What Are the Possible Remedies for a Breach of Fiduciary Duty?

 Posted on August 09, 2022 in Business Law

There are many situations in which business disputes can arise, and in some cases, these issues need to be resolved through litigation. Disputes involving business partners or shareholders can be especially challenging, especially when they are related to disagreements about the direction or management of a company. Business disputes can also involve claims that a party has acted inappropriately or illegally and caused harm to other partners,  shareholders, or to the business itself. These cases often involve claims that a person has committed a breach of fiduciary duty. When these issues are handled through the legal system, the parties involved in a dispute need to understand the potential remedies that may be ordered.

Legal and Equitable Remedies for Breaches of Fiduciary Duty

A person is considered to be a fiduciary when they are entrusted with the care of property or money on behalf of another person. A fiduciary duty is the legal obligation to act in the best financial interests of the person being represented. This duty requires fiduciaries to exercise a higher standard of care than that which is required of ordinary people. Business owners or partners have a fiduciary duty toward other partners, shareholders, or investors.

A breach of fiduciary duty occurs when a fiduciary violates their obligations and causes harm to the person they are representing. In the context of a business, breaches may include self-dealing, insider trading, mismanagement of assets, misappropriation of a company’s funds for personal gain, failure to disclose conflicts of interest, unfair treatment of minority stockholders, excessive compensation to the fiduciary or other parties, engaging in competition with the business, or other improper actions that lead to financial losses.

When these matters are handled through litigation, and a plaintiff successfully demonstrates that a breach of fiduciary duty has occurred, multiple forms of relief are available. Legal remedies generally involve compensation paid by the defendant, including compensatory damages for losses experienced by the plaintiff, the requirement to return any compensation paid to the defendant or any profits they earned, and exemplary or punitive damages for breaches that were willful and intentional. The defendant may also be required to pay the plaintiff’s attorney’s fees.

Equitable remedies may also be ordered that are meant to address the ways the plaintiff was affected by the breach. A full accounting may be completed by an independent third party to gain an understanding of what the breach entailed and how it impacted the business. Assets held or managed by the defendant may be placed in receivership and managed by a third party until the case has been resolved. Ideally, the plaintiff should be restored to the position they were in prior to the breach, and they should be able to pursue business opportunities that would have been available to them had the breach not occurred.

Contact Our Oakland Park Business Litigation Lawyer for Breach of Fiduciary Duty

If you need to resolve business disputes related to the breach of fiduciary duty, The Elliot Legal Group, P.A. can advise you of your options, provide you with strong representation, and advocate for your interests throughout the legal process. To learn how we can help with your case, contact our Pompano Beach business litigation attorney at 754-332-2101.

Sources:

https://www.americanbar.org/groups/litigation/committees/business-torts-unfair-competition/practice/2018/tips-for-determining-damages-for-breach-of-fiduciary-duty/

https://www.americanbar.org/content/dam/aba-cms-dotorg/products/inv/book/214873/5310344_chap1_abs.pdf