What is a “fiduciary duty” under California business law and why is a breach of fiduciary duty dispute in San Diego or anywhere in California such a potentially legally and financially damaging issue?  Generally speaking, a fiduciary duty is based upon the power to make decisions which affect the financial interests of another.  The fiduciary is contractually placed in a position of power and they hold a legal responsibility known as a “fiduciary duty” to act in the best interests of the other party.

In a business setting, corporate officers, members in a Limited Liability Corporation (LLC) or partners in a partnership have a fiduciary duty to conduct themselves and the business of the company in a manner which is in the best interests of the organization, corporation or company.  A breach of fiduciary duty in San Diego exposes the responsible party to substantial civil liability (read: financial damages).  Those in a fiduciary role must refrain from competing against the interests of the company, or using corporate assets or resources to benefit themselves personally, or another entity.

The fiduciary duty in San Diego goes far beyond contractual obligations to deal in a fair matter.  The violation of a fiduciary duty is viewed by California business law as an obligation to act with “undivided loyalty” to the investors, shareholders, members, partners, officers they serve.

This can involve the improper use, embezzlement or failure to account for company funds, profiting at the company’s expense, sharing trade secrets, unfair business practices, acting on behalf of a competitor, acting in one’s own interests instead of and against the company’s interests, self-dealing or withholding material facts.

Pro-Tip: “Well, generally, a fiduciary duty is when one party has an advantage of power, knowledge, or resources over another party. And they’re doing business with each other. That’s basically where we get fiduciary duty. And then the laws have been built on that concept for hundreds of years. So you can imagine that today’s fiduciary duty lawsuits are much different than they were 50 years ago. We’ve come a long way. The laws have changed.

A fiduciary is supposed to act openly, honestly, and fairly. They’re supposed to put the beneficiary’s interest above their own, and they’re supposed to never self-deal, they’re supposed to act in good faith. Basically, not take money or take an action that is not in the interests of your fiduciary client that they don’t know you’re taking.

For example, you’re a shareholder and you find out your buddy down the street owns the same amount of shares as you, but he got twice the dividends as you did. Corporations and their board of directors and their officers have an obligation to treat like shareholders in a like, and similar manner.  Unfortunately, quite often that just doesn’t happen. Sometimes other things that happen with corporations, such as insider trading, it happens on the large market, big caps. They go to jail, things like that, but it also happens on the small market.

We see this every year, several times a year, a shareholder client comes in, (they call themselves partners), but it’s a corporation. And they say, ‘my company decided to go bankrupt. Then I found out that the principles opened up a new company over in England and they made $10 million, and we lost everything.’ Basically, these bad actors were hoping that you didn’t find out on those situations. Again, the sooner we find out the quicker we can get what we call temporary protective orders and asset seizures and levies with a judge to stop them from stealing or taking other actions in breach of a fiduciary duty.” – Dan Watkins, Founding Partner

A breach of fiduciary duty dispute in San Diego or California is a serious violation of law which can result in a lawsuit against the individual who broke their fiduciary responsibilities.  There are many powerful legal and financial remedies for the violation of a fiduciary duty.  These include not only monetary damages but “equitable remedies” such as repayment or recovery of profits or gains achieved while self-dealing.  If the violation of fiduciary duty is part of a derivative action, available remedies include the recovery of attorney’s fees.

Are you concerned about a potential breach of fiduciary duty dispute in California?  We invite you to review our podcast Episode 17 – Violation of Breach of Fiduciary Duty as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.