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What Are The Elements Of Breach Of Fiduciary Duties in New York?

  • By: David Rich
  • Published: September 15, 2023

In New York, “In order to establish a breach of fiduciary duties, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant’s misconduct.” Kurtzman v. Bergstol, 40 A.D.3d 588, 590, 835 N.Y.S.2d 644 (2nd Dep’t 2007); see also Pokoik v. Pokoik, 982 N.Y.S.2d 67, 70, 115 A.D.3d 428 (1st Dep’t 2014).

“A fiduciary relationship exists between an agent and principal, signifying a relationship of trust and confidence whereby the agent is bound to exercise the utmost good faith and undivided loyalty toward the principal throughout the relationship.” 2 Leon C. Lazer, et al., Manhattan Pattern Jury Instructions – Civil § 3.59 (2d ed. 2006); see also Sokoloff v. Harriman Estates Development Corp., 96 N.Y.2d 409, 416, 754 N.E.2d 184, 729 N.Y.S.2d 425 (N.Y. 2001); Lamdin v. Broadway Surface Advertising Corp., 272 N.Y. 133, 138, 5 N.E.2d 66, 67 (N.Y. 1936); In re Estate of Naumoff, 301 A.D.2d 802, 803, 754 N.Y.S.2d 70 (3d Dep’t 2003).

For Purposes of a Breach of Fiduciary Duties Claim, What Fiduciary Relationships Are Recognized in New York?

Among the agents who, in New York, owe fiduciary duties to a principal are an employee to the employer; a corporate officer or director to the corporation; a real estate broker to the owner of the real estate; and members of a partnership or joint venture to one another. Duane Jones Co. v. Burke, 306 N.Y. 172, 187-188, 117 N.E.2d 237 (N.Y. 1954) (employee to employer); Luskin v. Seoane, 226 A.D.2d 1144, 1145, 641 N.Y.S.2d 478 (4th Dep’t 1996) (same); Calabrese Bakeries, Inc. v. Rockland Bakery, Inc., 102 A.D.3d 1033, 1037-1038, 960 N.Y.S.2d 514 (3rd Dep’t 2013) (corporate officers and directors to the corporation); Precision Glass Tinting, Inc. v. Long, 293 A.D.2d 594, 594-595, 740 N.Y.S.2d 138 (2nd Dep’t 2002) (real estate broker to the owner of the real estate); Gibbs v. Breed, Abbott & Morgan, 271 A.D.2d 180, 184-185, 710 N.Y.S.2d 578 (1st Dep’t 2000) (members of a partnership to one another); Northern Shipping Funds I v. Icon Capital Corp., 921 F. Supp. 2d 94, 102 (S.D.N.Y. 2013) (participants in a joint venture to one another).

So, too, among the agents who, in New York City (including the borough of Manhattan) and throughout the remainder of New York State, owe fiduciary duties to a principal are an attorney to the client; a trustee to the trust beneficiary; and an escrow agent to the beneficiary. Graubard Mollen Dannett & Horowitz v. Moskovitz, 86 N.Y.2d 112, 118, 629 N.Y.S.2d 1009, 653 N.E.2d 1179 (N.Y. 1995) (attorney to client); Keller v. Loews Corp., 69 A.D.3d 451, 451, 894 N.Y.S.2d 376 (1st Dep’t 2010) (same); In re Mankin, 88 A.D.3d 717, 718, 930 N.Y.S.2d 79 (2nd Dep’t 2010) (trustee to the trust beneficiaries); Talansky v. Schulman, 2 A.D.3d 355, 359, 770 N.Y.S.2d 48 (1st Dep’t 2003) (escrow agent to his or her beneficiary).

Again, the agents who, in New York City (including Manhattan) and throughout the rest of the Empire State, owe a fiduciary responsibility to a principal include co-tenants to each other; spouses to one another; and an attorney-in-fact to his or her principal. Snyder v. Puente De Brooklyn Realty Corp., 297 A.D.2d 432, 435-436, 746 N.Y.S.2d 517 (3rd Dep’t 2002) (co-tenants to each other); Christian v. Christian, 42 N.Y.2d 63, 365 N.E.2d 849, 396 N.Y.S.2d 817, 823 (N.Y. 1977) (spouses to one another); Petracca v. Petracca, 101 A.D.3d 695, 697, 956 N.Y.S.2d 77 (2d Dep’t 2012) (same); In re Ferrara, 7 N.Y.3d 244, 254, 852 N.E.2d 138, 819 N.Y.S.2d 215 (N.Y. 2006) (attorney-in-fact to his or her principal).

The preceding list of fiduciary relationships is not exhaustive.

If your company wants to bring, or needs a lawyer to defend it in, business litigation and you are located in the New York City metro area (including the borough of Manhattan), call Manhattan Business Litigation Attorney David S. Rich at (347) 835-5688.

David Rich, Esq.

David Rich David S. Rich is the founding member of the Law Offices of David S. Rich, LLC,
a Manhattan Employment and Business Litigation Law Firm, in New
York City and in Englewood Cliffs, New Jersey...View Profile