Colorado Breach of Fiduciary Duty Lawyers
What is Breach of Fiduciary Duty?
Breach of fiduciary duty is a cause of action frequently brought as one of a number of claims in the same lawsuit such as outrageous conduct or negligence. In order to bring a claim for breach of fiduciary duty, there must be some kind of relationship between the plaintiff and defendant that serves as a predicate to finding a fiduciary duty. Whether you are being sued for breach of fiduciary duty - or looking to bring a breach of fiduciary duty action against another - the need for swift and efficient resolution is of utmost importance.
At Volpe law, our breach of fiduciary duty lawyers prioritize our client's interests and work diligently to resolve any and all situations where breach of fiduciary duty is at issue. Contact us today at 720-441-3328 or complete a Consultation Request Form to request a Free Consultation.
Elements of Breach of Fiduciary Duty in Colorado
In general, there are four elements that a plaintiff must prove for a breach of fiduciary duty claim:
- The defendant acted as a fiduciary of the plaintiff;
- The defendant breached its fiduciary duty to the plaintiff;
- The plaintiff incurred damages; and
- Defendant's breach of fiduciary duty caused the plaintiff's damages.
Importantly, however, a court may conclude that, as a matter of law, a fiduciary relationship existed, and therefore only the latter three elements will need to be proved.
What is a Fiduciary Relationship?
In order to find a fiduciary duty between individuals, there must first be evidence of a fiduciary relationship. A “fiduciary relationship” exists “where one person is under a duty to act for or to give advice for the benefit of another upon matters within the scope of their relationship.” Some examples of duties include:
- Between an officer and director of a corporation
- Between a corporation and its shareholders
- Between partners
- Between joint venturers
Furthermore, a fiduciary relationship may also stem from a confidential relationship between parties. For a fiduciary relationship to arise out of a confidential relationship, the plaintiff must show that:
- He/she reposed special trust or confidence in the defendant;
- Doing so was justified;
- The defendant invited, accepted, or acquiesced in that reposition of trust; and
- The defendant agreed to act for the plaintiff's benefit.
Even in fact patterns where a fiduciary duty exists, it is important to note that parties to the relationship may modify or disclaim the relationship.
What Are Some Examples of Fiduciary Duties?
Below are some of the most common types of fiduciary relationships and the duties that stem from them.
Because an employee is required to act in the best interests of his/her employer in matters connected to that employment, a fiduciary relationship exists between them. On the other hand, employers do not generally owe the same duty to their employees. The contents of an employment contract are determinative in finding a fiduciary duty between an employer and employee.
Partners and Joint Venturers
Partners in business owe one another many fiduciary obligations such as: duty of loyalty, standards of good conduct and fair dealing, full, fair, open, and honest disclosure of anything affecting their relationship, and the duty not to misrepresent or conceal material facts from one another. Similarly, joint venturers typically owe one another the fiduciary duties of loyalty, fairness, openness, and honest disclosure.
Corporate Officers and Directors
A corporate director and officer has a fiduciary duty to act in good faith and in the best interests of the corporation and its shareholders, failure of which can result in a shareholder lawsuit. Among the duties owed to the corporation are:
- The obligation to assign patent rights;
- The obligation to deal fairly when buying stock from minority shareholders; and
- The duty not to act in contravention of a corporation's interests.
Notwithstanding these duties, directors have broad discretion in making business decisions as long as they act in good faith (i.e., the "business judgment rule")
Banks and Lending Institutions
In a relationship between a bank and its customers, the question of the existence of a fiduciary duty is triggered when the parties are in a lender-borrower relationship, and a breach of that duty typically involves a breach of confidence or the disclosure of information assertedly exchanged in confidence.
Courts now acknowledge a fiduciary relationship between a homeowners' association and a homeowner. Specifically, the association “has a general fiduciary duty to deal with the utmost good faith and to deal impartially with the homeowners.” In addition, HOAs also owe homeowners “a fiduciary duty to enforce restrictive covenants, and any approval disapproval of plans must be reasonable and made in good faith, and neither arbitrary nor capricious." Board members - when acting on behalf of the HOA or in their official capacity as board members - have a fiduciary duty to homeowners as well.
Apart from specifically enumerated duties in trust documents or wills, trustees generally owe “a duty to the beneficiaries to exercise that degree of care and skill that a person of ordinary prudence would exercise in preserving his own property.” The relationship between a trustee and a beneficiary is one clearly marked by fiduciary duties, as the nature of the relationship is specifically economic.
Insurers and Insurance Agents
Colorado courts have conclusively rejected the notion that there exists a fiduciary relationship between insureds and insurers. Instead, the relationship is “quasi-fiduciary,” and courts limit that characterization to the insurer-insured relationship in liability insurance. Therefore, an insurance agent owes no fiduciary duty to his/her clients, for example, to inform them of particular insurance coverage.
What are the Damages for a Breach of Fiduciary Duty in Colorado?
As with other tort claims, a plaintiff may recover economic, noneconomic, and punitive damages. However, it is important to note that the “economic loss rule” may apply to a lawsuit that includes an allegation of breach of a fiduciary duty. This rule bars recovery of economic damages for relationships based in contract, as contract law is the sole remedy for breach therein. In addition, noneconomic damages that result solely from monetary loss are usually not recoverable in breach of fiduciary duty actions.
Contact a Lawyer Today
If you are involved in litigation or a dispute involving fiduciary duties, contact us to learn how we can help. Call us today at 720-441-3328 or complete a Consultation Request Form to request a Free Consultation.
The information contained on this website is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter. Laws frequently change and therefore this content is not necessarily up to date, nor comprehensive. Contact us or another attorney with any legal questions specific to your matter. You may request a consultation by completing our consultation request form