Yes! You can file suit for breach of fiduciary duty if three requirements are met:
1. You had a fiduciary relationship with the defendant.
2. The defendant breached a fiduciary duty is owed to you.
3. The defendant’s breach resulted in (economic) injury to you or (economic) benefit to the defendant.
You had a fiduciary relationship with the defendant
A fiduciary relationship exists when one person is under a duty – created by law or contract – to act on or give advice for the benefit of another within the scope of the relationship. Fiduciary relationships can be formal or informal. Some examples of formal fiduciary relationships are as follows:
– Partners owe a fiduciary duty to each other.
– Agents owe a fiduciary duty to their principals.
– Corporate officers owe a fiduciary duty to the corporation they serve.
– Executors and trustees owe a fiduciary duty to the beneficiaries of the estate or trust.
– Joint venturers owe a fiduciary duty to each other in dealings within the scope of the joint venture.
– Employees owe a fiduciary duty to their employers and are obligated to act in their employers’ interests during their employment.
– Attorneys owe a fiduciary duty to their clients.
Although much less common, informal fiduciary relationships may arise from moral, social, domestic, or purely personal relationships of trust and confidence in business transactions or otherwise. To prove the existence of an informal fiduciary relationship in most circumstances, you must establish that the dealings between you and the fiduciary continued long enough to justify your reliance on the fiduciary to act in your best interest.
The defendant breached a fiduciary duty is owed to you
Next, you must determine if the defendant has breached a fiduciary duty owed to you. There are many specific fiduciary duties that partners, agents, corporate officers, executors and trustees, and others owe depending on the type of relationship. Nevertheless, there are many general duties that every fiduciary owes, such as the:
– duty of loyalty and utmost good faith;
– duty of candor;
– duty to refrain from self-dealing;
– duty to act with integrity of the strictest kind;
– duty of fair, honest dealing; and
– duty of full disclosure.
The defendant’s breach resulted in (economic) injury to you or (economic) benefit to the defendant
Third, in order to sue for breach of fiduciary duty, you must have sustained economic losses as a result of the defendant’s conduct. However, even if you have not sustained any economic losses, you still may sue the defendant to recover any benefits the defendant wrongfully acquired from breaching a fiduciary duty. In addition to your economic damages, you may also recover exemplary/punitive damages if you can prove that the defendant’s breach of fiduciary duty was intentional.
Finally, and perhaps most importantly, a suit for breach of fiduciary duty has a four-year statute of limitations. So stated differently, the suit must be brought within four years of the date the breach of fiduciary duty caused an injury.
Written by*:
Travis C. Headley
WATTS GUERRA LLP
4 Dominion Drive, Bldg 3, Suite 100
San Antonio, Texas 78257
Office (210) 447-0500
Email: theadley@guerrallp.com
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