A fiduciary duty is the highest duty imposed by law. Any claims of fiduciary liability will be complex and require a lawyer experienced in both defending and pursuing these claims. If you believe a breach of fiduciary duty has occurred, or have been accused of a fiduciary breach, getting to the heart of the matter can be challenging. At Burford Perry, our lawyers have over 55 years of combined experience both helping clients pursue fiduciary liability claims and defending those accused of breaching fiduciary liability.
In D Bobbit Noel Jr. v Chief Energy and Devon Energy Holding, L.L.C., Robert Burford (co-counsel with Gibbs & Bruns) represented Vinson & Elkins attorney, D. Bobbitt Noel, in a fraud and breach of fiduciary duty case against billionaire Trevor Rees-Jones, Chief Energy, and Devon Energy. Noel alleged an old friend, Rees-Jones, cheated him when he bought out Noel’s stake in a highly successful shale gas company, Chief Energy. After a several week trial and favorable jury verdict, the trial court entered a $196 million judgment for Noel.
In Collins v. Martinez and CAROL Crane, Brent Perry prosecuted shareholder oppression and fiduciary duty claims for the minority owner of a construction services company. The two friends and owners were divided over whether to accept a $27 million buyout from a private equity firm. Brent Perry was able to settle the case for most of the claimed damages on the day before trial.
It is impossible to give a comprehensive definition of fiduciary duties.[1] Individuals who take on fiduciary duties are usually officers, directors, agents, executors, administrators, or trustees and are referred to as the fiduciary. And when a fiduciary duty arises out of an agency relationship, the party on whose behalf the fiduciary acts is called a principal.
Fiduciaries have a duty to avoid any conflicts of interest between themselves and their principals or between the principals and any of the fiduciary’s own clients. The fiduciary duty holds that “a corporate officer or director must act in good faith and must not allow his or her personal interest to prevail over the interest of the corporation.”[2] Also, “the duty of loyalty places restrictions on a governing person’s ability to participate in transactions on behalf of the company when the person has a personal interest in the transaction.”[3]
Some common types of fiduciary relationships include:
These fiduciaries are expected to act in the utmost good faith, perfect candor, openness, honesty, and total absence of any concealment or deception. The fiduciary duty can be formal or informal. Facts indicating greater control by one party can be the basis for an informal fiduciary.[4] A fiduciary duty arises from a relationship of trust and confidence.
The duties of loyalty, care, and good faith are all elements of the fiduciary duty:
Breaches of fiduciary duty occur when a fiduciary obtains profits or other advantages through self-dealing or causes a loss to the principal. A breach of fiduciary duty can take many forms, some of which are apparent, while others require examination of fiduciary accounts and transactions in detail.
In determining whether a breach of fiduciary duty occurred, the principals or the party to which the fiduciary owes its duty must show: (1) a fiduciary duty existed at the time of the dispute or breach in question, (2) the breach was within the scope of the fiduciary’s relationship and duty, and (3) the breach caused the principal to suffer a loss or resulted in wrongful benefit to the fiduciary.[11] Some common examples of a breach of fiduciary duty include:
It is not easy to determine whether a fiduciary has breached his duties or acted improperly, especially where complex financial and business matters are involved. If a breach occurred, court proceedings may be necessary to remedy the breach or remove a fiduciary from his or her position. Sometimes, a fiduciary accused of breaching their duty needs a dogged defense team to protect the fiduciary’s best interests. Fiduciary liability cases should never be handled without a lawyer.
The attorneys at Burford Perry LLP have extensive experience both as plaintiff and defense counsel in fiduciary liability cases. Our experience allows us to thoroughly evaluate a fiduciary’s actions to determine whether or not a breach occurred, and what, if any, damages would remedy the situation. While our attorneys have successfully obtained out of court settlements in fiduciary liability cases, we also have a proven track record of success in the courtroom. If you suspect a breach of fiduciary duty occurred, or if you have been accused of a breach, contact us today for a confidential consultation.
[1] Kinzbach Tool Co. v. Corbett-Wallace Corp, 160 S.W.2d 509, 512 (Tex. 1942).
[2] Landon v. S & H Marketing Group, Inc., 82 S.W.3d 666, 675 (Tex.App.—Eastland 2002, no pet.).
[3] Allen v. Devon Energy Holdings, 367 S.W.3d 355, 397 (Tex. App.—Houston [1st Dist.] 2012).
[4] See Redmon v. Griffith, 202 S.W.3d 225, 237 (Tex.App.-Tyler 2006, pet. denied).
[5] Tex. Bus. Org. Code § 152.206 (partnerships).
[6] Landon v. S & H Marketing Group, Inc., 82 S.W.3d 666, 675 (Tex.App.—Eastland 2002, no pet.).
[7] Crim Truck & Tractor Co. v. Navistar Intern. Transp. Corp., 823 S.W.2d 591, 593 (Tex. 1992).
[8] Texas Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex.1980).
[9] Tex. Bus. Org. Code § 152.206 (partnerships).
[10] Home Loan Corp. v. Texas American Title Co., 191 S.W.3d 728, 731 (Tex.App.—Houston [14th Dist.] 2006, pet. denied).
[11] National Plan Administrators, Inc. v. National Health Ins. Co., 235 S.W.3d 695, 701 (Tex. 2007).