What Happens if a Fiduciary Duty is Breached?

An Orange County fiduciary duty attorney can provide help in situations when a fiduciary duty exists and may have been breached. There are many situations where a fiduciary duty exists. For example, attorneys have a fiduciary duty to clients; partners have a fiduciary duty to each other; corporations have a fiduciary duty to shareholders; and corporate directors and officers have a fiduciary duty to the company. 

A fiduciary duty is the highest duty that can be owed under the law. If a suspected breach of this duty occurs, it is important that an experienced attorney be consulted. Brown & Charbonneau, LLP can provide representation to those who are accused of breaching a fiduciary duty.

We can also provide representation to those who believe that they have been damaged as a direct result of the breach. To find out more about an Orange County fiduciary duty attorney can help when a breach is suspected, give us a call today.

What Happens if a Fiduciary Duty is Breached?

A fiduciary duty encompasses different obligations, including a duty of loyalty and a duty of good faith and fair dealing.  Those who have a fiduciary duty cannot enrich themselves at the expense of those whom they have an obligation to. For example, a corporate officer cannot divert opportunities from the company for his own gain.

If there is a reason to believe that a fiduciary duty has been reached, the individual or group of individuals who believe they have been harmed by the breach can initiate litigation. A lawsuit can be filed for breach of fiduciary duty to hold the fiduciary accountable for his or her actions that led to loss.  In the case of a corporate officer diverting an opportunity from the company, for example, a lawsuit for breach of fiduciary duty could potentially lead to the corporate officer being made to pay back the company or shareholders for the lost money due to the diverted opportunity.

A lawsuit for a breach of fiduciary duty could result in a court case and, if the breach and damages are proved, the fiduciary who failed to fulfill his or her obligations could be made to compensate those who were harmed by the breach. The burden will be on those victimized by the breach to pursue the claim for breach of duty.

A person who has been sued for a breach of fiduciary duty can defend himself or herself from accusations. There are a number of possible defenses, but an especially common defense involves claiming the business judgement rule protects the fiduciary from liability. Under the business judgement rule, a person who made a decision while acting in his or her official capacity in the business can’t necessarily be held accountable for every single decision that tuns out to have adverse outcomes.

The person who has been accused of violating a business judgement rule could avoid liability for losses or damages by showing that he or she acted reasonably within the scope of his or her obligation to the business.  Questions may be raised regarding whether the fiduciary did reasonable due diligence in the information he or she relied upon to make the decision and questions may be raised regarding whether the decision was, in fact, made in good faith or not. However, the business judgement rule does provide broad and powerful protection if the person accused of a breach of fiduciary duty can assert this legal doctrine and prove that it offers protection.

When a claim for breach of fiduciary duty is made, it does not always end up getting resolved in court through a civil suit. In some cases, breaches may be addressed in arbitration, mediation, or through out-of-court negotiations. Determining the best course of action for dealing with the alleged breach of fiduciary duty will important both for those seeking remedies for a breach as well as for individuals who have been accused of a breach.

Contact an Orange County Fiduciary Duty Attorney

Brown & Charbonneau, LLP can provide invaluable assistance when accusations are made that a fiduciary duty has been breached. To find out how our firm can provide help whether you are claiming a breach has occurred or whether you are defending yourself from allegations of a breach, give us a call at 714-505-3000 or contact us online today.