Breach of Fiduciary Duty Attorney in Miami

The specific fiduciary duties vary depending on the relationship. Within the context of Florida businesses, key fiduciary duties include:

• Duty of Care: Fiduciaries must act as a reasonable and prudent person would in similar circumstances, exercising informed business judgment in transactions and company oversight.
• Duty of Loyalty: Fiduciaries must prioritize the principal’s interests over their own, acting with honesty, good faith, and fair dealing. Personal financial interests should not conflict with those of the principal.
• Duty of Candor: Fiduciaries are required to fully disclose material information that could harm the business or individual to whom the duty is owed. This duty often arises in corporate settings among management, board members, and shareholders.

Fiduciary duties can arise from law, contract, or by virtue of the circumstances surrounding business relationship and/or transaction.  In the business context, these duties can be contingent on the legal structure of the company as well as the laws of the state where it was incorporated. Florida business laws that establish fiduciary duties include:

Partnership Law

Partners owe each other and the partnership duties of loyalty and care. These duties prohibit competition with the partnership, acting on behalf of adverse parties, and engaging in reckless or illegal conduct. Partners must also account for any benefits derived from partnership business or property.

Limited Liability Companies (LLCs) Law

Florida LLC members and managers generally owe duties of loyalty and care to the LLC and its members. While Florida law allows people to “customize” an LLC operating agreement to limit some duties, certain limitations apply.  An LLC agreement cannot eliminate the obligation of good faith and fair dealing.

Corporate Law

Corporate officers in Florida owe fiduciary duties to the corporation and its shareholders, acting in good faith and in the corporation’s best interests. They must disclose conflicts of interest and obtain approval for transactions involving personal interest.

Closely Held Corporations

In closely held corporations, fiduciary duties among shareholders can be complex. Many states liken these duties to those in partnerships, where all shareholders owe duties to the corporation and each other. However, Florida law is unsettled on this issue, with some cases supporting this approach and others not. To mitigate uncertainty, shareholders should consider a well-drafted shareholders’ agreement to define their duties.

Fiduciary duties can sometimes be waived or limited.  Corporations in Florida often insure and indemnify their directors and officers against breaches, and may limit personal liability for specific duties and have some protection under the business judgement rule.  That said, corporations in Florida may not entirely waive the fiduciary duties of its directors, and directors still owe a duty of loyalty and a duty of care.  Similarly, Florida LLCs can modify the liability of managers or members through their operating agreements, within certain legal bounds.

Breaches typically occur when fiduciaries prioritize their own interests or someone else’s interests over those of the principal. Common examples include:

• Self-dealing: Accepting excessive payments, misusing company assets, competing with the business, or engaging in insider trading.
• Usurping a corporate opportunity: Benefitting personally from opportunities meant for the company without consent.
• Failure to disclose information: Not providing crucial information, failing to disclose conflicts of interest, or withholding details about business opportunities.

To sue for breach of fiduciary duty in Florida, a plaintiff must prove:

1. The existence of a fiduciary relationship and duty;
2. A breach of that duty; and
3. Resulting damages.

However, a claim for a breach of a fiduciary duty is often not, by itself, enough to necessarily implicate the fiduciary; a plaintiff must also overcome what’s know as the business judgment rule. This rule presumes that a corporate director or officer acted in good faith, and in the best interest of the corporation, which serves to deter frivolous lawsuits stemming from poor decisions. However, the business judgment rule can be overcome if the plaintiff proves fraud, illegal conduct, conflicts of interest, bad faith, or neglect of duties. The rule also has very limited protect for decisions made without a business justification, uninformed decisions, or certain failures to act when necessary for the business.

A plaintiff in a fiduciary duty claim can typically seek either of the two types of remedies: (1) monetary compensation to cover the losses incurred from the breach, or (2) equitable relief, which may involve halting or reversing a transaction, or even the removal of the fiduciary from their position.