Breach of Fiduciary Duty in Court

If you believe you have suffered damages as a result of the wrongful actions of a fiduciary, you can sue in civil court. In Texas, your options for recovery if a fiduciary is found guilty of a breach of fiduciary duty could include:

  • Direct and indirect financial damages and recovery of lost profits
  • Forfeiture of fees paid to the fiduciary
  • Transfer of property or “disgorgement” of any profits illegally obtained
  • Cancellation of any contracts the fiduciary wrongly entered into
  • An injunction to stop an action or decision
  • Removal of a trustee or receiver
  • Loss of professional license
  • Reimbursement for legal fees and costs
  • Punitive (or “exemplary”) damages

Proving Breach of Fiduciary Duty

When bringing a legal claim for breach of fiduciary duty to the court, the attorney for the injured party will need to prove at least three things. 

  1. That a fiduciary relationship existed: In some cases it’s easy to prove that someone had a fiduciary duty [link to blog post – who is a fiduciary] as a result of the role they have in a business relationship – an officer of a business, an employee, an agent or broker, a trust fund trustee, a fiscal agent or a guardian. In other situations there is a real question as to whether a duty exists, particularly when it involves those in trusted relationships, such as a friend or a family member.  
  2. That there was a breach of fiduciary duty (what duty was breached): In some cases, it’s easy to determine that there was a breach of fiduciary duty because the acts were intentional and illegal or clearly out of bounds. For example, if a fiduciary was found guilty of embezzlement, theft, fraud, self-dealing or undue influence. 

Sometimes the breach was unintentional, such as when a fiduciary shares information that puts the beneficiary in a one-down position in a negotiation, or when a fiduciary fails to do sufficient research and as a result makes a poor decision. A breach of fiduciary duty does not have to be intentional to be actionable in court. 

On the other hand, it may be that there was no breach of fiduciary duty, even though harm occurred. The harm may simply have been the result of market conditions or bad luck. 

  1. That the breach of fiduciary duty caused damages or harm to the beneficiary: An attorney in a civil action will need to prove exactly what kind of harm was suffered. It can be financial harm – a specific loss of funds. It can also be damage to one’s reputation, damage to one’s business interests, loss of property, unwanted contractual obligations, or other damages. 

If you believe you have been harmed by the action, or inaction, of a person who had a duty to protect your interests, talk with a McKinney attorney who handles fiduciary litigation. Contact The Fell Law Firm or call 972-450-1418 to understand your rights and the compensation to which you may be entitled in a court of law. 

Leave a Reply

Your email address will not be published. Required fields are marked *