Frequently, two or more people will combine their financial resources, efforts, skill, and knowledge in furtherance of some business enterprise and in the hope of generating a profit. These co-venturers may choose not to form a corporation or limited-liability company, but instead operate along less formal lines. They may choose to bind themselves to some…
"Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. . . . Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” Thus did Judge Benjamin Cardozo articulate fiduciary duties in his seminal 1928 opinion in Meinhard v. Salmon, a dispute between business partners. This blog surveys the most recent appellate-level New York court decisions on breach of fiduciary duty claims, with a particular emphasis on the fiduciary relationships among businesspeople. These claims arise frequently in commercial litigation, and are flexible enough to encompass a wide range of conduct. Corporations, limited liability companies, partnerships, and businesspeople in general would be well served by keeping up with developments in this important body of law.
Jeremias v. Toms Capital LLC:
Manipal Educ. Americas, LLC v. Taufiq: Fiduciary Duties of Employees to Employers
Breach of fiduciary duty claims frequently arise within the employment context. As a general matter, employees owe their employers basic fiduciary duties in certain circumstances. A potentially fertile area of litigation involves employees who are disloyal to their employers. A recent decision of the Appellate Division, First Department, contains an informative analysis of fiduciary-duty claims…
Apollo Mgt., Inc. v. Cernich: The Flexibility of Breach of Fiduciary Duty Claims
An interesting and easily overlooked decision of the Appellate Division, First Department, shows just how flexible fiduciary duty claims can be. In Apollo Mgt., Inc. v. Cernich, 202 A.D.3d 527 (1st Dep’t 2022), the court allowed the plaintiffs to seek money damages on a fiduciary-duty theory of liability for misconduct that really fell under an…
Matter of Hersh: Fiduciary Duty Claims and the Statute of Limitations
Regardless of the merits of a plaintiff’s claim, she will be unable to have her day in court if she fails to file suit before the statute of limitations expires. This principle is especially important to breach of fiduciary duty claims, because the statute of limitations governing such claims is elusive and highly dependent on…
Newman v. Newman: Fiduciary Duties in Small, Closely-Held Family Corporations
This blog previously has discussed fiduciary duty claims in the shareholder-derivative context. Courts in derivative suits frequently address fiduciary duty questions, especially where the dispute involves a small, closely-held family corporation. Yet another recent decision of the Appellate Division, First Department, deals with fiduciary duties in a derivative action: Newman v. Newman, 202 A.D.3d 442…
Sajust, LLC v. Mendelow: Fiduciary Duties in Shareholder and LLC Derivative Suits
Breach of fiduciary duty questions often arise in shareholder derivative actions. These lawsuits involve a shareholder of a corporation who files suit derivatively—that is, on the corporation’s behalf rather than in her own individual capacity—to recover for some alleged wrong done to the corporation itself. In such cases, the directors of the corporation often have…