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Breach of Fiduciary Duty

A legal duty owed to another is an obligation that, generally, is supported by law and recognized by courts. Depending on the relationship between the parties, the legal duty owed will vary. For instance, while driving on a public roadway, drivers owe a duty to other drivers not to hit them. If that duty is breached through negligence, the offending party will be held liable for the resultant damage. In the case of the special relationship created between individuals where there is an element of trust and reliance upon advice given for the benefit of another, there may be a unique duty created called a “fiduciary duty.” A fiduciary duty involves a higher standard of care than most other legal duties and can be created through circumstance.

The Houston Partnership Dispute Attorneys and the West Houston Breach of Fiduciary Duty Lawyers at the Law Offices of Steven Tuan Pham have assisted numerous clients in resolving business disputes, breach of business contracts, and prosecute against partners, members, shareholders, agents, managers, and board of director members who breached their fiduciary duties. At the same time, our Houston Business Litigation Attorneys and our Houston Commercial Dispute Lawyers have assisted clients in defending against malicious suits and false allegations of fraud, embezzlement, breach of contract, and breach of fiduciary duty. Please contact our Houston Commercial Litigation Attorneys and our Southwest Houston Partnership Dispute Lawyers for assistance regarding matters of your concern.

How Is Fiduciary Duty Created?

A fiduciary duty can be created through an agreement between the parties, but most often brought into being by the simple nature and extent of the relationship between the individuals or between an individual and an entity. Whether a fiduciary duty exists is a question of fact that is decided by either the court or a jury. When parties act within a fiduciary relationship, they consent to be bound by the rules of that special relationship. Perhaps the cornerstone of a fiduciary relationship is the notion of fair dealing and good faith. That is, parties in a fiduciary relationship should hold the interest of each other in high regard and not merely coincidental to the alliance. Fiduciary relationships can exist where there is trust and reliance and absent any formal relationship like a lawyer/client or partner/partner relationship. Simply put, fiduciary relationships can be formal or informal.

Some examples of fiduciary relationships are: lawyer/client; business partners; officers and directors of corporations to the corporation; and trustee to trust beneficiaries, among others. Some fiduciary relationships have duties unique to that particular relationship. For example, lawyers owe the duty to preserve client confidences; the duty to turn over funds belonging to the client; the duty to act with openness, honesty and candor and without deception; the duty of honesty regarding the fee agreement; the duty to refrain from self-dealing; and the duty to let the client know of conflicts of interest in a timely manner as well as other duties.

Another common fiduciary relationship exists between partners. Partners owe one another the duty of loyalty to the partnership’s common concern; the duty of the utmost fairness, good faith and honesty in dealings with other partners regarding matters relative to the partnership’s purpose; the duty to fully disclose issues affecting the partnership; the duty to account for all partnership property; and the duty not to compete with the partnership.

Corporate Officers, Company Managers, and Board of Directors

With few exceptions, corporate directors, corporate officers, and managers of a company (LLC) have similar duties to those of partners. For example, corporate officers and directors have the duty of loyalty; the duty to fully disclose any personal interests in corporate business dealings (good faith and fair dealing); and, the duty not to usurp corporate business opportunities for personal gain. If a corporate officer or a company manager acts in ways that violate their fiduciary duties, actions must be taken immediately to avoid further damages to your corporation, to your company, and to your business. Actions that can be taken against a shareholder, manager, corporate officer, and board of director members in a breach of fiduciary action includes summarily dismissal, injunctions, declarations, disgorgement of benefits and interests, obtaining damages or compensation, account for profits, rescission of relevant contracts, and/or restoration of company's assets. Please contact the Houston Breach of Fiduciary Duty Attorneys and the Houston Breach of Contract Lawyers at the Law Offices of Steven Tuan Pham should you have further questions.

What Are Some Fiduciary Duties?

Fiduciary duties can be general in nature and apply to all fiduciary relationships. Some general fiduciary relationship duties are: the duty of utmost good faith and loyalty; the duty of candor; the duty not to self-deal; the duty to act with strictest integrity; the duty to be informed and to act prudently, the duty of honest and fair dealing; and the duty to fully disclose.

In cases involving breach of a fiduciary relationship, the complaining party must show that the breaching party owed a duty to the claimant that rises to the level of fiduciary and the breach must have resulted in damages to the aggrieved party. Courts look to several factors when deciding if transactions between fiduciaries were fair. Some of those factors are: whether there was full disclosure surrounding the transaction; the adequacy of the consideration; did the beneficiary of the relationship have third party advice; and, did the fiduciary benefit at the expense of the beneficiary. Misapplication of fiduciary property can be considered a crime under the Texas penal code §32.45 with an increase in penalty if the crime was perpetrated against an elderly person.

Recovering For Damages

If you prevail at trial on a breach of fiduciary duty, you could recover actual damages (out of pocket damages or lost profits), reimbursement of any fee you may have paid to the fiduciary, an accounting, pre and post judgment interest and equitable relief in the form of a constructive trust or an accounting. A plaintiff may also recover damages stemming from mental anguish that resulted from public embarrassment. Exemplary damages are available to a plaintiff who can show the breach was intentional.

If you believe you have been the victim of a breach of fiduciary duty or if you have been sued for breach of fiduciary duty, contact the Houston Business Litigation Lawyers and the West Houston Commercial Litigation Attorneys at the Law Offices of Steven Tuan Pham Our West Houston Partnership Breach Attorneys, working in conjunction with our Southwest Houston Breach of Fiduciary Duty Lawyers will provide you with a personal a consultation to learn of your legal options. Do not make any drastic decision prior to consulting with an experienced Houston Business Litigation Attorneys at Law Offices of Steven Tuan Pham


Each commercial litigation suit is unique depending on the fact and the contract, if any, in which you agreed and signed with the opposing party.  You should NOT rely on the information on of this web site in replacing a personal consultation with an experienced Houston Breach of Fiduciary Duty Lawyers and the West Houston Business Contract Breach Attorneys at the Law Offices of Steven Tuan Pham  There may be legal issues in which you may not be aware. Please feel free to contact our Houston Business Litigation Attorneys and our Houston Partnership Dispute Lawyers at the Law Offices of Steven Tuan Pham today at 713-517-6645 or complete our Contact Form.