Tort Action for Violation of a Fiduciary Duty
A person who has a fiduciary relationship with another person commits a tort when he or she breaches his or her fiduciary duty with regard to the other person. The other person is entitled to damages from the fiduciary if he or she sustains damages as a result of the fiduciary's breach of his or her duty.
Elements of Relationship
A fiduciary relationship occurs between two persons when one person has a duty to act for the other person or has a duty to give advice for the benefit of the other person. Examples of fiduciaries include agents, personal representatives, trustees, guardians, or financial and legal advisors, such as attorneys, stockbrokers, or accountants.
A fiduciary who breaches his or her duty to another person is liable only to the other person. He or she is not liable to third parties unless he or she owed a duty to the third parties.
A person who assists a fiduciary in breaching his or her duty to another person may be liable for the fiduciary's breach of duty. However, that person's liability is based upon the harm that was caused to the other person and not upon his or her breach of duty to the other person.
A tort action for violation of a fiduciary duty may be brought in a court of law or in a court of equity. If the action is brought in a court of law, the person who was harmed by the violation may be entitled to compensatory or punitive damages. If the action is brought in a court of equity, the person may be entitled to an injunction or an accounting from the fiduciary. The person may further be entitled to restitution from the fiduciary, which restitution may consist of the profits that the fiduciary made as a result of his or her breach of duty.
Examples of violations of a fiduciary duty include a bank's disclosure of its customer's financial information, a trustee's mismanagement of an estate, or an attorney's disclosure of a client's privileged information.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.