In its simplest form, breach of fiduciary duty involves violating one’s position of trust to another party. In order to prevail on a claim for breach of fiduciary duty, you must prove by a preponderance of the evidence (i.e., more likely than not), the following elements:
Fiduciary obligations arise between two parties when one party is generally expected to trust and rely upon the other party to handle property, money, or other business affairs. Classic examples of fiduciary relationships include attorney-client, accountant-client, doctor-patient, and business partner relationships. In the absence of some formal arrangement (such as those obvious relationships just identified), there must be evidence demonstrating that: 1) one party placed a special trust in the other that was related to the management of business or other property; and 2) the trust was so placed because the defendant influenced and “broke the willpower” of the trusting party.
It is important to keep in mind that, in many (possibly most) cases, the existence of a fiduciary relationship is determined by Missouri’s courts on a case-by-case basis. For example, neither business nor family relationships necessarily give rise to a fiduciary or confidential relationship of the nature that would permit you to pursue a breach of fiduciary duty claim. On the other hand, fiduciary obligations can arise in some relationships as a matter of law (e.g., attorney-client, doctor-patient, business partners, etc.), as well as in other situations arising due to the degree of trust given to the defendant with respect to property, the affairs of others, or by virtue of previously agreed-upon contractual terms.
For Missouri’s employees, absent a covenant to not compete or other legally binding (most aren’t) employment agreement, an at-will employee (who is not an officer or director of the employer) owes no fiduciary duty to his or her employer. However, under extreme circumstances, an employee’s actions could be deemed so egregious (e.g., proving proprietary trade secrets to a competitor) that an implied duty of loyalty to the employer may be deemed to exist.
Special or confidential relationships (other than those arising by operation of law—attorney-client, doctor-patient, business partners, etc.) giving rise to fiduciary obligations can be generally characterized by situations such as:
Shareholders in a corporation owe a fiduciary duty to one another to operate in good-faith and act in the best interests of, not only the company, but fellow shareholders. Importantly, shareholders’ duty of loyalty to one another exists by virtue of their status as shareholders, not the result of any contractual agreement. Thus, at least in Missouri, shareholders’ duty of loyalty to their fellow shareholders is not something that they can contract around.
The Missouri Supreme Court has identified ten (10) substantive areas in which a shareholder’s duty of loyalty is subject to breach:
Shareholders’ fiduciary duties becomes particularly important in business relationships involving minority shareholders. The Missouri Supreme Court has also held that, when conducting the affairs of a company, dominant shareholders owe minority shareholders the fiduciary duty to operate the company in good-faith and to engage in fair dealing with minority shareholders. Simply put, majority shareholders are considered to be fiduciaries under Missouri law, and thus, their dealings with the corporation are subjected to rigorous scrutiny. That is, where any of the majority shareholders’ contracts or engagements with the corporation is challenged, the burden is on the dominant shareholder to prove, not only good faith with regard to the transaction, but also to show the inherent fairness of the transaction from the viewpoint of the corporation and all of its shareholders (i.e., including—especially—minority shareholders).