Breach of fiduciary duty in California

April 12, 2013 (Press-News.org) When people decide to enter into a professional relationship, they know that the agreement will create certain rights and obligations with one another. If this relationship is a business hiring an employee, the business expects that the employee will not engage in any behavior that somehow damages or injures the company. Instead, it is the employee's job to ensure that he or she will only make decisions that benefit the business.

If the individual violates this trust, he or she may be liable for a breach of the fiduciary duties that they owe to the company or others involved with the business. Individuals that may owe fiduciary duties to the company include partners, co-owners, officers, directors, employees and shareholders, as well as anyone else responsible for making decisions concerning the operation of the business.

For a person or business to have a claim for a breach of fiduciary duty against an individual, there must be a duty or obligation that exists between the parties. This duty must be breached, which then causes the individual or company to suffer damages. The injured party may then pursue compensation from the person that caused the breach.

These cases can be quite complex, and will often require a careful review of the facts to determine if the parties actually had a fiduciary relationship with one another. This is usually demonstrated by a contract or documents that were drafted at the time a business was formed.

If there was a fiduciary relationship, the activity that is alleged to have violated this duty will need to be examined. Those individuals who are heavily involved in the day-to-day operation of a business or corporation will often need to make many decisions each day.

Most of these decisions will be designed to further the business's interests, and therefore will not be found to be harmful to the company, even if they do not work out long-term. Only those actions that show some sort of violation of trust, like the disclosing of confidential information to a competitor or fraud, could potentially rise to the level of a breach. The damages in these cases can include lost profits for the business, as well as recovery of any profits that the individual may have made as a result of the breach.

Those who have questions about breach of fiduciary claims or other business litigation matters should discuss their concerns with an experienced business law attorney. Because these cases can be so complex, it is important to work with someone who understands the issues that need to be resolved.

Article provided by Brown & Charbonneau, LLP
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