If you have a relationship with a party in whom you have placed great trust, and that party abuses your trust and causes you economic harm, you may have a claim against the individual or entity for breach of fiduciary duty.
What is a fiduciary?
A fiduciary is a person or entity who holds a relationship of trust with another and has a legal and ethical duty to act on behalf of and in the best interest of the other party. Fiduciary relationships are typically seen when there is a power imbalance – and one party relies on the other for their superior knowledge, skill, or judgment. Examples of those who owe a fiduciary duty to another include an estate trustee to a beneficiary, a lawyer to a client, and a corporate board member to shareholders. In many cases, fiduciaries manage money or other assets on behalf of their clients. A fiduciary relationship can be formal, such as one spelled out in a written contract between the parties, or it can be implied by law.
What do fiduciary duties entail?
Fiduciaries are legally bound to act first and foremost with the needs and interests of the beneficiary or client in mind. Fiduciaries owe their clients a duty of care, which means they must act with the same level of care that any other reasonable fiduciary would in similar circumstances. They also owe their clients the duties of prudence, good faith, loyalty, confidentiality, and disclosure. A fiduciary may breach its duty through various actions, from misuse of client funds and self-dealing to misrepresentation of facts and failure to disclose a conflict of interest.
Proving a breach of fiduciary duty
In bringing a breach of fiduciary lawsuit, the plaintiff has the burden to prove the essential elements of the claim. The plaintiff must demonstrate that there was, in fact, a fiduciary relationship between the two parties. They must also show the defendant breached its fiduciary duty, that the breach caused the plaintiff economic harm, and that the damages incurred by the plaintiff directly resulted from the breach of fiduciary duty.
Process of a breach of fiduciary duty lawsuit
A breach of fiduciary duty lawsuit begins with the filing of a complaint with the proper court. Your complaint will include your version of the facts of the case, along with the legal claims you are asserting and the remedies – monetary damages and/or other relief – you are seeking in court. The defendant will have a certain amount of time to file an answer, which in some cases may include a counterclaim asserting that you harmed the defendant in some way. Depending on the circumstances, the defendant may also file a motion asking the court to dismiss all or part of the lawsuit.
In the vast majority of civil lawsuits, the two parties will arrive at a settlement before the end of the trial, which saves litigation costs and the unknown result at the end. A settlement can be reached at any point before a final decision is rendered.
If a settlement is not reached and the lawsuit moves past its initial phases, the next step is discovery. In the discovery phase, both sides ask the opposing side and other parties to provide information to help them build evidence to support their arguments at trial. Discovery typically includes depositions, a tool in which either party asks the other or potential witnesses to answer questions under oath. Discovery also includes requests for the production of documents relevant to the lawsuit.
After discovery, the next phase is the trial, which may be decided by a jury or a judge alone. Prior to the start of trial, attorneys for both sides will provide the judge with briefs outlining their arguments and the evidence they plan to present. Once the trial begins, attorneys for the plaintiff and defendant will make opening statements that outline their case. Next, they will present their evidence, call their witnesses, and cross-examine the other side’s witnesses. After all the evidence has been presented, both sides will give their closing arguments, and unless a settlement agreement is reached, the judge or jury will render a decision.
If you have been harmed by a fiduciary, contact the attorneys at Schwartz, Conroy & Hack. We have a deep understanding of the complexities of a fiduciary relationship and the rights available to someone who suffered damages due to a breach of fiduciary duty.
