4 Elements of a Breach of Fiduciary Duty Claim
Under Colorado law, there are four elements to a claim/cause of action for breach of fiduciary duty. The four elements are:
- The defendant was acting as a fiduciary of the plaintiff;
- The defendant breached a fiduciary duty to the plaintiff;
- The plaintiff suffered damages as a result of the breach; and
- The defendant’s breach of fiduciary duty caused the plaintiff’s damages.
The Four Elements
(1) Fiduciary Duty
The “fiduciary duty” element requires that the defendant owe a special duty to the plaintiff. Examples include the duty that a trustee owes to the beneficiaries of a trust, the duty owed by officers and directors of a corporation to the shareholders of such corporation, and the duty owed by a majority shareholder in their dealings with minority shareholders.
The “breach” element goes to whether the person owing the fiduciary duty breached such duty. This is typically a fact-intensive question for the jury and is likely the most contentious issue at trial.
Once a duty is established and breach can be shown, a plaintiff must show that the breach caused him or her damages.
The plaintiff must show that the damages he or she suffered were actually caused (1) by the defendant and (2) because of their breach of fiduciary duty. “The element of causation is satisfied when the plaintiff proves that the defendant’s conduct was a substantial contributing cause of the injury.” Aller v. Law Office of Carole C. Schriefer, P.C., 140 P.3d 23, 26 (Colo. App. 2005)
How Does the Law Define Fidcuiary Duty?
A duty of utmost good faith, trust, confidence, and candor owed by a fiduciary (such as an agent or a trustee) to the beneficiary (such as the agent’s principal or the beneficiaries of the trust); a duty of utmost good faith, trust, confidence, and candor owed by a fiduciary (such as a lawyer or corporate officer) to the beneficiary (such as a lawyer’s client or a shareholder); a duty to act with the highest degree of honesty and loyalty toward another person and in the best interests of the other person (such as the duty that one partner owes to another).
What is a Fiduciary?
What Duties Does a Fiduciary Owe?
What Constitutes a Breach of Fiduciary Duty?