Aiding a Fiduciary’s Breach of Duty

A person who the law recognizes as owing a special duty of loyalty and honesty to another is referred to as a fiduciary.  Examples of fiduciary relationships are an agent acting for a principal under a power of attorney or a trustee acting on behalf of a settlor or beneficiaries of a trust.  A recent decision of the California Court of Appeals held that an individual may have liability for aiding a fiduciary in breaching his/her duty where the person knowingly provides substantial assistance to the fiduciary.  American Master Lease LLC vs. Idanta Partners (2014).  Fiduciary duties are also owed by a manager to a limited liability company, by officers and directors to a corporation that they govern, and among partners of a partnership.  The court held that liability for aiding and abetting a breach of fiduciary duty arises when the aider and abettor commits an independent tort by making a conscious decision to participate in tortious (wrongful) activity for the purpose of assisting another in performing a wrongful act.  There likely will be future litigation on the issue of whether third parties share liability for the wrongful act of a fiduciary.

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