Virginia Breach of Fiduciary Duty Attorneys
Determining the damages available to you for a breach of fiduciary duty often requires help from Virginia Fiduciary Duties Attorneys at MartinWren, P.C. When another person breached their duty to us, we may wonder what our state laws are pertaining to seeking compensation for damages. This area of law can be complex and intricate, so it is highly recommended that an experienced legal professional is sought during this time.
Fiduciary Duty Defined
A fiduciary duty is a legal duty to act solely in another person’s or organization’s best interests. The individual charged with such duty is known as a fiduciary. This tradition goes back to Roman law, which recognized the duties of a “fiduciary” to deliver an inheritance to the lawful heirs. Today, a fiduciary duty is the strictest duty of care recognized in our legal system.
When a fiduciary duty is breached, this means a person failed to act in what was the best interest of another. For example, board member for a corporation has a duty to company shareholders, just like a trustee has a duty to beneficiaries of a trust. A fiduciary responsibility exists when there is a relationship with a client that entails a reliance, confidence, and trust that the fiduciary will act based on expertise. A fiduciary must have accepted this confidence and trust to use discretion when acting on the client’s behalf. For the fiduciary duty to be legally-binding, an agreement has to be established by statute, contract, law, or factual circumstances of relationship.
Circumstances and Obligation
Generally speaking, the law governing fiduciary obligation addresses two questions. First, in what circumstances does a fiduciary obligation apply? Second, what does the fiduciary obligation require a person to do?
Fiduciary Duties Attorneys in Virginia can explain to you how a fiduciary obligation can arise when a fiduciary relationship is established by terms of a contract, such as a trust agreement, election to a corporate board, or the establishment of a legal guardianship. A fiduciary may be an agent, a broker, an attorney, or a legal guardian who has a responsibility to supervise matters on behalf of someone else.
Where a fiduciary relationship is found to exist, and, therefore, a fiduciary duty is owed, the next point of inquiry is what exactly does that duty require? A fiduciary duty requires more than simply fairness and honesty; it obliges the fiduciary to act in a manner that furthers the beneficiary’s best interests. A fiduciary may not profit from the relationship with their beneficiary unless they have the beneficiary’s express informed consent.
A fiduciary also has a duty to avoid any conflicts of interest between themselves and their beneficiaries or between their beneficiaries and the fiduciary’s other clients. If a fiduciary relationship is created through contract or another written agreement, it may specify the duties of the fiduciary, the compensation for the service, if any, and the recourse that each party has in the case of a violation of the agreement.
Examples of Fiduciary Relationship
VA Fiduciary Duties Attorneys at MartinWren, P.C. understands that many people’s minds may spin with confusion about what a breach in fiduciary means. So there, we have provided specific examples of the types of fiduciary situations you may be a part of or witness in real life:
- An executor has the fiduciary duty to the heirs
- A guardian has the fiduciary duty to a ward
- An accountant has the fiduciary duty to his or her client
- A trustee has the fiduciary duty to beneficiaries
- An employer has the fiduciary duty to his or her employees
Fiduciary Duty in Business
Business relationships often bring several layers of fiduciary duties and responsibilities. Regardless of the structure of a particular company, it is likely that some fiduciary duty exists between the members or partners. The company’s organizational documents typically stipulate these duties.
In a partnership, the partners each have a fiduciary duty to each other, including a duty of loyalty, duty to fully disclose any information regarding the partnership and its affairs, and a duty to operate in good faith and fair dealing. It is a violation of a partner’s fiduciary duty to engage in outside transactions that might conflict with the interests of the partnership.
Similarly, in a limited liability company (LLC), the manager owes to the members of the company the highest duty of care, loyalty, and disclosure, and the members owe such duties to the LLC. Each party is expected to always act in the best interests of the company and avoid any potential conflicts of interest with the company.
Remedies for Breach of Fiduciary Duty
If a fiduciary duty is breached, Virginia Fiduciary Duties Attorneys can go over with you the various remedies available. Depending on the nature of the breach and the harm that results, monetary damages may be awarded, officer positions may be relinquished, or a specified performance may be ordered by a court. The remedies for breach of fiduciary duty claims can entail the following:
- Out of pocket loss: difference between value received and value paid
- Lost profits: as the probable result of the breach
- Mental anguish: separate from economic losses, in which a person sustained mental pain due to the breach of duty
- Exemplary damage: typically imposed when damages are awarded, and inflicted with the intention of a punishment rather than to compensate the injured person(s)
- Rescission of contract: terminating requirements of contract due to breach of fiduciary duty (but can require mutual restoration)
What the Law Forbids
If a person agrees to act in a fiduciary relationship with another party, the law forbids the fiduciary from behaving in a manner that goes against the interest of the client or is for his/her own personal benefit. The fiduciary must then act with only the best of efforts, consideration, and diligence for the client. Anyone who has agreed to a fiduciary role, is held to a very high standard of transparency and honesty for the client.
We can analyze the nature of the relationship, the duty owed, and whether conduct violated that duty. Call Robert E. Byrne, Jr. or John B. Simpson of MartinWren, P.C. at 434-817-3100, and we can discuss the best way to proceed to protect your interests. If you have suffered harm due to a fiduciary’s breach, or you have been accused of breaching a fiduciary duty, please contact the VA Fiduciary Duties Attorneys at MartinWren, P.C. without hesitation.