Breach of Fiduciary Duty
In disputes involving entities, an issue that often arises is a breach of fiduciary duty. Fiduciaries have a particular responsibility toward their clients or beneficiaries, and when that role is not being properly fulfilled, litigation may develop. Having served the Pleasanton community for almost four decades, commercial law lawyer James G. Schwartz represents area businesses and gives assistance on a wide range of their needs, including breach of fiduciary duty claims.Understanding a Breach of Fiduciary Duty
A fiduciary duty arises when one party, called the fiduciary, is under an obligation to act in the best interest of another party, usually called the principal. When a fiduciary duty exists, there is a special trust, confidence, and reliance on the fiduciary to exercise his or her discretion or expertise in acting for the principal. A fiduciary obligation may arise legally or ethically, and it is usually formed through some type of contractual relationship between the parties.
Some common examples of fiduciaries are company directors and executives, as well as real estate brokers, investment advisors, and attorneys. Company directors and executives have a fiduciary duty to the company’s shareholders, while brokers, advisors, and attorneys all have a fiduciary duty to their clients. Also, if a trust is established, the executor of the trust, the trustee, has a fiduciary duty to the beneficiary, the person receiving the benefit of the trust.
A breach of fiduciary duty occurs when the fiduciary willingly and knowingly behaves in a way that is contrary to the best interest of the principal, or acts in a way that serves only the interest or benefit of the fiduciary. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client.
Breach of fiduciary duty lawsuits are also sometimes brought between partners of a business entity. An alleged breach of a partnership fiduciary duty could include any of the following causes of action:
- Breach of contract: one partner harmed another’s best interest by not doing what the partnership agreement required him or her to do;
- Fraud: one partner misrepresented or concealed important facts from another partner; or
- Accounting: figuring out how much a partner misappropriated or how much damage a partner caused.
In California, to bring a cause of action for breach of fiduciary duty, the harmed party must prove a fiduciary duty existed, there was an actual breach of that duty, the breach of fiduciary duty caused the harm suffered by the plaintiff, and there were actual losses or damages sustained.Consult a Pleasanton Lawyer for Guidance on a Business Dispute
When you are facing a potential breach of fiduciary duty claim, having a skilled lawyer to assist you may give you reassurance during a potentially difficult process. Attorney James G. Schwartz serves the business litigation needs of clients in Pleasanton and the surrounding cities, including Newark, Oakland, and Dublin. Call us today at 925-463-1073 or contact us online to schedule a consultation.