By the Business Attorneys at Garg & Associates, PC, serving The Woodlands, Spring, Houston, Conroe, Humble, Kingwood, Tomball, Cypress, Huntsville, Westchase, Southwest, Sugar Land, West Oaks, Alief, Memorial, River Oaks, Stafford, Katy, and Missouri City.

What is “breach of a fiduciary duty”?

For a duty to be fiduciary there needs to be a special relationship between the parties. That is, “[w]hen one person is under a duty, created by law or contract, to act on or give advice for the benefit of another within the scope of the relationship, that person has s fiduciary relationship with the other person.” A few of the recognized fiduciary relationships include attorneys, spouses, agents, partners, corporate officers, holders of powers of attorney, executors and trustees, class representatives (in class actions), securities brokers and employees. To prove breach of a fiduciary duty, the plaintiff must show first that the duty was fiduciary. Some fiduciary duties are: the duty of loyalty and utmost good faith; the duty of candor; the duty of fair and honest dealing; the duty of full disclosure; and the duty to refrain from self-dealing. Trustees are held to a stricter standard, with the fundamental duties including “the use of skill and prudence that ordinary capable and careful person would use in the conduct of her own affairs and the loyalty to the beneficiaries of the trust.”

To sustain this action, the plaintiff must show that the defendant’s breach resulted in injury to the plaintiff or created a benefit to the defendant. The plaintiff need not prove the causal nexus between the defendant’s actions and the resultant damage. The remedy for this type of breach include actual damages of lost profits and out of pocket losses; mental anguish; exemplary damages and equitable relief in the form of fee forfeiture and constructive trusts; pre- and post judgment interest; and court costs. Attorney are not generally recoverable unless by specific statute, by contract between the parties or upon a showing of equitable relief.

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