A breach of fiduciary duty claim arises when someone in a position of trust fails to act in the best interests of those they serve. When a corporate officer, director, partner, or manager puts their personal interests ahead of the company and its owners, the resulting harm can be devastating. Breach of fiduciary duty claims hold these individuals accountable and recover the losses their misconduct caused. Howard East’s litigation team prosecutes and defends these claims across Illinois, Missouri, and New York.
What Constitutes a Breach
Fiduciaries owe duties of loyalty, care, and good faith. A breach occurs when they engage in self-dealing transactions, compete with the company, divert corporate opportunities, waste corporate assets, or fail to exercise reasonable care in making business decisions. The standard is whether the fiduciary acted in the company’s best interest — not their own.
Proving Breach of Fiduciary Duty
Successful claims require proving that a fiduciary relationship existed, the fiduciary breached their duties, and the breach caused damages. The challenge often lies in overcoming the business judgment rule, which presumes that directors and officers acted properly. Plaintiffs must show self-interest, lack of good faith, or gross negligence to overcome this presumption.
Available Remedies
Courts can order disgorgement of profits gained through the breach, compensatory damages, rescission of unauthorized transactions, and injunctive relief. In egregious cases involving willful misconduct, punitive damages may be available. Courts can also remove offending officers or directors from their positions.
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This content is for informational purposes only and does not constitute legal advice.
What Constitutes a Breach of Fiduciary Duty
A breach of fiduciary duty occurs when a fiduciary — such as a corporate officer, director, trustee, or partner — fails to fulfill their legal obligation to act in good faith and in the best interests of the beneficiary. Common examples include self-dealing transactions, misappropriation of corporate assets, failure to disclose material information, and competing against the entity they are supposed to serve. Illinois courts analyze these claims under both statutory law and common law principles.
Our commercial litigation attorneys handle breach of fiduciary duty cases involving corporate officers, business partners, trustees, and financial advisors. We work with forensic accountants to trace misappropriated funds and build compelling cases for damages. The Legal Information Institute at Cornell provides a comprehensive overview of fiduciary duty principles under American law.
Proving a Breach of Fiduciary Duty in Court
To prevail in a breach of fiduciary duty lawsuit, plaintiffs must establish four elements: the existence of a fiduciary relationship, a breach of that duty, a causal connection between the breach and the plaintiff’s harm, and actual damages. Our business litigation team develops evidence strategies that address each element systematically.
Fiduciary relationships exist in many business contexts beyond the corporate boardroom. Partners in a partnership, managing members of an LLC, real estate agents, attorneys, and financial advisors all owe fiduciary duties. Our shareholder dispute lawyers frequently litigate breach of fiduciary duty claims where majority shareholders take actions that harm minority investors. We also handle cases involving regulatory compliance failures that constitute fiduciary breaches.
Remedies for Breach of Fiduciary Duty
Courts offer several remedies for breach of fiduciary duty including compensatory damages, disgorgement of profits, constructive trusts, injunctive relief, and in egregious cases, punitive damages. The American Bar Association discusses the evolving standards for fiduciary duty claims in modern business contexts. Our attorneys at Howard East pursue every available remedy to make our clients whole after a breach of fiduciary duty.
Frequently Asked Questions
What is a breach of fiduciary duty?
A breach of fiduciary duty occurs when someone in a position of trust — such as a corporate officer, director, trustee, or partner — fails to act in good faith or in the best interests of those they serve, causing harm or financial loss.
Who can be sued for breach of fiduciary duty?
Anyone who owes a fiduciary duty can be sued, including corporate directors and officers, business partners, trustees, attorneys, financial advisors, real estate agents, and majority shareholders in closely held companies.
What damages can I recover in a breach of fiduciary duty case?
You may recover compensatory damages for financial losses, disgorgement of profits the fiduciary wrongfully earned, punitive damages in egregious cases, and attorney fees in some jurisdictions.
