Simply defined, fiduciary duty is an obligation to act in the best interest of another party. For example, a company’s board member has a fiduciary duty to shareholders and a trustee has a fiduciary duty to the trust’s beneficiaries to pay out the appropriate amounts.
Legally speaking, fiduciary duty refers to the relationship between two parties where one is compelled to act exclusively in the interest of the other. The fiduciary party owes a legal duty to the other party – the principal – and extreme care is to be taken to guarantee no conflict of interest arises between the fiduciary and their principal. In most cases, no profit is supposed to be generated from the relationship without explicit, prior consent.
Fiduciary duties exist in a variety of business relationships. Where a party undertakes to act primarily for the benefit of another, that association turns into a fiduciary relationship. A fiduciary, like a trustee, is subject to a higher degree of duty that obligates the fiduciary to act in a diligent and faithful manner to further the other’s best interests.
If you suspect someone has breached their fiduciary duty to you, get legal help as soon as possible. Call the commercial litigation lawyers at Burg Simpson right now at 866-234-7768.
According to the law, a fiduciary duty exists in any relationship where one party must act for another. The fiduciary is entrusted with the care of property or funds on behalf of the principal, or beneficiary. Fiduciary relationships are either formally created by a contract or informally generated by implication in an existing relationship. Generally speaking, the fiduciary is not permitted to profit from the relationship, without explicit consent at the start of the relationship.
These relationships take several different forms, such as:
- Trustee/Beneficiary – In estates and trusts, the trustee legally owns the property in question and possesses the authority to handle the assets, but must do so in the best interest of the beneficiary.
- Guardian/Ward – As the legal guardian of a minor, the fiduciary in this relationship is tasked with caring for the health and welfare of the beneficiary.
- Principal/Agent – This generic relationship applies to several different specific circumstances, such as the connection between shareholders and corporate office holders, or investors and brokers, for example.
- Attorney/Client – The attorney “must act in complete fairness, loyalty and fidelity in each representation of and dealing with clients,” according to the U.S. Supreme Court.
If you are concerned that you suffered a breach of fiduciary duty, contact an experienced civil law attorney at Burg Simpson Arizona to discuss matters of your case by calling 602-777-7000 or fill out our FREE CASE EVALUATION formhere.
WHAT ARE ELEMENTS OF FIDUCIARY DUTY?
In Arizona, to file a claim for a breach of fiduciary duty, the aggrieved party must establish:
- The defendant owed the plaintiff a fiduciary duty.
- The defendant breached the fiduciary duty.
- The defendant’s breach was a cause of the plaintiff’s damages.
- The extent of the plaintiff’s damages.
While intent does not have to be established, it is critical that every other element is. Do not try to bring a breach of fiduciary duty case without skilled legal assistance. Call the civil suit lawyers in Burg Simpson’s Phoenix Arizona office at 602-777-7000 so we can go over your case with you as soon as possible.
POTENTIAL PENALTIES FOR BREACHING FIDUCIARY DUTY
Because of the high duty of care implicit in a fiduciary relationship, and the level of trust involved, breaches are taken very seriously. According to “Black’s Law Dictionary,” some of the consequences can include:
- Compensatory damages: If a breach results in litigation, compensatory damages are usually awarded to the victim. These are meant to compensate the victim for the damages the breach caused.
- Punitive damages: Breaching fiduciary duty can invoke punitive damages. Punitive damages are used primarily as a punishment and deterrent. Punitive damages are normally reserved for when fraud or malice played a role in the breach.
- Professional repercussions: Financial penalties aside, fiduciaries could suffer consequences that could hurt them professionally, including the potential loss of a professional license or accreditation, which could be worse than any financial damages.
If you are involved in litigation over a potential breach of fiduciary duty, do not take any chances. Call a corporate litigation attorney in Arizona now at 602-777-7000 so we can evaluate your particular case.
BURG SIMPSON’S ARIZONA TRIAL ATTORNEYS CAN HELP
A breach of fiduciary duty is a serious offense and can have expensive, lasting repercussions. If your business has suffered because a fiduciary has betrayed your trust and breached their duty, do not wait to speak with a business litigation lawyer about your disputes. Do not wait to reach out to Burg Simpson Arizona at 602-777-7000 or complete a FREE Case Evaluation form right now.