What is a Breach of Fiduciary Duty?
Some relationships carry fiduciary duties and responsibilities according to the law. These relationships are held to a higher standard so that a breach of said duty is actionable in the court of law. Usually, a fiduciary relationship exists when one party must act in the best interest of another party and that party places confidence and trust in another.
What are Fiduciary Duties?
A fiduciary duty exists between parties of a transaction where one party is bound to act according to good faith, fair dealing, and for the benefit of the other party. In these relationships, one party invests their confidence in the loyalty and integrity of the other, known as the fiduciary. The party that the obligation or duty is owed to is the beneficiary. Some fiduciary duties are governed by statute and others are defined specifically in contract terms.
Some examples of those who have fiduciary duties include medical professionals, such as physicians and psychiatrists to their patients; legal and financial professionals; spouses; and appointed guardians. Often, corporate directors have fiduciary duties to shareholders, as well as employees to their employers. Fiduciaries have the following duties and responsibilities:
Duty of Loyalty. The fiduciary is under obligation to act on behalf of the beneficiary and never knowingly act against their interest. If a conflict of interest exists that prevents the fiduciary from complete loyalty to the beneficiary, this conflict must be disclosed to the beneficiary.
Duty of Care. The fiduciary is also under a duty of care to the beneficiary and must act in a reasonably safe manner in accordance with the standards set in the community.
Duty of Fair Dealing. The fiduciary must also act in a fair manner and not take advantage of the confidence of the beneficiary to gain profit or unfair disadvantage.
Duty of Confidentiality. The fiduciary also owes a duty to not disclose sensitive information given to them in confidence without informed consent or use the information to their advantage.
Claims for Breach of Fiduciary Duty
To file a claim for breach of fiduciary duty, one must first establish that a fiduciary duty existed. Whether a fiduciary duty existed is a matter of law determined by a judge in a court of law. Whether a fiduciary duty exists is a legal question. However, how or what type of duty was breached is a matter of fact often determined by a jury.
One who is injured by the breach of a fiduciary duty is entitled to recover the actual damages incurred, as well as punitive damages. Punitive damages are usually awarded if malice or fraud can be proven. After it is established that fiduciary duty exists, the claimant must then show that a breach of said duty occurred and that the claimant suffered harm caused by said breach.
If you experienced a breach of fiduciary duty, you need comprehensive representation from an experienced professional liability attorney. MacMain, Connell & Leinhauser has expertise in defending professionals against breach of fiduciary duty claims. Contact us online or call us at 484-318-7106 for an initial consultation. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia and Chester County.