Texas law says that a fiduciary duty breach arises when there is a duty of utmost good faith, trust, confidence, and candor owed by a fiduciary to a beneficiary. It is a duty to act with the highest degree of honesty and loyalty toward another person and in the best interests of the other person. A fiduciary relationship arises when one person is under a duty to act for the benefit of another on matters within the scope of that relationship. Fiduciary relationships require an unusually high degree of care, and arise usually in one of four situations:
when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first,
when one person assumes control and responsibility over another,
when one person has a duty to act for or give advie to another on matters falling within the scope of the relationship, or
when there is a specific relationship that has traditionally been recognized as involving fiduciary duties.
Depending on the fact situation, examples of fiduciary relationships and responsibilities may arise between managing partners, corporate officers, joint venturers, employees, securities brokers, escrow agents, insurance agents, holders of power of attorney, estate executors, trustees, mineral rights holders, and condominium board members. Additionally, fiduciary relationships may be created by informal situations, depending on the circumstances.
When someone violates a fiduciary relationship, there may be a case (or “cause of action,”) for a breach of fiduciary duty. In order to prove a cause of action for fiduciary duty breach, the plaintiff (the party who sues) has to prove the following elements:
1. The plaintiff and defendant had a fiduciary relationship;
2. The defendant breached its fiduciary duty to the plaintiff;
3. The defendant’s breach resulted in
(1) injury to the plaintiff, or
(2) benefit to the defendant.
If the plaintiff proves these elements, then the plaintiff may recover damages for the fiduciary breach. Those damages may include actual (or economic) damages, mental-anguish damages, and exemplary (or punitive) damages.
Actual, or economic, damages are damages for economic injuries resulting from a breach of fiduciary duty. Economic damages include out-of-pocket losses and lost profits.
The plaintiff can recover mental-anguish damages if the damages are a foreseeable result of the defendant’s breach of fiduciary duty. Mental-anguish damages (also known as emotional distress, mental suffering, or mental or nervous shock) are defined as damages resulting from highly unpleasant mental reactions, such as fright, horror, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment, worry, and nausea. It must be so severe that no reasonable man could be expected to endure it, and the intensity and duration of the distress are factors to be considered in determining the severity of the mental-anguish.
In addition to economic and mental-anguish damages, the plaintiff may be able to recover exemplary damages. These are also known as punitive damages, and they are intended to punish and deter blameworthy conduct. A plaintiff may recover exemplary damages if he shows by clear and convincing evidence that the injury resulted from the defendant’s fraud, malice, or gross negligence.
If you think that you have been taken advantage of by someone who may have a fiduciary relationship with you, then you may be able to pursue a claim against that person for breaching this special relationship. In order to prove a fiduciary duty breach, a fact-specific analysis is necessary, and a difficult road may lie ahead. If you have any questions, please contact attorney Virgil Yanta of Yanta Law today for a free consultation. Yanta Law is here to help you, day or night, rain or shine, and regardless of where you are in Texas—in fact, we travel to wherever you need us to be.
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