Types of Remedies for Breach of Fiduciary Duty
• Actual Damages
• Economic Damages
• Out-of-Pocket Losses
• Lost Profits
• Mental-Anguish Damages
• Exemplary Damages
• Equitable relief
• Contractual-Consideration forfeiture
• Profit disgorgement
Although it is encouraged that litigation be a “last resort” as a means to resolve a dispute, in some cases, litigation may be your only option. When deciding to file a civil lawsuit for breach of fiduciary duties, you must first determine what your ideal resolution would be and then compare that resolution with the remedies available.
Damages to Consider
One type of damage that you may consider is actual damages. Actual damages, which are sometimes called “compensatory damages,” are awarded in order to repair a wrong and/or compensate one for an injury.[1] Within actual damages are two sub-categories of damages, economic damages, and non-economic damages. Economic damages consist of compensation for injuries such as out of pocket expenses and/or lost profits. An easy way to think of economic damages is to think of the actual pecuniary or monetary loss to a party. Noneconomic damages are things such as mental-anguish. Since mental-anguish requires a showing that such injury was a foreseeable result of the breach of fiduciary duty, recovering under this theory may be more difficult.[2]
Further, if you can prove that a breach of fiduciary duty was intentional, you may also be able to recover exemplary damages.[3] Courts have found that intent can be shown when a defendant intends to gain an additional, unwarranted benefit.[4] However, you should be aware that exemplary damages are capped by statute. For more on exemplary damages, please visit: http://www.houston-opinions.com/law-exemplary-damages.html.
Seeking Equitable Relief
Additionally, you may be able to seek equitable relief, including but not limited to contractual-consideration forfeiture and/or profit disgorgement. Where actions constituting a breach in fiduciary duties amounts to a fraudulent inducement, a court may order all or part of the contractual consideration paid by the principal to the fiduciary to be forfeited. Profit disgorgement is a typical equitable remedy that is normally found within corporations, partnerships, and limited liability companies. In this scenario, a fiduciary will benefit either by competing directly with the principal/beneficiary or usurping an opportunity that properly belongs to the principal/beneficiary. As such, a court may order all profits realized by the breaching fiduciary to be awarded to the principal/beneficiary.
Written by*:
Jorge Mares
WATTS GUERRA, LLP
4 Dominion Drive, Bldg 3, Suite 100
San Antonio, Texas 78257
Office (210) 447-0500
Email: jmares@guerrallp.com
Follow us on Instagram and Facebook!
