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Fiduciary Duty Cases Summarized By Injury Attorney

This page within Virginia Tort Case Law is a compilation of cases reported by the Virginia Supreme Court and summarized by Brien Roche dealing with the topic of Fiduciary Duty and the related topic of intentional torts. 
For more information about fiduciary duty see the pages on Wikipedia.

Fiduciary Duty-Cases

2007 Banks v. Mario Indus., 274 Va. 438, 650 S.E.2d 687.

Defendant in this case was an employee of Mario and admitted that he owed Mario a duty of loyalty. Those admissions combined with the fact that the employee’s job was to faithfully represent Mario’s interest support the claim for breach of fiduciary duty.

2007 Augusta Mut. Ins. Co. v. Mason, 274 Va. 199, 645 S.E.2d 290.

A fiduciary relationship exists in all cases when special confidence has been reposed in one who in good conscience is bound to act with due regard for the interest of the one reposing the confidence. Incorporated in any contract between a fiduciary and its principal is an obligation to disclose anything known to him that might affect the principal’s decision on whether or not to act or how to act. In this suit by an insurance company against an insurance agent, any fiduciary duty allegedly breached existed solely because of the contractual relationship between the insurer and the agent and as such the insurer has failed to assert a valid claim for breach of fiduciary duty.

2006 Saks Fifth Ave., Inc. v. James, Ltd., 272 Va. 177, 630 S.E.2d 304.

In this breach of fiduciary duty and conspiracy action wherein one of plaintiff’s sales person was hired away by a competing company, plaintiff must prove a causal connection between the Defendant’s wrongful conduct and must prove the damages asserted. In this instance, plaintiff proved damage but did not present sufficient evidence of the causal connection between the alleged breach and the resulting damages. All plaintiff established was that the loss of profits were due to the sales person no longer being with plaintiff. This fact alone was not sufficient since the sales person was an at will employee and he was free to stop working for plaintiff at anytime.

2006 Today Homes, Inc. v. Williams, 272 Va. 462, 634 S.E.2d 737.

Two officers of plaintiff corporation are sued for breach of fiduciary duty. One defendant learned of a parcel of land and mentioned it to the other defendant. One defendant was then terminated by plaintiff. Two weeks after the first defendant and two months prior to the second defendant leaving plaintiff company, they incorporated a competing business and then developed the property that the first defendant had learned of during her employment with plaintiff. A corporate officer has a fundamental duty not to divert a corporate opportunity for personal gain. The first defendant breached that duty. A corporate officer must disclose a corporate opportunity to the employer before taking advantage of it for himself. Once plaintiff has shown that a corporate opportunity existed and that the corporate fiduciary appropriated it without disclosure and the consent of the company, a prima facie case has been made out. There is further discussion of the corporate opportunity doctrine.

2004 Halifax Corp. v. Wachovia Bank, 268 Va. 641, 604 S.E.2d 403.

Over four-year period, comptroller of plaintiff corporation embezzled over $15 million by writing checks against accounts with defendant bank and depositing them into other accounts at defendant bank. Plaintiff alleged conversion and aiding and abetting breach of fiduciary duty. Without deciding whether or not claim for aiding and abetting breach of fiduciary duty exist, the court properly held that insufficient facts were alleged to state such a claim. The claim for conversion had been displaced by Va. Code § 8.3A-420(a).

2003 Williams v. Dominion Tech. Partners, 265 Va. 280, 576 S.E.2d 752.

Former employer sued former employee for breach of fiduciary duty, breach of contract, tortious interference with business relationship, and business conspiracy alleging that employee had improperly elected to work as an at-will employee at power tool facility where plaintiff had placed him. Under the common law, an employee, including an employee at-will, owes a fiduciary duty of loyalty to his employer during the course of the employment. Within that general duty of loyalty is the specific duty that the employee not compete with his employer during his employment. The employee does, however, have a right to make arrangements during his employment to compete with his employer after resigning his post but this right is not absolute and must be balanced with the importance of the integrity and fairness attaching to the relationship between employer and employee. In order to sustain claim for statutory business conspiracy, plaintiff must prove by clear and convincing evidence that defendants acted with legal malice, i.e., intentionally, purposefully, and without lawful justification and that such actions injured the plaintiff’s business. In this case, employee simply arranged with employment brokerage firm to become its employee effective upon resignation from the employment agency. Specific duties that employee owes to employer are not to misappropriate trade secrets, not to misuse confidential information, not to solicit clients or other employees prior to termination of employment. This list is not exhaustive. In this particular instance, the employee’s actions did not rob his employer of any objective or tangible business opportunity or expectancy since the employee simply took advantage of an opportunity to obtain full-time employment in another capacity. In this case, since the conduct alleged was the same as to all of the different theories of recovery, the judgment in favor of the plaintiff is reversed and final judgment is entered in favor of the employee.

