Breach of Fiduciary Duty Claims: The Basics
Under Alabama Code Title 7. Commercial Code § 7-3-307, any agent, director, officer, partner, trustee, or other representative of an organization has a fiduciary duty to certain persons and entities, including the principal, partnership, corporation, beneficiary, or any other person to whom a duty is expressly stated (such as via a contract). In order to comply with said duty, the fiduciary agent must comply with certain rules and requirements. For instance, the agent must do the following:
- Act with loyalty towards the company;
- Be diligent in his or her management of the corporation’s financial affairs;
- Exercise unbiased and sound business judgement when making financial decisions on the company’s behalf;
- Avoid self-dealing transactions in which company finances or assets are used for the benefit of an individual rather than the corporation; and
- Avoid diverting potentially lucrative business opportunities away from the corporation and into another entity that a fiduciary agent controls or owns.
If it is discovered that an agent has violated any or all of the above responsibilities, he or she can be charged with a breach of fiduciary duty. Even if it was just a single person that committed a breach of duty, an entire organization can be held liable, especially if customer money, information, or assets were at stake. If there is an officer within your organization that has breached his or her duty, and if you either want to file a claim or seek protection, retain the help of an aggressive Birmingham business litigation lawyer for immediate assistance today.
Bringing a Breach of Fiduciary Duty Claim Against an Agent
If you suspect that a breach of fiduciary duty occurred and if you want to file a claim against the guilty party, you need to be able to prove the following to be true:
- That a fiduciary relationship existed between you and the other party;
- That said duty was breached;
- That a breach entitles you to a remedy;
- That the breach caused you to suffer financial damages; and
- That the breach was a result of someone taking advantage of your trust.
If you can prove the above points to be true, you may be able to seek monetary and/or other types of remedies. What type of remedy you are awarded depends on the type of breach and the impact it had on you or your business. For instance, if a partner moved profits into a personal bank account or an account held by an entity in said partner’s name, you may be able to collect monetary damages. If a manager breached a duty to you and your other partners, shareholders, officers and/or directors, you may be able to have the individual removed from the partnership.
When You Are Accused of a Breach of Fiduciary Duty
If you are reading this because you are guilty of breaching your fiduciary duty, the best thing you can do is retain the help of an experienced lawyer who can help you begin building your defense. The partner filing the claim has the burden of proof to show that you took advantage of your position to benefit yourself at the expense of the company.
Retain the Help of a Skilled Attorney Today
Whether you are on the receiving end of a breach of duty claim or are the claimant, it would serve your best interests to hire a business litigation lawyer. At Cloud Willis & Ellis, we are prepared to help you through this tricky situation and get back to business as usual. Call now to schedule your appointment today.