Breach of Fiduciary Duty
Violations of Fiduciary Duty in San Diego
What constitutes a breach of fiduciary duty and what impact can violations of fiduciary duty and responsibility have for a San Diego business or professional? Generally speaking, a fiduciary duty is the obligation to act in the best interest of another party or a corporation. The individual members of the Board of Directors of a corporation, as well as majority shareholders, and executives owe fiduciary duties to the shareholders of the corporation. Stock brokers, real estate professionals, investment advisors and even attorneys all have a fiduciary duty to act in their clients’ best interests.
What Creates a Fiduciary Duty
A fiduciary duty exists when the relationship between various parties involves a special form of trust, confidence, expertise or reliance upon the “fiduciary” to exercise competence, discretion or just actions. California law specifically prohibits a fiduciary from taking any actions or making decisions which are in any way adverse to or contrary of the best interest of those who are expected to benefit from the service of the fiduciary. Here in California (and across the United States) fiduciaries are held to the highest standards of conduct, honesty and full disclosure. They are not to act in their own interests or achieve personal benefit or gain at the expense of the shareholders or clients they serve.
Breach of Fiduciary Duty in Partnerships and Corporations
A partnership and an LLC with multiple members are excellent examples of a “fiduciary” relationship. Most partnership agreements clearly establish the roles and responsibilities of each partner and perhaps even their responsibilities to the partnership itself. What would constitute a breach of fiduciary duty in a partnership? If one partner became aware of a large lot of inventory (associated with the business of the partnership) which was available at a very low price and attempted to purchase it on their own, outside of the partnership and sell it for a gain it would generally represent an actionable breach of fiduciary duty case. Partnerships are generally held to have a duty of loyalty and responsibility to avoid diverting partnership opportunities for private benefit.
Officers and Directors owe fiduciary duties to the corporation they serve. An example of a breach of fiduciary duty in this setting could involve an officer or director of the corporation who intends to set up a new business and ultimately compete with the corporation they presently serve. The corporate officer or director must terminate the relationship before beginning operations of a competing business. If the corporate officer attempted to “actively solicit” customers or to recruit key employees of the corporation prior to terminating the relationship it would be a breach of fiduciary duty resulting in an actionable lawsuit.
Contact Experienced Business Litigation and Breach of Fiduciary Duty Attorneys
The unique circumstances and facts and the contractual relationship associated the dispute will determine if there has been a breach of fiduciary duty in your case. Allen Barron’s experienced commercial and business litigation attorneys can help to determine if you have experienced a Breach of Fiduciary Duty which is actionable. We will help you to organize and gather the facts necessary and pursue those who have caused you harm in a business setting. There doesn’t have to be a breach of contract for you to have a remedy under federal and California law.
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For more information or to discuss your tax, legal and accounting needs contact Allen Barron or call 866-631-3470 for a free and confidential initial consultation. Learn about the importance of integrated business strategy and coordination across legal, tax and accounting systems.
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