No legal relationship has a higher standard of care than a fiduciary duty. It entails one party placing special trust and confidence in another to manage their money, property, or well-being. Because of this, a breach of fiduciary duty is a grave violation.
The experienced and skilled business litigation attorneys at Shaw Cowart LLP know how solemn a duty a fiduciary has. We understand how egregious a breach of that duty is. If you or your business has been harmed by a breach of fiduciary duty, we will fight for justice on your behalf and help you recover the compensation you deserve.
What is Fiduciary Duty?
A fiduciary duty exists when one party (the client) places trust or confidence in another party (the fiduciary) with the fiduciary’s full knowledge. In many cases, the fiduciary is expected to use their knowledge or expertise to advance the client’s interests. For a fiduciary duty to be legally enforceable, it must have created under the law with a contract, statute, or legal proceeding, or it must be established based upon the facts of the relationship and existing case law.
A fiduciary is expected to always act in the best interest of the client, even at the fiduciary’s own detriment. They also cannot withhold relevant information from clients and are required to disclose potential conflicts of interest.
Relationships that include a fiduciary duty include:
- An attorney has a fiduciary duty to their clients
- A corporate CEO has a fiduciary duty to their shareholders
- An accountant has a fiduciary duty to their clients
- A guardian has a fiduciary duty to the child in their care
- A trustee has a fiduciary duty to the beneficiary of the trust
What is a Breach of Fiduciary Duty?
A breach of fiduciary duty is any action taken by the fiduciary that harms the client, is not in the best interest of the client, or solely benefits the fiduciary. A failure by the fiduciary to disclose relevant information to the client can also be a breach of duty.
For example, a CEO of a corporation closes a deal to acquire a struggling company owned by their friend. Because the acquired company was struggling, the acquisition hurts the share price of the corporation. This may be a breach of fiduciary duty because the CEO, as the fiduciary, acted in their own interest rather than in the interest of the corporation’s shareholders.
How Do I Prove a Breach of Fiduciary Duty?
To win a claim for breach of fiduciary duty, you must prove these elements:
- That the defendant had a fiduciary duty to the plaintiff
- That the defendant breached this duty by acting against the interests of the plaintiff
- That the plaintiff suffered damages because of the defendant’s breach
What Damages Can I Recover From a Breach of Fiduciary Duty Claim?
If you or your company were the victims of a breach of fiduciary duty the damages you may be able to recover include:
- Compensatory damages: These damages are designed to compensate the plaintiff for the loss they suffered because of the breach. In the previous hypothetical, for example, the shareholders may be able to recover compensatory damages from the CEO for the CEO’s actions lowering their share prices.
- Punitive damages: These go beyond compensatory damages to punish the party who breached their fiduciary duty. They are meant to discourage the defendant from committing the violation again, as well as to prevent other fiduciaries from making the same breach. Punitive damages are usually only awarded if the plaintiff can prove that the defendant acted out of malice or committed fraud.
Contact Our Austin Business Lawyers Today
At Shaw Cowart LLP, our attorneys have a passion for justice. We will aggressively fight for your interests. We serve Austin and surrounding areas of Texas. Call 512-499-8900 today to schedule a consultation.