Are you concerned about a breach of fiduciary duty in a San Diego or California business or corporate setting? What are some examples of those who have a fiduciary duty, the types of duty they owe and when a breach might occur?
Key Takeaways about a Breach of Fiduciary Duty in a San Diego or California Business
- The fiduciary duty doesn’t have to be expressed or contractual. In California, a fiduciary duty is defined by the nature of the relationship between the parties.
- Fiduciaries in California are required to act in the best interests of the “beneficiary.”
- There are many legal duties owed by a fiduciary to their beneficiary, and substantial legal consequences and damages for a breach of fiduciary duty in a San Diego or California business.
What is a Fiduciary Duty in a Business or Corporate Setting?
A fiduciary duty generally exists in situations where one party has power over another and in situations of leadership or access to financial responsibilities. The fiduciary holds a position of trust and has a responsibility to always act in the best interests of the “beneficiaries” (those they serve). It may surprise you to learn that employees have a fiduciary duty to their employers, just as the officers of a company, directors and executives do to the company itself. Business partners, whether they be members in an LLC, fellow shareholders or substantial investors have a duty to act in the best interests of their partners and the business itself.
What are some of the Duties Associated with the Breach of Fiduciary Duty in a San Diego Business?
There are many types of duties associated with the breach of fiduciary duty in a San Diego or California business environment. Candor is important between any fiduciary and those they serve so officers, shareholders, directors and executives have a duty of disclosure to reveal any potential conflict of interest between their actions, their own interests and those they serve. This is similar to but different from the duty of good faith and fair dealing which requires a fiduciary to be honest, fair and act in good faith as they accomplish their responsibilities.
The duty of care is another of the important responsibilities of a fiduciary. Fiduciaries must exercise prudence, reasonable judgement and take or avoid actions which might generate negative consequences whenever possible. It is important to note any decisions or actions taken with “reasonable care” which simply don’t have a good outcome do not create liability or a breach of fiduciary duty. The duties of Loyalty and Obedience ensure a fiduciary takes actions which are within the powers and purposes specified in corporate documents and contracts and puts the best interests of the company ahead of their own professional or personal interests.
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
Breach of Fiduciary Duty
Therefore, any actions which cause carelessly or recklessly or fraudulently cause harm to the company or the “beneficiaries” of a fiduciary, damage existing goodwill, or mismanage funds and responsibilities can result in a breach of fiduciary duty in a San Diego or California Business. If you are concerned about the actions of partner, business executive or officer, director or employee the experienced business and corporate attorneys at the Watkins Firm can help you to evaluate what has happened and protect your interests.
We invite you to review our podcast Episode 10 – The Importance of a Strong Corporate Attorney as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
Meet Daniel Watkins:
Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through. Dan enjoys digging into the facts and finding creative solutions to problems. He contributes his insights candidly and constructively.
Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.
Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.
He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.
THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR
Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.
In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.
