How is Breach of Fiduciary Duty Determined?
Whether it is an attorney, accountant, or business partner, you put great trust in the professionals you work with. These professionals often owe their clients (or partners) a fiduciary duty. A professional may be legally liable for damages caused by a breach of fiduciary duty. In this article, you will find an overview of the key things to know about California’s standard of liability for breach of fiduciary duty claims.
The Judicial Council of California Civil Jury Instructions (CACI 4100) defines a fiduciary duty as “a duty to act with the utmost good faith in the best interests” of another. The person (or entity) owed a fiduciary duty could be a client or business partner. It is the single highest standard of care under United States law. Several different parties may be deemed “fiduciaries” in California, including lawyers, accountants, financial advisers, real estate agents, business partners, and corporate officers.
Determining if a Breach Occurred
A breach of fiduciary duty occurs when a fiduciary fails to fulfill their legal obligations to act in good faith, use adequate professional skill, or otherwise act within the best interests of a beneficiary, client, or partner. A claimant must typically prove the following elements:
- Existence of a Fiduciary Relationship: First and foremost, you must prove that a fiduciary duty actually exists. A claimant must show that the defendant had a duty to act in their best interests and that they actually trusted and relied on the defendant to fulfill that duty.
- Breach of Duty of Care: This is the heart of any breach claim. A claimant must demonstrate that the defendant failed to fulfill their legal obligations. Most often, this means proving bad faith conduct, conflict of interest, or substandard professional conduct given reasonable industry expectations.
- Damages: The claimants must prove that they suffered financial harm as a result of the defendant’s breach. Your recovery will primarily be based on your actual losses caused by the breach. Though, punitive damages may be available in some circumstances.
- Causation: To recover compensation through a breach of fiduciary duty claim in California, a claimant must generally prove that their damages were caused by the defendant’s bad faith conduct, conflict of interest, or another breach of fiduciary obligations.
Comprehensive Investigation is Required
Breach of fiduciary duty cases are notoriously complex. A comprehensive investigation is needed to determine exactly what happened and how the fiduciary failed to abide by their professional responsibilities. Liability in a claim is always imposed on a case-by-case basis, with close attention to the specific facts.
If you have questions about how breach of fiduciary duty is determined, we can help. Contact us now for a confidential consultation. We serve clients in Los Angeles and throughout Southern California from our Pasadena and Monrovia offices.