What is a breach of fiduciary duty in a business dispute and why is this issue raised in so many business disputes and lawsuits? What creates a fiduciary duty and what types of actions violate this important business duty?
What is a Fiduciary in a Business Setting?
A fiduciary duty is created when the nature of the relationship between the parties requires a high level of trust, transparency, expertise and confidence. The fiduciary is relied upon to act with competence, discretion and in the best interests of those to whom they serve as a fiduciary. There are many examples of the fiduciary duty in a business setting including:
Any Officer, Director or Majority Stakeholder owes a fiduciary duty to the company and it’s stakeholders.
Members of an LLC owe a fiduciary duty to one another.
Majority shareholders owe a fiduciary duty to minority shareholders and investors
Employees owe a fiduciary duty to their employer
A breach of fiduciary duty in a business dispute arises when a person in a position of trust or authority with a fiduciary duty to the company or another stakeholder takes actions or decisions which are against the best interests of the other party. It may surprise you to learn there are actions that an employee of the company can take which violate their fiduciary duty to their employer.
What Are the Responsibilities of a Fiduciary in a Company or Business?
A fiduciary is required to exercise their highest level of business judgment, due diligence and professional standards in every action they take or decision they make. They are required to act in good faith and put the best interests of the company and those to whom they owe a fiduciary duty above their own self interests. Fiduciaries are required to provide full disclosure in all instances and notify other parties if their interests or actions compete in any way with the best interests of those they serve. If they are going to take a contrary action or decision, the fiduciary is required to provide notice and obtain authorization from those who are owed a fiduciary duty. The fiduciary must never “self-deal” or act as a “dual agent.”
What Are Some Examples of a Breach of Fiduciary Duty in a Business Dispute
The Watkins Firm has more than 40 years of experience protecting our clients interests and/or defending our clients in cases involving a breach of fiduciary duty. This includes but is not limited to providing false financial information, business fraud, disputes between business partners, members, investors and/or shareholders, commingling of personal and business funds and assets, misappropriation of trade secrets or the use of trade secrets to compete against the company, conflicts of interest and/or self-dealing, gross negligence in the performance of their duties, and even cooperating with or helping to advance the interests of a competitive entity.
How Can The Watkins Firm Help to Protect Your Interests in a Breach of Fiduciary Duty Case?
A case which involves a breach of fiduciary duty in a business dispute involves substantial legal and financial risk. The primary civil remedy in these cases is substantial compensation in the form of damages. Allegations of a breach of fiduciary duty are common in any business-related dispute. If you are concerned about the actions of a fellow stakeholder or an employee, or if you have been accused of a breach of fiduciary duty we invite you to review our Podcast – Episode 17 – Violation or Breach of Fiduciary Duty, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
