Breach of Fiduciary Duty California

A breach of fiduciary duty in California happens when an entity or person is in a position of trust and fails to act in the best interests of a client. More specifically according to California Civil Jury Instructions, a fiduciary relationship is “any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.” A breach of fiduciary duty claim is a tort claim that often arises from specific, well-defined relationships, such as between attorney and client or real estate broker and client. In California, breach of fiduciary duty penalties includes civil remedies, civil penalties, and criminal penalties. If a breach of fiduciary duties was done with oppression, fraud, or malice (proven by clear and convincing evidence under California Civil Code § 3294) then the court may award punitive damages. According to California’s Code of Civil Procedure section 343, the statute of limitations for a breach of fiduciary duty is four years.

A breach of fiduciary duty in California happens when an individual or entity is in a position of trust and fails to act in their client’s best interests. Breach of fiduciary duty occurs when someone has a responsibility to act in the interests of another person and fails to do so.

A fiduciary relationship occurs when one person or party (Person X) trusts another party or person (Person Y) to act in Person X’s best interests.

In California, this type of relationship starts when the “fiduciary” party begins to consciously act on behalf of the other party, called the “beneficiary” party.

What are fiduciaries expected to do? First, the fiduciary party must treat the beneficiary reasonably and with care. They must be honest with the beneficiary about any relevant information they receive. They also must act in what is commonly called “good faith,” placing the beneficiary’s interests above their own.

What are the main fiduciary duties?

The main liabilities for fiduciary of duties include:

duty is to always act in the beneficiary’s best interest
duty to disclose
duty of prudence
duty to keep confidentiality
duty of good faith
duty of care care
duty of loyalty

Examples of fiduciary relationships are everywhere; however, many of us do not notice them because they are so common in business. When a client buys into a business’ stock, for example, the client expects the business to help improve the value of the stock. Therefore, any effort to destabilize the company is a breach of fiduciary duties.

Typically, fiduciary duties exist between many different partners, including:

Shareholders and corporations
Individuals in confidential relationships, such as doctors and patients
Financial partners in joint ventures
Charity officers and charity financiers

What are the 3 fiduciary duties?

Fiduciary responsibilities exist in various industries and different fields of business. As a result, many individuals and corporations become involved in fiduciary relationships.

In California, there are three main fiduciary duties. These are:

Duty to confidentiality
Duty to total loyalty
Duty to sensible care

Some of the usual examples of organizations and individuals involved in fiduciary duty relationships include:

Lawyers and clients
Business partners
Corporations and stockholders
Insurers and those insured
Real estate agents and clients
Spouses
Stockbrokers and clients
Trade unions to union members
Joint venturers
Controlling shareholders and minority shareholders
Banks and borrowers

All of these individuals and entities are lawfully required to act in the alternate party’s best interest and honor the three duties listed above.

When fiduciaries do not uphold their duties, a fiduciary violation occurs.

In California, the courts dictate that violating fiduciary duties can be grounds for the aggrieved party to collect damages in a court of law.

What damages are available for breach of fiduciary duty?

Is breach of fiduciary duty a crime in California?

A breach of a fiduciary is a civil claim and not a crime. However, the same wrongful conduct can be a crime. For example, a corporate director who steals from his company breaches his fiduciary duty. In addition, the same conduct is a crime of embezzlement.

In part, the laws that govern our society are in place to promote proper conduct among all people. Without rules and guidelines, our society and our relationships would be rudderless. Without penalties for wrong, immoral and illicit behavior, individuals lose trust in each other and themselves.

Fiduciary duty is the need to act in an individual’s best interest based on the relationship with that individual. Individuals’ trust in one another must be protected and upheld within a relationship.

Nakase Wade: Business Attorneys in California

At Nakase Wade, our business lawyers provide planned, thoughtful advice for all businesses. In addition, our corporate attorneys act as capable, experienced partners for companies of all sizes across California.

Contact us today if you experience a fiduciary duty breach in California. We will quickly get to the heart of the matter and help you determine the appropriate strategy for dealing with this violation. We care about our clients and realize how damaging it can be when a party you trusted violates their fiduciary duties. Contact Nakase Wade for a free consultation today.

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