Fiduciary Duty

Brien Roche

Fiduciary Duty Cases

The word ‘fiduciary’ literally means purse. A fiduciary duty relates to a purse or money. That is, something of value. The person who has the fiduciary duty has something of value that he is holding on behalf of another. That other person may be an employer, an employee, it may be a beneficiary under a trust, it may be a partner, it may be another party to a contract.

Employee

An employee may owe a fiduciary duty to the employer. That duty is one of loyalty. The employee is obliged to work for the benefit of the employer. If during the course of the employment the employee is working for his own benefit to the detriment of the employer then that may be a breach.

Depending on the nature of the duty there may be an obligation to disclose anything that the employee learned during the course of the employment that should be held for the benefit of the employer.

A corporate officer is an employee. As an officer, that person has a duty to promote the business of the company. If the officer diverts business away from the company that the company would benefit from, that is a breach.

Other duties that employees may hold are duties not to misuse anything of value, whether it be property, trade secrets, etc. There may be a duty not to misuse confidential info. There may be a duty not to solicit clients away from the company. Also there may be a duty not to withhold information from the employer. There may be a duty not to engage in a deal that the employer could engage in to its benefit. That is, the employee cannot steal that opportunity from the employer.

Fiduciary Duty Cases and Contracts

If the duty purely arises from an agreement between the parties (a contract), then the claim is probably going to be a breach of contract claim. It probably will not be a breach of fiduciary duty claim.

Remedy

Where the person owing the duty breaches any of these duties then there may be a constructive trust that is imposed on that property that is diverted. Greenspan v. Osheroff, 232 Va, 388, 351 S.E.2d 28 (1986).

Where there is a breach then the damage may be measured by the value that was diverted. Patel v. Anand, LLC, 264 Va. 81, 564 S.E.2d 140 (2002). In other words if the employee (fiduciary) received certain personal value from a transaction that should have benefited the employer then that benefit is the measure of loss. To put it another way, if the value that the employer could have expected was “X” and because of the misconduct of the employee, the employer only received 3/4X then the damage is 1/4X.
Call, or contact us for a free consult. Also for more info on fiduciaries see the Wikipedia pages. Also see the post on this site dealing with contract litigation