Partners and Shareholder Litigation - Breach of Fiduciary Duties

Litigation between business owners is an area of law that has seen a rise in recent years. Many disputes can be found in state and federal courts which concern the rights and responsibilities of shareholders in their relations with each other. A fiduciary duty is a duty of the utmost importance--one of the highest standards of care imposed in our legal system--whereby one person is called upon to care for the property of another.

Co-owners of businesses, partnerships, corporations, limited liability companies, and the like, all owe a fiduciary duty to each other. These duties include:

1. Investment of money, and guarding those investments.


2. Acting for the benefit of the party.


3. Disclosing material facts.


4. Taking due care so as to avoid misleading clients.

Some of the examples of where fiduciary responsibility comes into play are are Mortgage Brokers, Corporate Board Members, Business Partners or Financial planners serving and acting as fiduciary. Fiduciaries are the people who have an authority or power to exercise a legal right on behalf of another.

In a typical partnership litigation case you will often observe that the cause of action is for breach of contract, fiduciary duty breach (where the partner has betrayed the plaintiff), misrepresentation or fraud (where the partner concealed or misrepresented a fact that was material) and account issues (where the co-owner stole and the amount of damage caused to the company).

If a party has made any misrepresentation or has concealed some material facts for which he had the knowledge and misrepresents and does not reveal this to other party, the fraud will be the perfect cause of action but the cause of action cannot be for the breach of fiduciary duties. Therefore, if you suspect or believe that you are a victim and there is breach of fiduciary duties then you need to immediately contact a professional lawyer.

In some of the cases, parties to the contract also define the standard of duty.

The following elements are required to build a proper case:

• A legal relationship, or contract that imposes a fiduciary duty


• Breach of the duty imposed by law


• And the damage caused due to breach of the duty

The Burden of proof in a case like this lies on the plaintiff that the defendant had fiduciary duty towards the plaintiff and that the defendant has breached the duty. Additionally, the plaintiff also has to prove that the damage has been caused due to breach. Generally it's a question of fact and not of law whether any kind of duty contract is in existence or not. This means that it can be quite difficult to resolve such cases. The jury will have to hear the testimony and weigh credibility of both the parties to determine the case.

This article was written by Michael Spadaccini, the technical director for TastyPlacement, a Website SEO Austin TX firm; he recommends you check out The Butler Firm, an Austin commercial litigation attorney.

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