Structuring a business as a corporation creates duties that must be fulfilled by key players, called fiduciaries. Directors and officers of a corporation have fiduciary duties to their corporation and its stockholders. If a director or officer does not fulfill those duties, a breach of fiduciary duty may have occurred.
Directors and officers have a duty to fulfill their responsibilities to the corporation as outlined in the corporate documents and in the law. Fiduciaries must fulfill a duty of loyalty and a duty of care. This means that they must prioritize the best interests of the corporation over their own interests, and they must be prudent in carrying out their duties.
Some examples of breach of fiduciary duty include:
- Conflicts of interest
- Competing with the corporation
- Secretly profiting from corporate business
- Failing to regularly attend board meetings
- Failing to supervise staff
- Failing to review a corporate matter
If a corporate officer or director performs one of the actions described above, and if doing so resulted in damage to the corporation, the officer or director can be held liable for breach of fiduciary duty. Breach of fiduciary duty can also occur in partnerships or limited liability companies.
One challenge in fiduciary duty law is determining whether or not the officer or director acted in good faith. If the individual exercised business judgment but his or her decision eventually harmed the corporation, breach of fiduciary duty does not apply.
If breach of fiduciary duty occurred, the beneficiary of the fiduciary duty can file a lawsuit against the person who breached the duty. Additionally, the company can remove the fiduciary from the position. The purpose of a breach of fiduciary duty lawsuit is to recover damages associated with the breach and to prevent the fiduciary from performing further harmful actions.
If you believe a breach of fiduciary duty has occurred, a consultation with an attorney is the first step to resolving the situation. LaGarde Law Firm has represented numerous businesses in breach of fiduciary duty matters. We offer a business contingent fee model to help you pursue your case without financial hardship.
We front the costs associated with the lawsuit. We are paid if and when we obtain a favorable result in your case. In addition to our fee, we are reimbursed for court costs and other expenses that we have incurred on our client’s behalf. We would be happy to meet with you for a free, zero-obligation consultation.