loyalty toward the principal throughout the course of the relationship. Fiduciary relationships exist in many different contexts. Corporate officers owe a fiduciary duty to a corporation. Shareholders in closely held corporations share a fiduciary duty among themselves. Members of a partnership or joint venture owe a fiduciary duty to one another. Trustees owe a fiduciary duty to trust beneficiaries. Escrow agents owe a fiduciary duty to beneficiaries. In some cases, a breach of fiduciary duty can result in substantial damages. The experienced New York litigation lawyers at Klapper & Fass can represent you in taking legal action against an agent who has breached his or her fiduciary duty.Bringing a Breach of Fiduciary Duty Claim
A fiduciary relationship is based on trust or confidence. A fiduciary or agent owes undivided loyalty to a principal. This means that he or she may not engage in self-dealing or enter into situations in which his or her personal interests may conflict with the interests of those to whom he or she owes a fiduciary duty.
Although there are some clear situations in which statutes, corporate bylaws, or another authority establish a fiduciary relationship, the determination of whether there is a fiduciary relationship may be a fact-sensitive inquiry that is conducted by a jury. To determine whether there is a fiduciary relationship in more ambiguous cases, the jury would have to look at the nature of the relationship between the parties, whether the alleged principal had unique or special expertise, whether the alleged principal knew the use to which the information was to be put, and the purpose for which the agent supplied the principal with the information.
If you are suing for a breach of fiduciary duty, you will generally need to establish that there was a fiduciary relationship, the defendant committed some form of misconduct like self-dealing, and the defendant's misconduct directly caused your damages.
Generally, there may also be liability for aiding and abetting a breach of fiduciary duty. In that case, you will need to establish that whoever the defendant aided and abetted performed a wrongful act that caused damages, the defendant was aware of his or her role in an overall tortious or illegal activity at the time of providing help, and the defendant knowingly and substantially assisted the primary violation.
If you are a defendant in a breach of fiduciary duty lawsuit, you can potentially raise a wide range of arguments. It is important to consult an attorney to determine whether any of these defenses is likely to be viable. One standard defense relies on the statute of limitations pertinent to the underlying misconduct. There is no statute of limitations that is just for breach of fiduciary duty lawsuits. Generally, you have three years to bring a claim for monetary damages. You have six years for lawsuits based on fraud or in which you are seeking equitable relief rather than monetary damages.
Another standard defense is the business judgment rule. This is a doctrine that bars a judicial inquiry into corporate directors' actions if those actions were taken in good faith while exercising honest judgment about the lawful furtherance of a corporate purpose. In some cases, the defendant will argue that there was no fiduciary relationship, but instead the parties were conducting business at arm's length, so no special duty was owed or breached.
In some cases, if the party claiming a breach of fiduciary duty is sophisticated, the court expects the party to protect itself when a situation is no longer one of total trust. The court may determine that a principal should have made an additional inquiry, rather than finding a breach of a fiduciary duty.Enlist a New York Lawyer for Your Litigation Needs
Our New York litigation attorneys regularly represent Fortune 500 equipment lenders, finance companies, and large and medium-sized companies. Klapper & Fass has offices in White Plains and Manhattan and serves the five boroughs of New York City as well as Westchester, Rockland, Nassau, and Suffolk Counties. We also represent clients nationwide, including in Illinois, California, Texas, and Massachusetts. For an attorney to handle a business dispute or a commercial collections matter, contact us at 914.287.6466 or via our online form to set up an appointment.