2002 O’Connell v. Bean, 263 Va. 176, 556 S.E.2d 741.

Legal malpractice action. Action for negligence of attorney in performance of professional services while sounding in tort, is in fact an action for breach of contract whether framed as breach of fiduciary duty or constructive fraud claim. For this reason, punitive damages may not be awarded for any such breaches in absence of an independent, willful tort giving rise to such damages.

2002 Patel v. Anand, L.L.C., 264 Va. 81, 564 S.E.2d 140.

In case where fiduciary withholds information from its principal, which if disclosed, would have caused the principal to reject the transaction, the measure of damages is the difference between the value of the item bargained for and the value of the item actually received. Plaintiff in this case failed to present evidence based upon that standard.

2001 Flippo v. CSC Assocs. III, L.L.C., 262 Va. 48, 547 S.E.2d 216.

Suit alleged breach of fiduciary duty as to operation of LLC. An act which is otherwise legal may nevertheless breach one’s fiduciary duty. For manager of LLC to come within the protection of the statutory Business Judgment Rule as to the breach of fiduciary duty claim relating to transfer of LLC assets to a joint venture, legal advice that manager received and acted upon must have been advice sought in good faith for benefit of LLC.

2000 Feddeman & Co. v. Langan Assocs., 260 Va. 35, 530 S.E.2d 668.

In this business buy-out deal between two accounting firms, defendant employees were entitled to make arrangements to resign including plans to compete with their employer; however, right to make arrangements is not absolute. This right must be balanced with importance of integrity and fairness attaching to employer/employee relationship. In this case, planned resignation was designed to devastate employer in event employer did not agree to buy-out arrangement. Jury issued presented as to whether this constituted breach of fiduciary duty.

1994 Carstensen v. Chrisland Corp., 247 Va. 433, 442 S.E.2d 660.

Measure of damages in case where fiduciary withholds information from principal which, if disclosed, would have caused principal to reject transaction is difference between value of item bargained for and value of item actually received.

1994 Firebaugh v. Hanback, 247 Va. 519, 443 S.E.2d 134.

Two realtors were in fiduciary relationship with owners of property which they were attempting to purchase and they breached that fiduciary duty thereby justifying court in denying them specific performance on contract.

1994 Hilb, Rogal & Hamilton Co. v. DePew, 247 Va. 240, 440 S.E.2d 918.

Employee’s post-termination conduct was not in violation of his fiduciary duty. Employee’s duty to his employer not to compete arises out of that relationship; upon termination of relationship employee may compete with his employer. Elements of intentional interference of contract are as stated in Duggin. Breach of fiduciary relationship is evidence of improper method as called for in Duggin.

1993 O `Hazza v. Executive Credit Corp., 246 Va. 111, 431 S.E.2d 318.

Suit by shareholders against corporation. Fiduciary duty of good faith and fair dealing requires that each transaction entered into by corporation by its officers and directors be entered into in good faith, which requires intent to benefit corporation. There is nothing in evidence in this case to support finding that transaction in question was not entered into in good faith.

1989 Oden v. Smith, 237 Va. 525, 379 S.E.2d 346.

Evidence of advice and counsel in business matters involving certain degree of trust is necessary to show fiduciary relationship. When such relationship exists, any transaction to benefit of dominant party and to detriment of other is presumptively fraudulent.

1988 Hooper v. Musolino, 234 Va. 558, 364 S.E.2d 207.

Suit by partnership and limited partnership against general partner for negligence and breach of fiduciary duty. When general partner’s negligence has caused injury to limited partner, then he is entitled to recover his investment. Defendant, as fiduciary in his role as managing partner, had burden of demonstrating his entitlement to funds taken from partnership account.

1986 Greenspan v. Osheroff, 232 Va. 388, 351 S.E.2d 28.

Court found that employee had fiduciary duty to employer arising out of employer/employee relationship as well as employee’s explicit assumption of duty to take care of employer’s medical practice during his illness. Employee breached that duty and constructive trust was imposed. Constructive trust is created by operation of law and is independent of intention of parties. It may arise from breach of fiduciary duty as well as from actual fraud or unconscionable conduct amounting to constructive fraud. It is well settled that where one person sustains fiduciary relationship to another he cannot acquire interest in subject matter of relationship adverse to such other party. If he does so, equity will regard him as constructive trustee.

1981 American Realty Trust v. Chase Manhattan, 222 Va. 392, 281 S.E.2d 825.

Two parties to this suit owed each other reciprocal duty founded in trust and confidence foundation stones of fiduciary relationship.

1953 Patterson v. Anderson, 194 Va. 557, 74 S.E.2d 195.

Suit against fiduciary for failure to perform his official duties is claim against him personally.

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