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Breach of Fiduciary Duty

The law sets a higher standard of care for fiduciaries in their business dealings with you. A fiduciary is someone with whom you have a special relationship of trust. Fiduciary relationships may include:

  • Trustees and beneficiaries
  • Directors and Officers to a corporation
  • Attorneys and clients
  • Principals and agents
  • Partners and joint venturers
  • Discretionary brokers
  • Pension plan or health plan advisors or administrators

A Fiduciary is held to the highest standard of good faith and candor. A fiduciary must refrain from self-dealing and must act with the strictest integrity. A business agreement or contract in and of itself does not create a fiduciary relationship. Before fiduciary obligations can be imposed in a business transaction. The fiduciary relationship must have existed before and apart from the business relationship.

Shareholders in a corporation do not generally owe one another fiduciary obligations. However corporate officers and directors owe a fiduciary obligation to the corporation. These cases usually involve a shareholder or minority partner who loses money as a result of the bad judgments or the self-dealing of an officer, director or general partner. General partners can be liable as fiduciaries but, generally speaking, limited partners are not.

Officers, directors, partners and members of business organizations have a fiduciary duty under the law to act in the best interest of the owners of the business and, in many cases, the employees of the business. A fiduciary duty is the highest duty recognized in law. It requires utmost care and trust regarding the management of money and business affairs between parties.

A fiduciary who breaches this high standard of care may be the result of simple negligence or something more sinister, such as the misappropriation of funds or operating in conflict with the business purpose of the company.

Much of this litigation also involves Trustees who fail to follow the terms and restrictions of the Trust agreement or who use trust assets for their own personal enrichment or gain.

Corporate fiduciary litigation involves many different aspects but typically they involve 401k plans, pension plans and employers’ self-funded health plans. Officers and directors may face personal liability concerning these plans for misrepresentation, failing to disclose information, failure to properly monitor investment managers or investments, and failing to take reasonable steps to avoid losses by the plans.

Partners and joint venturers also owe a fiduciary duty. When you saddle up to be someone’s partner you undertake a heavy responsibility. If you are a general partner you owe certain fiduciary duties to your partners. Unfortunately partnerships, like marriage, often end in divorce. Oftentimes one partner wants to move on or several partners want to remove a partner. There are certain situations where a partnership has simply reached a logical conclusion or a partner has died.

When partnerships have ended, or are about to end, there is usually a disentanglement process. In these situations, you need someone who understands business and litigation. What are you fighting over? What is the financial condition of the company? What are the assets, liabilities, intangibles? What are your rights? Where can you gain the greatest leverage?

As a business owner and lawyer I understand the practical effects of legal agreements on ongoing businesses. If you are involved in a partnership dispute, contact Hoch Law Firm.

Unfortunately, very often people abuse or take advantage of positions of trust. It is just as important (maybe even more so) to periodically check on people who hold positions of trust over your money. I have seen lifelong friendships end over a breach of a fiduciary duty.

Contact Hoch Law Firm for help with breach of fiduciary duty cases in Dallas-Fort Worth.

Client Reviews
★★★★★
Tim represented us in a dispute with our insurance company over roof damage due to a hail storm in the Dallas area. We were very disheartened by the constant denials and dishonest treatment we were receiving from the insurance carrier, and Tim counseled us to remain patient while he systematically put together expert opinions and facts that supported our claim. Eventually we were able to settle our case and had the roof replaced on our apartment building just two months before the big tornado hit in late 2015. Our investment property was the only one in the area that did not sustain any roof damage! We were lucky with our timing, but we were even more fortunate to have Tim on our side. We highly recommend Tim's firm! Allan and Marian Goodman
★★★★★
In short order, he was able to quickly understand and master the details of our case and map out a very cost-effective, efficient legal strategy. After a series of quick wins in court, our opponent came to the table with a highly satisfactory settlement. Mr. Hoch’s ability to effectively tell a persuasive story within the confines of a courtroom is without equal. Anthony Page
★★★★★
Tim’s knowledge and insight regarding not just the law, but business and human nature in general was greatly appreciated and relied upon as we navigated through a difficult situation. Tim has my utmost admiration and respect both on a personal and professional basis. Phillip A. Reinsch
★★★★★
We use Tim Hoch to handle complex business litigation matters on a variety of topics. He combines a strategic, no-frills approach with a bottom-line mindset. He is extremely responsive, organized and thorough. We would gladly recommend his services. Richard Warren, CEO