A “fiduciary” refers to an individual or entity with a legal duty to act in the best interest of someone else (the beneficiary). These relationships typically arise in the context of a business or professional relationship. However, the idea of a fiduciary relationship has a broad meaning and includes technical and informal relationships that occur whenever one person trusts and relies upon another.
Fiduciaries occupy a unique position of confidence toward their beneficiaries. As such, breach of fiduciary cases offer a wide range of remedies to beneficiaries. These cases involve a complex interplay of complicated statutes. Thus, it is crucial that individuals pursuing claims against a fiduciary consult with an experienced attorney to discuss their rights and remedies.
Proving Breach of Fiduciary Duty in Texas
Under Texas law, a beneficiary asserting a breach of fiduciary duty claim must establish four primary elements:
- The fiduciary owed the beneficiary a duty;
- The fiduciary breach their duty;
- The beneficiary suffered harm, or the fiduciary unlawfully benefited from the breach; and
- The beneficiary must demonstrate the amount of their losses or the fiduciary’s ill-gotten benefits.
Texas recognizes both formal (express fiduciary relationships) and informal fiduciary relationships. However, formal relationships are established as a matter of law. Some examples of formal fiduciary relationships in Texas include the following:
- Agent and principal,
- Attorney and client,
- Corporate officers and the corporation,
- Real estate broker and a client, and
- Trustee and beneficiary.
Informal relationships arise from the fundamental nature of the relationship. Common examples of informal fiduciary relationships include the following:
- Parent and child,
- Teacher and student, and
- Friends.
Breach of fiduciary cases involving informal relationships is more difficult to prove.
Breach of Fiduciary Duty Damages
Generally, in Texas, fiduciary duties include the duty of care, loyalty, good faith, confidentiality, prudence, and disclosure. However, in some cases, depending on the circumstances, a fiduciary may owe their beneficiary a special duty. But how can you rectify the situation if there is a breach? And what damages are available for breach of fiduciary duty?
Pretrial Remedies
In some cases, a beneficiary may need to seek a remedy before trial to protect themselves from immediate injury or to discover the extent of the parties’ relationship and breach. There are three primary pretrial remedies available to beneficiaries in these cases.
- Temporary Injunctions,
- Receiverships, and
- Audit Relief.
Moreover, in some cases, a beneficiary might consider other remedies such as attachment, garnishment, and repossession.
Legal Damages
Courts may award actual damages to beneficiaries who successfully assert a breach of fiduciary claim against a fiduciary.
Direct Damages
Direct damages, also known as “general damages,” compensate the beneficiary for losses the fiduciary should have foreseen. One measure that courts use to determine direct damages is by evaluating the benefit of the bargain. This measure uses the expectation damages theory and considers the difference between the value given and the value promised.
Consequential Damages
Consequential damages refer to losses that stem naturally, but not necessarily, from the at-fault party’s breach. Beneficiaries seeking consequential damages must prove that the damages are a proximate result of the fiduciary’s wrongful act.
Mental Anguish
In some cases, a beneficiary may recover damages for emotional distress if the damages were a foreseeable result of the fiduciary’s breach. However, these damages are hard to prove, and the Texas Supreme Court has noted that mental anguish refers to a high degree of pain and distress. In most cases, the aggrieved party must present direct evidence of their mental anguish.
Prejudgment Interest
In Texas, courts have the discretionary power to award prejudgment interest.
Exemplary Damages
Exemplary damages refer to damages awarded to punish the at-fault party. In these cases, the claimant must establish by clear and convincing evidence that the harm resulted from fraud, malice, or gross negligence.
Other potential remedies include constructive trusts, accounting, permanent injunction, rescission, equitable liens, declaratory relief, and partition.
Determining Damages for Breach of Fiduciary Duty
A common issue that arises in breach of fiduciary cases is what the court uses to determine remedies. Depending on the facts and circumstances of the case, the law permits a party to submit the issue of legal damages to a jury. However, trial courts typically have the right to resolve equitable remedy issues. It is important that beneficiaries seeking damages against a fiduciary consult with an attorney and determine all available remedies before trial.
Consult with an Experienced Attorney
If you suffered financial injury as a result of another person or entity breaching a fiduciary duty that was owed to you, contact the dedicated estate lawyers at Robbins Estate Law. We have extensive experience representing those who were wronged by trustees and executors. We understand your frustration, and we are ready to help in any way we can. To learn more about how we can help you reach the outcome you’re looking for, contact us today.
Kyle Robbins
Kyle Robbins is the founder and sole owner of The Law
Offices of Kyle Robbins. He received his J.D. with honors from the University of Texas School of Law and his B.S. in Food Chemistry and Microbiology from Oklahoma State University.
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