Is there a fiduciary relationship at all
This is often the most contested issue. Some roles carry fiduciary duties by their nature, such as trustees, executors, and agents, and in many business forms partners or managers owe duties to one another or to the company. Outside those roles, ordinary arm's-length business relationships generally do not create fiduciary duties, even when one side trusted the other a great deal. New York courts sometimes recognize a fiduciary relationship arising from special trust and confidence, but the facts must show more than a normal commercial deal. Operating agreements and partnership agreements can also define, and in some cases narrow, the duties owed. Reading those documents closely is often the first step, because they may answer the question before any case law is needed.
What counts as a breach
Once a duty exists, the question becomes what it required and whether the conduct fell short of it. Self-dealing, taking a business opportunity that belonged to the company, and using confidential information for personal gain are common examples under the duty of loyalty. Other claims involve carelessness rather than disloyalty, and those often face higher hurdles, including contractual limits on liability. In New York, a fiduciary claim that simply restates a contract claim, without a duty independent of the contract, is frequently dismissed.
Connecting the conduct to the harm
A claim also needs a link between the misconduct and a loss, or in some cases a gain the fiduciary should not be allowed to keep. Remedies in New York can include damages, disgorgement of profits, and, in some employment and agency settings, forfeiture of compensation earned while disloyal. The time limit to sue can depend on the remedy sought and on whether the claim rests on fraud. Bring the agreements that defined the role, the financial records showing the transactions you question, and your communications with the fiduciary. We test each piece against your facts before deciding whether a claim is worth pursuing.
