You may have heard the term fiduciary duty but are a bit unclear as to what it means. Fiduciary duty is the obligation one person or agency must act in another’s best interests. The two parties connected by this obligation are said to be in a fiduciary relationship. In business, fiduciary relationships are bound by certain laws. When one party breaks their obligation in this type of relationship, they may be held liable for breach of fiduciary duty and be required to pay damages for losses incurred.
In 2017, the California Civil Jury Instructions defined a fiduciary relationship as any relation between two parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. The document also states that from the time the beneficiary places their confidence in the integrity of the fiduciary, the fiduciary must always act in their best interests and never without their consent.
Fiduciary relationships exist in different industries and job settings. For example, an attorney and client have a fiduciary relationship, as do a company and its shareholders. Business owners who share interests in a business equally are said to be in a joint venture or partnership, with each having a duty to act in the other’s best interests. In each of these relationships, the beneficiaries depend on a person or agency to always make decisions for their benefit.
Identifying and Proving a Breach of Fiduciary Duty
Fiduciary relationships are more complex than hiring someone to perform simple tasks, such as yardwork or housekeeping. Because we share sensitive information and data with the fiduciary, there is an added level of trust implicit in these relationships. For instance, we hire a business attorney to provide capable representation and guidance for our legal matter. We trust our accountant to manage our money responsibly and make good decisions for our bottom dollar.
A breach of fiduciary duty refers to more than a simple breach of contract. Because of the added component of loyalty and trust, an intentional breach of fiduciary duty can include punitive damages for harm done under California state law. If you were harmed financially or legally by a professional or company you rightfully expected to make good decisions on your behalf, you may have a claim for breach of fiduciary duty.
Because these cases sometimes fall into a gray area, which is not clearly defined by a written contract, your Encino business attorney is the best resource for evaluating your case to uncover a breach of fiduciary duty. They must prove the fiduciary relationship existed, the defendant breached that duty, and that breach caused you harm.
Breach of Fiduciary Duty Consequences
Under California law, a plaintiff can ask for compensatory damages for all the ways a breach impacted their business or livelihood. Punitive damages are also possible. They are used to punish a defendant and send the message that such practices will not be tolerated. Quantifying damages in these types of cases is not a straightforward process, as every situation is unique. Your business attorney will review your case and assess potential damages.
Los Angeles Business Attorneys at Abir Cohen Treyzon Salo, LLP Skillfully Resolve Complex Business Disputes
If the other party in your business relationship failed to act on your behalf or committed fraud against you, you may have cause to bring a breach of fiduciary duty claim. To learn more about how these cases work and the damages you may be entitled to, contact a trusted Los Angeles business attorney at Abir Cohen Treyzon Salo, LLP. Call us at 833-ACTS-LAWopens phone dialer or contact us online to schedule a free initial consultation. Located in Los Angeles and San Diego, we serve clients throughout California.