By Paul F. Millus Whistleblowers are protected under a variety of state and federal laws. In New York, there is New York Labor Law §740, which has been amended in 2020 and 2021 to improve protections for New York whistleblowers. With those amendments, in the healthcare field in particular, a 2020 amendment to the statute…
"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.
107 S. Albany Street, LLC v. Scott: Contractor Liability for Breach of Fiduciary Duty Under the Lien Law
Construction and development projects brim with the potential for disputes. But before taking drastic measures, parties to such a dispute must carefully consider the consequences of their actions. New York’s Lien Law regulates important aspects of the relationships between owners, contractors, and subcontractors, including the proper use and disposition of construction financing. Failure to adhere…
Continental Industries Group, Inc. v. Ustuntas: Revisiting Aiding and Abetting Breach of Fiduciary Duty Claims
Aiding and abetting breach of fiduciary duty claims are litigated frequently, and this blog has addressed them here and here. The Appellate Division, First Department, recently opined on aiding-and-abetting liability in Cont. Indus. Group, Inc. v. Ustuntas, 211 A.D.3d 601 (1st Dep’t 2022). As the court’s decision shows, aiding-and-abetting claims are readily susceptible to dismissal,…
Continental Industries Group, Inc. v. Ustuntas: Post-Employment Fiduciary Duties of Employees to Employers
Breach of fiduciary duty claims often arise in disputes between employers and their former employees, as this blog has discussed. Generally speaking, employees often owe their employers fiduciary duties. But can an employee’s fiduciary duties extend beyond the duration of his employment? The opinion of the Appellate Division, First Department, in Cont. Indus. Group, Inc.…
Jadidian v. Goldstein: Pleading Fraud to Take Advantage of a Longer Fiduciary-Duty Limitations Period
This blog often addresses the statute of limitations for breach of fiduciary duty claims (see here and here, for example). Which limitations period applies to a breach of fiduciary duty claim is a frequently recurring issue. This is because there is no single statute of limitations for fiduciary-duty claims, but three distinct possibilities: Jadidian v.…
Lin v. Lau:
Fiduciary Duties and Attorney Malpractice
An archetypal fiduciary relationship is that between attorney and client, and the handling of client funds is a potential hornets’ nest of fiduciary-duty liability for attorneys. In Lin v. Lau, 210 A.D.3d 817 (2d Dep’t 2022), the Appellate Division, Second Department, refused to dismiss a lawsuit against an attorney arising from the attorney’s alleged mishandling…
Neurological Surgery, P.C. v. MLMIC Ins. Co.: When Being a Policy Holder Is Not Enough to Impose Fiduciary Duties on An Insurance Company
In certain situations, an insurance company owes its policyholders fiduciary duties. Specifically, when an insured calls upon its carrier to defend it in a lawsuit, the carrier generally will owe fiduciary duties to the insured. But in other scenarios, policyholders face an uphill battle in proving that they have the requisite “special relationship” with their…
Mohinani v. Charney:
Revisiting Derivative Claims and Damages in Real-Estate Investment Disputes
It is somewhat rare for a business dispute to be litigated all the way through trial. Protracted litigation is costly, time-consuming, and unpredictable. When that does happen, however, the results can be illuminating—especially when the trial court’s decision is upheld on appeal. That is what happened in the recent decision of the Appellate Division, First Department,…
Hahn v. Stone House Properties LLC: The Duty of Loyalty and Fiduciary Relationships
Loyalty is perhaps the quintessential characteristic of a fiduciary relationship. Indeed, someone who occupies the role of a fiduciary is expected to be loyal above all else. For that reason, the phrase “duty of loyalty” is often bandied about in relation to fiduciary-duty claims. In the abstract, merely stating that a fiduciary has a “duty of…
Ilan Properties, Inc. v. Benishai: Breach of Fiduciary Duty Claims and the Continuing Wrong Doctrine
This blog previously has addressed the statute of limitations, a concept that has special significance for breach of fiduciary duty claims. Whether a fiduciary-duty claim is timely is highly fact-dependent and not always clear-cut. For that reason, plaintiffs’ lawyers often get creative in trying to salvage an otherwise viable fiduciary-duty claim that is on the brink…