How Do You Prove Breach of Fiduciary Duty?

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How Do You Prove Breach of Fiduciary DutyA breach of fiduciary duty is a serious, complex, and often challenging matter. Familiarizing yourself with the law, examples, and burden of proof in these actions can give you a better understanding of what to expect. If you believe an individual has breached their fiduciary duty towards you or an entity pertaining to you, you must seek legal advice. An experienced Maryland employment litigation attorney can assist you in understanding your rights and options for possible legal action. Contact us today to speak with a lawyer!

What Is a Fiduciary Duty?

A fiduciary duty is a legal responsibility for a person to act solely in the best interest of another party. A fiduciary is someone in a position of trust and confidence. If a fiduciary fails to act in the beneficiary’s best interest, they have breached their duty. A fiduciary is held to a high standard of integrity, honesty, and transparency and, most importantly, cannot benefit at the beneficiary’s expense. Notably, only an individual owed a fiduciary duty can sue for breach of fiduciary duty. In other words, you cannot sue on behalf of someone else. 

By garnering a basic understanding of fiduciary duty and what is expected of a fiduciary, you will be better suited to spot any breaches.

Examples of Fiduciary Relationships

There are many types of fiduciary relationships, some of which you may regularly encounter, even daily. 

There are several common examples of fiduciary relationships, including:

  • An employer and employee,
  • An attorney and client, 
  • An accountant and client,
  • A principal and agent,
  • An executor of an estate,
  • A guardian to ward,
  • A corporate officer to shareholders, and
  • A trustee to a beneficiary.

You may still be owed a duty even if you do not see the precise fiduciary designation above. Other fiduciary relationships exist, and a breach may be actionable. Contact our lawyers to discuss the fiduciary relationship you believe exists and how it was breached. 

Examples of a Fiduciary Duty Breach

There are many examples of breaches of fiduciary duty, and they can vary widely depending on the circumstances and role of the fiduciary

Some common examples include:

  • Sharing trade secrets,
  • Acting on behalf of a competitor,
  • Failing to disclose relevant information and facts,
  • Self-dealing (e.g., taking a business opportunity from the company for your benefit),
  • Failing to avoid and reveal a conflict of interest,
  • Embezzling against an estate or trust,
  • Denying shareholders access to documents, and
  • Preventing shareholders from exercising their voting rights.

This list is not exhaustive, and if you believe a breach occurred, it is best to contact an experienced attorney to discuss your options.

Proving a Breach of Fiduciary Duty Claim

To be successful, the plaintiff in a breach of the fiduciary case must prove the essential elements of the claim. They must be prepared to show:

  • A fiduciary relationship existed (i.e., the fiduciary owed a duty to the beneficiary);
  • The fiduciary breached their expected duties (i.e., acted in a manner that contradicted their duty);
  • The plaintiff suffered damages; and
  • The damages incurred were a direct result of the breach of fiduciary duty.

The plaintiff can recover damages the defendant caused by providing substantial evidence to support these elements. 

Maryland Fiduciary Duty Law and Recent Changes

Recently, the law on fiduciary duties expanded in Maryland. Specifically, the courts finally paved the way for independent breach of fiduciary duty causes of action

Previously, the Maryland courts long held there was no separate breach of fiduciary duty cause of action. In other words, you could not file a lawsuit based on a breach of fiduciary duty alone; there had to be other causes of action.

The precedent set in a case from the 1970s (Kann v. Kann, 344 Md. 689 (1977)) left many potential plaintiffs unable to pursue independent breach of fiduciary claims. However, in 2020, the Maryland Court of Appeals, in a decision often referred to as the Plank case, finally recognized an independent cause of action for breach of fiduciary duty plaintiffs. However, the court in Plank cautioned that just because a stand-alone cause of action is available does not mean that every breach of fiduciary duty will rise to an independent tort claim. The remedies available for the breach will depend on the applicable law and the type of fiduciary relationship at issue. 

Even in the post-Plank world, parties should still follow the guidelines set in the early case of Kann. Specifically, before filing a claim, plaintiffs are required to:

  • Identify the particular fiduciary relationship involved,
  • Identify how the fiduciary breached the duty, 
  • Consider the remedies available, and
  • Determine the appropriate remedies in the situation.

If a plaintiff can demonstrate these four factors, the court should permit the claim to proceed. 

Importantly, illustrating these factors does not mean the plaintiff wins their claim, only that their claim can proceed in court. The potential damages available will depend upon the circumstances of the case. The courts have made it clear that a breach of fiduciary duty claim must be well-pled, especially if it is the sole claim. Hiring an attorney familiar with the courts and experienced in the intricacies of Maryland fiduciary duty law will ensure your best chance of success.

How Can an Attorney Help?

Breach of fiduciary duty claims are complex, and the proof necessary to win a lawsuit is often not readily apparent or available. These claims can take a lot of time and investigative work to prove. If your claim does not settle, the litigation that ensues can be lengthy and convoluted. Having a skilled litigation lawyer will make the process as smooth as possible.

Annapolis, Maryland Attorneys

At Smithey Law Group, we focus exclusively on labor and employment matters. When you come to us as a victim of a fiduciary’s disloyalty, we know precisely how to handle it. If you trusted someone to have your best interest at the forefront and it turns out they breached that trust, it can be devastating emotionally and financially. Contact our award-winning team to schedule a consultation at a time convenient to you.

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Joyce Smithey, a seasoned employment and labor law attorney, has over 22 years of experience representing both employers and employees in Maryland and D.C. Her practice, rooted in a deep understanding of employment law, spans administrative hearings to federal litigation. Joyce's approach is comprehensive, focusing on protecting client interests while ensuring legal compliance. A Harvard graduate, her career began in Fortune 500 companies, transitioning to law after a degree from Boston University School of Law. Joyce's expertise is recognized by numerous awards, including Maryland’s Top 100 Women. At Smithey Law Group LLC, which she founded in 2018, Joyce continues to champion employment rights, drawing on her rich background in law and business.

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