The term fiduciary refers to a relationship in which one person has a responsibility of care for the assets or rights of another person. A fiduciary is an individual who has this responsibility. The term “fiduciary” is derived from the Latin term for “faith” or “trust.” A fiduciary duty claim arises when it becomes evident that a party may have violated this trust in some way.
Fiduciary responsibilities are an important aspect of many different business operations. Partners, corporate directors and officers, majority shareholders, trustees, pension fund advisers and directors and attorneys are a few examples of business professionals who may sometimes operate in a fiduciary capacity and, as a result, face specific added risk in discharging their resulting heightened responsibilities. The Corby Law business litigation team are experienced in building strategies for individuals charged with violation of appropriately carrying out their assigned fiduciary duties. Business litigation cases involving elements of fraud require the expertise of an experienced corporate law firm.
Elements of a Fraud Claim
1. Existence of a relationship of trust and confidence.
2. Proof of a benefit to the defendant
3. Determining if it’s an actual fraud claim or a constructive fraud claim. (Note: Constructive fraud is based on a confidential relationship rather than specific misrepresentation. Unlike actual fraud, the intent to deceive is not an element of constructive fraud. Actual fraud is specific misrepresentation with the intent to deceive.)
4. There is a difference between a constructive fraud claim and a breach of fiduciary duty claim. The necessary allegation for a claim of breach of fiduciary duty requires proof of the existence of an established fiduciary relationship. The requirement that an individual sought to benefit wrongfully from the transaction is not an element of a claim for breach of fiduciary duty and that is the primary difference between pleading a claim for constructive fraud, and one for breach of fiduciary duty.
The following is a North Carolina case that illustrates the importance of filing the correct charges.
Allran v. Branch Banking & Trust Corp. (Lawyers Weekly No. 11-15-0698, 14 pp.) (Calvin E. Murphy, J.) N.C. Bus. Ct. Holding: The plaintiff-borrower alleges that the defendant-bank (1) failed to reveal that the land the borrower was buying was not worth the purchase price and (2) falsified closing documents; these allegations are not sufficient to show any fiduciary duty or fraud, but they are sufficient to state a claim of unfair and deceptive trade practices. The bank’s motion to dismiss is granted as to plaintiff’s claims of breach of fiduciary duty, constructive fraud, fraud, and fraud in the inducement. The motion to dismiss is denied as to plaintiff’s unfair trade practices claim.
As you can see, filing and prosecuting a breach of fiduciary duty claim is no simple task. If you find yourself threatened with a fiduciary duty claim, then call The Law Office of Stephen M. Corby for a private consultation with one of our experienced corporate lawyers.