Breach of Fiduciary Duty
The highest standard of care that one person can owe another is a fiduciary duty. Whoever owes a fiduciary duty is called the agent or fiduciary, while the person to whom the duty is owed is often known as the principal or beneficiary. There are many different people who may owe a fiduciary responsibility to someone else. For example, partners in a business owe each other fiduciary duties. For another example, an attorney owes a fiduciary duty to a client. If you need to recover damages for a breach of fiduciary duty, you should retain an experienced New York City business litigation attorney at Benjamin Hart, P.C. to pursue damages.Claims Arising from a Breach of Fiduciary Duty
A fiduciary duty exists when one person is under a duty to act for or give counsel for the benefit of another person with regard to matters within the scope of their relationship. The relationship is considered fact-specific and is grounded in a higher degree of trust than what is usually present in the marketplace between people interacting at arms-length. Some of the fiduciary duties are the duty of care, the duty of honesty, and the duty of loyalty. Unfortunately, not all fiduciaries honor their fiduciary duties. If any of these duties is violated, it may be possible to sue.
In New York, an attorney will need to prove the following elements to establish a breach of fiduciary duty by a defendant: a fiduciary relationship between the plaintiff and the defendant, misconduct by the defendant, and damages caused by the misconduct. Among those who owe fiduciary duties in New York are employees to employers, real estate brokers to a real estate owner, members of a partnership or joint venture to each other, or a corporate officer or director to the corporation.
One type of breach of fiduciary duty is "self-dealing." This occurs if a fiduciary works for their own gain at the beneficiary's expense. For example, if a trustee is making investments for a trust and invests trust funds in his own business, even though his own business is not doing well, this would be self-dealing. For another example, if a partner of a partnership receives an opportunity for the partnership, but he directs the opportunity away from the partnership to his own side business, this would also be self-dealing.
Since directors and majority shareholders have the power to manage a corporation, they have a fiduciary obligation with regard to corporate welfare. The directors and shareholders are in a position of trust and owe a duty to all shareholders to abide by fiduciary standards of conduct and to uphold their obligations in good faith whenever they are taking actions for the corporation. Majority shareholders of a corporation owe a fiduciary duty to minority shareholders. If, for example, officers and directors take corporate assets away from the business and waste them, this would be a breach of fiduciary duty for which shareholders could sue.
Anyone who induces or who aids and abets a breach of fiduciary duty can also be held liable. This can be useful when the fiduciary does not have enough assets to pay for a judgment, but the person or company that induced or helped the breach does have assets.
In a breach of fiduciary duty claim, you can request punitive damages as well as compensatory damages. A punitive damages award is directed toward punishing a wrongdoer and deterring the same types of actions by others. This is awarded in proportion to the actual injury inflicted by the defendant.Hire an Experienced New York City Lawyer to Protect Your Interests
If you are harmed by a breach of fiduciary duty in any context, you should retain a skillful attorney who can guide you through the legal process. Benjamin Hart, P.C. represents clients in Queens, Manhattan, Brooklyn, the Bronx, and Staten Island — all five boroughs of New York City. We also represent clients in Nassau and Suffolk Counties. Contact us at (212) 835-1532 or via our online form for an appointment.