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What is Fiduciary Relationship and What Does it Mean?

| Jul 24, 2015 | Business Law, Real Estate Law |

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To understand a breach of fiduciary duty it’s important to first understand what a “fiduciary relationship” actually references. What is a fiduciary relationship?

Fiduciary Relationship: Any connection between parties involved in a transaction in which one of the parties is duty bound to act “with the utmost good faith for the benefit of the other party…Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent…” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 [130 Cal.Rptr.2d 860], internal citations omitted).

In another case, examples of recognized legal relationships or fiduciary relationships were provided: guardian and ward, trustee and beneficiary, principal and agent, attorney and client, etc. (Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 271).

What Constitutes a Breach of Fiduciary Duty?

A breach of fiduciary duty will usually fall into one of three categories: Breach of reasonable care [CACI 4101], breach of duty of loyalty [CACI 4102], or breach of confidentiality [CACI 4103].

When negligent behavior on the part of the fiduciary responsible party is intentional, this is defined as fraud. This also constitutes a breach of fiduciary duty.

In order for the court to find that a breach of fiduciary duty has occurred, certain elements must be in place: duty, breach and causation of damages. Duty references the actual existence of a fiduciary duty. Breach refers to the actual breach in the expected duty. And causation of damages references that damage that was caused by the breach. (Mosier v. Southern California Physicians Insurance Exchange (1998) 63 Cal.App.4th 1022, 1044).

In some cases, a breach of fiduciary duty could result in punitive damages (i.e. Hobbs v. Bateman Eichler, Hill Richards, Incorporated (1985) 164 Cal.App.3d 174).

According to previous determinations by the court, attorney’s fees are not generally recoverable in breach of fiduciary duty cases (Allstate Insurance Co. v. Superior Court (2007) 151 Cal.App.4th 1512, 1528).

The nature of the breach will determine the type of damage relief available and the amount provided.

Courts sometimes modify or vary their interpretations on this type of case due to the fact that the breach of fiduciary duty case is based on a combination of contract and tort action.

Contact the Law Office of Retz & Aldover LLP if you need additional information about a breach of fiduciary duty or if you have questions about the issue.