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breaches of fiduciary duty

Ethical and legal responsibilities are the cornerstones of fiduciary duty.

Texas judicial systems place severe responsibility on those with the title of fiduciary. If someone has or may allege that you have breached a fiduciary duty, you need a lawyer.

There are breach of fiduciary attorneys who can help you understand all that may encompass the landscape of breach of fiduciary duty. Texas lawyers in this field stand ready to defend you if needed.

Key Takeaways: Breach of Fiduciary Duty in Texas

  1. Fiduciary Duty Importance: Texas law places significant responsibility on fiduciaries, emphasizing the need for ethical and legal adherence in managing another’s interests.
  2. When Fiduciary Duty Arises: A fiduciary duty exists in relationships where one party acts on behalf of another, requiring prioritization of the client’s interests. Examples include lawyers and clients, trustees and beneficiaries, and corporate officers and shareholders.
  3. Breach Examples: Breaches can occur in various scenarios, such as a corporate officer not disclosing conflicts of interest or an executor mismanaging estate assets.
  4. Legal Standards for Breach: To claim a breach of fiduciary duty, one must prove the existence of a fiduciary relationship, the defendant’s breach of duties, and the resulting injury or benefit.
  5. Defenses Against Allegations: Defenses include proving no breach occurred, the duty had ended, the issue was personal rather than fiduciary, or the breach caused no harm.
  6. Seek Legal Assistance: Facing allegations or being concerned about potential breaches requires consulting with experienced attorneys to navigate the complexities of fiduciary duties and defenses.

When Is There a Fiduciary Duty?

Texas finds a fiduciary duty for a person or organization that acts on behalf of another person. A fiduciary duty requires you to put your clients’ interests ahead of your own. There are several types of fiduciary relationships. For instance, common professional relationships are:

  • Promoters and stock subscribers,
  • Lawyers and clients,
  • Investment corporations and investors,
  • Insurance companies/agents and policyholders,
  • Trustees and beneficiaries,
  • Corporate board members and shareholders; and
  • Executors and beneficiaries.

There are various complexities to the services and responsibilities of each type of fiduciary duty. Every fiduciary must know and follow the expectation specific to them. 

General Fiduciary Duties

The law expects every fiduciary to protect their client’s best interests and consistently show a high level of ethics when making decisions on their behalf. Various Texas laws address fiduciary responsibilities. Again and again, they bind a fiduciary legally to act in the other’s best interests and follow specific rules concerning their relationship.

Examples of Breach of Fiduciary Duty 

Texas law allows for a wide breadth of situations to encompass a breach of fiduciary duty. It seeks to protect all manner of individuals to whom a fiduciary duty is owed. Here are two examples of conditions where a breach of fiduciary duty in Texas could exist.

A Corporate Officer 

Corporate officers and directors owe clear fiduciary duties to the corporation for which they work. As a result, they are bound to an honest relationship with the corporation, including being fully transparent regarding competing interests.

For example, consider a situation where:

  • A corporate officer uses their influence or power to hire contractors to work on projects for the corporation; and
  • The corporate officer does not inform the company that the contractors they hire are tied to a company owned by their spouse’s family. 

This could be a breach of fiduciary duty. It would be irrelevant whether the contractors were competent. The primary issues are that the corporate officer was not transparent and that their decision as a fiduciary was not without clear potential legal, ethical, and financial conflicts.

An Executor of an Estate

The office of executor is complicated and vital. An executor is tasked with many responsibilities, including:

  • Finding and organizing documents,
  • Taking inventory, 
  • Identifying and notifying beneficiaries, and
  • Managing assets.

It is carrying out the last item on the above list—managing assets—which most often will lead to a claim of breach of fiduciary duty. Texas law requires executors to make sure that the assets of the estate stay secure and properly maintained. If an executor uses an estate’s income for personal use or ignores an estate’s business and allows it to deteriorate or close while taking no action, they may have violated their fiduciary duty. Many things can go wrong in estate administration, and executors who misstep may get involved in a dispute over fiduciary duty in Texas.

Exact Legal Standards for Fiduciary Cases 

Fiduciary duty is more than a moral, social, or personal relationship of trust. Legally, the elements of a breach-of-fiduciary-duty claim must show:

  • The existence of a fiduciary relationship between the plaintiff and defendant; 
  • The defendant’s breach of the fiduciary duties arising from that relationship; and 
  • Injury to the plaintiff, or benefit to the defendant, resulting from that breach.

Courts lean toward protecting those whom the fiduciary is expected to serve and can be stern toward those with the duty.

Defenses to Breach of Duty in Texas

You will need a lawyer skilled in fiduciary cases to analyze your situation and prepare the best defense. It is not enough to say that a breach of fiduciary duty was not intentional or that you did not understand the fiduciary duty. Texas also does not provide a loophole for powerful 

professionals such as attorneys or investment bankers to avoid responsibility.

However, do not lose hope if you are facing a breach of duty allegation. There are strong winning defenses, including that:

  • You did not breach your duty;
  • Your fiduciary duty ended;
  • The allegation was not about fiduciary duty, but a personal grudge/issue; or 
  • The alleged breach did not result in injury to the plaintiff or benefit to you.

Whether someone has unjustly accused you of breach of fiduciary duty or you are concerned that you may have breached a duty, you need legal help. Take no action without first consulting a trusted, experienced lawyer who will start by working with you to determine what success for your case looks like and develop a plan to get you there. 

The Hunnicutt Law Group: We Never Lose Sight of What It Means to Be the Client

Lawyer Steve Hunnicutt founded and still leads the top-rated Hunnicutt Law Group. Mr. Hunnicutt has practiced law for 30 years. Prior to starting his firm, he served as in-house counsel for a Fortune 500 company and worked for a large law firm. The Hunnicutt Law Group will never lose sight of your best interests. We will offer you the representation that you deserve. 

At The Hunnicutt Law Group, you benefit from a highly knowledgeable attorney’s experience. You will receive an in-depth look at the intricacies of your unique matter without the high fees of big downtown firms. Call us today at 214-361-6740 or contact us online or by email to arrange a time to meet in person or via video conference. 

Author Photo

J. Stephen Hunnicutt

Our founding attorney, Stephen Hunnicutt, set the precedent for a commitment to excellence and a focus on the client. With 25 years of experience, he has handled countless cases involving business litigation and commercial litigation. Over the years, Mr. Hunnicutt has worked as in-house counsel for a Fortune 500 energy company, a large firm, a small firm, and finally, in his own practice.

Read more articles by Stephen Hunnicutt

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