BREACH OF FIDUCIARY DUTY
In general, a fiduciary owes a duty to act fairly and in the very best interests of the person to whom the duty is owed. When someone has a fiduciary duty, this implies that they have a relationship based on trust. When that trust is broken or abused, you may be able to receive compensation for your losses.
In the area of business law, many breaches are the result of self-dealing, nondisclosure, or fraud on the part of officers, directors, or majority shareholders. The fraud mentioned here can take many forms and can result in great financial loss for other business owners and shareholders. Another form of breach can occur when a board of directors or other officer acts against the overall needs of the corporation.
In an employer-employee setting, an employer who sues a former employee who has recently gone into competition with the employer will often times include a claim for a breach of a fiduciary duty of loyalty. It is well known that a corporate officer or director of a business will be under a fiduciary duty to the corporate business. However, an employee not in a position such as an officer or director may or may not be a fiduciary as there are several factors that must be considered. The Wisconsin Supreme Court has stated that a “key employee” owes a fiduciary duty. For instance, the individual’s managerial duties, whether the position is one of authority, and whether the individual possesses superior knowledge and influence over another all contribute to determining if an individual has a fiduciary duty as a “key employee.”
When a falling out occurs amongst shareholders, partners, or members in a small business, this can often result in heated litigation. Majority owners will often attempt to freeze out the minority owners by terminating the minority owner’s employment, voting him or her out as an officer or director, or by reallocating profits as expenses in order to avoid the payment of dividends. In Wisconsin, majority shareholders, officers, and directors all owe a fiduciary duty to the business entity and the minority shareholders. Depending on the circumstance, our attorneys at Levine Lyon & Eisberner LLC can analyze the reasons for termination and see if a fiduciary duty was present or defend against a claim of breach of fiduciary duty.
If you believe that you are a victim of a breach of fiduciary duty, please contact one of our attorneys at Levine Lyon & Eisberner LLC immediately as there is a two-year statute of limitations regarding these matters.