H. Joel Newman, PLLC Business Litigation Attorney

Breach Of Fudiciary Duty In Michigan
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SUBSTANTIAL SETTLEMENT IN TORTIOUS INTERFERENCE CASE

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We represented the Plaintiff in this highly unusual contingency fee tort case. Our client had an extremely high-paying career with a multinational corporation. The Defendant owned a business which did millions of dollars of business with our client’s employer. When the Defendant learned that our client was dating his former wife, he caused our client’s employer to terminate his employment. We sued the Defendant for tortious interference with a contractual relationship and invasion of privacy. We obtained a substantial confidential settlement for our client.

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Fudiciary Duty and Breach Attorney H. Joel Newman: Your Legal Questions Answered.

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H. Joel Newman is a highly experienced attorney with decades of success in handling breach of fudiciary duties cases throughout Michigan. Driven by a passion to win for his clients, Joel has built a long history of achieving exceptional results. He has obtained numerous multi-million dollar verdicts and settlements representing plaintiffs and has successfully defended clients against significant multi-million dollar claims. At our firm, we work efficiently and strategically on our clients' behalf to maximize value and protect their interests, ensuring they receive the dedicated representation they deserve.

WHAT IS A FIDUCIARY DUTY?

A fiduciary duty is a commitment where one party, the fiduciary, is bound to act primarily for the benefit of another party, the principal or beneficiary. This relationship requires the fiduciary to prioritize the beneficiary's interests over their own. A fiduciary owes the highest possible level of loyalty to the principal, even to her own detriment.

WHAT ARE THE MOST COMMON TYPES OF FIDUCIARY RELATIONSHIPS?

Common examples of fiduciary relationships:

  1. Trustee/Beneficiary
  2. Agent/Principal (e.g., an employee or independent contractor acting on behalf of an employer)
  3. Attorney/Client
  4. Company Officers/Shareholders (including the Board of Directors)
  5. Guardian/Ward or Conservator/Ward
  6. Financial Adviser/Investor

WHAT ARE THE CORE FIDUCIARY DUTIES?

A fiduciary has several core obligations that define the standard of care they must uphold:

  • Duty of Loyalty - To put the beneficiary's interests first, act in good faith, and avoid any conflict of interest or self-dealing.
  • Duty of Care - To act with prudence and professional skill, exercising the same judgment a reasonably careful person would use (duty of prudence).
  • Duty to Disclose - To provide all important information (like risks or conflicts) and maintain proper accounting and records.
  • Duty of Confidentiality - To protect the confidential and proprietary information of the principal.

WHAT CONSTITUTES A BREACH OF FIDUCIARY DUTY?

A breach of fiduciary duty occurs when the fiduciary violates one of their obligations, resulting in harm or loss to the principal's or beneficiary's interests. This could be the result of an intentional act, dishonesty, or gross negligence or inattention in the management of business.

BREACH OF FIDUCIARY DUTY IN BUSINESS

Breaches typically fall into categories of misuse, self-interest, or failure to act responsibly:

  • Misappropriation/Theft: Embezzlement of company funds, misappropriation of assets, or improper use of business funds.
  • Self-Dealing and Conflict: Taking a business opportunity intended for the company for personal benefit (usurpation), or overpaying yourself for services (violating the duty of loyalty).
  • Negligence: Failure to collect rent or debts, failure to pay property taxes, or poor financial decisions due to a lack of critical awareness of risk.
  • Lack of Transparency: Concealing important information from partners/shareholders or providing inadequate record-keeping.
  • Acting unilaterally or exceeding one’s authority.

WHAT ARE THE LEGAL ELEMENTS OF A BREACH OF FIDUCIARY DUTY CLAIM?

To establish a claim in most jurisdictions, you, the plaintiff, must prove the following four legal precedents:

  1. A fiduciary relationship existed between you and the defendant.
  2. The defendant committed a breach of trust or duty.
  3. The defendant's breach was the causation (direct cause) of the harm.
  4. You suffered quantifiable actual damage (economic injury) as a result.

WHAT ARE THE DAMAGES FOR BREACH OF FIDUCIARY DUTY?

The damages for the fiduciary can require the repayment of ill-gotten gains and damages. The breaching fiduciary generally has personal liability. Victims typically seek various forms of relief, which is allowable under Michigan statutes:

  • Direct Damages: Monetary awards to compensate for the specific, measurable financial loss suffered.
  • Restitution: Requiring the fiduciary to return any profits or funds gained through self-dealing.
  • Fiduciary Removal: A court order for the dismissal of the fiduciary from their position (e.g., removing a trustee or company director).
  • Accounting: A court-ordered detailed review of all transactions to trace and recover misused funds.
  • Regulatory Complaints: Filing a complaint with the SEC or a complaint with FINRA if the fiduciary is a financial professional. Professional complaints can be filed against Lawyers, Certified Public Accountants and other professionals, as well.

HOW CAN I PROTECT MYSELF AGAINST BREACHES OF FIDUCIARY DUTY?

Pay attention:

  • Demand timely financial reports:Including bank statements and review them carefully. Be sufficiently familiar that you can spot irregularities and follow up on them.
  • Document Responsibilities: Clearly define the responsibilities and scope of authority (e.g., in a partnership agreement or power of attorney document).
  • Demand Disclosure: Require written disclosure of any potential conflict of interest before decisions are made.
  • Seek Legal Counsel: Consult an experienced business litigation attorney to review management decisions and ensure compliance with the highest standard of care.

BREACHES OF FIDUCIARY DUTY IN BUSINESS

Business partners, managers, members, officers and employees in positions of trust all owe fiduciary duties to the Company and to each other. Absolute trust and honesty in managing a business is essential. Breaches of fiduciary duties can destroy the most successful business.

Common breaches of fiduciary duties in business:

  1. Breaches of the Operating Agreement or Bylaws
  2. Self-dealing (related party transactions)
  3. Taking company opportunities for oneself (usurpation)
  4. Improper handling of money, improper distributions
  5. Squeezing out other owners
  6. Improper failure to distribute dividends
  7. Gross mismanagement
  8. Withholding financial information
  9. Intimidation tactics
  10. The defendant committed a breach of trust or duty.
  11. The defendant's breach was the causation (direct cause) of the harm.
  12. You suffered quantifiable actual damage (economic injury) as a result.

CONTACT AN ATTORNEY WHO SPECIALIZES IN COMMERCIAL LITIGATION.

Don’t wait for things to get better. Take action. It is common to waive one’s rights by inaction. Also, although there are exceptions, the statute of limitations in Michigan is two years. Breaches of fiduciary duty are very serious. The Courts can award money damages and equitable remedies, such as expulsion of the wrongdoer or a buyout of the innocent partner. If you've experienced damages from Fiduciary Duty or Breach of Fiduciary Duty, you might have grounds for a business litigation lawsuit in Michigan. H. Joel Newman has a long record of exceptional results, driven by a passion to win for our clients. Call us today at (248)723-1238 for a free consultation.

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