Breach of Fiduciary Duty In Connecticut

Here is a quick summary of another of the so called "business torts" in Connecticut known as breach of fiduciary duty.  A fiduciary duty can arise in a number of contexts in business including relationships with partners, lawyers, accountants, trustees, investment advisers, brokers and employees.  When one party in a relationship is a fiduciary, it requires the party to act with the utmost good faith, fair dealing and loyalty. 

Many times, breach of fiduciary lawsuits are filed in Connecticut when the relationship breaks down over lost or mismanaged money.  Frequently, business partners are also found to be fiduciaries with respect to each other.  A fiduciary relationship may be formed when the following factors exist:

  • unique degree of trust and confidence between the parties
  • one party has superior knowledge and skill
  • the party with superior knowledge has a duty to represent the interests of the other part

Connecticut’s common law on breach of fiduciary duty law is flexible in that it will not exclude new situations, but is also clear that not all business relationships are fiduciary relationships. For example, courts will not recognize a fiduciary relationship for parties that are dealing at arm’s length for transactions.  This is because the relationship lacks a dominance by one party or dependence by the other, or the lack of a special relationship.

The legal recognition of a fiduciary relationship is very significant in a lawsuit in Connecticut.  If a plaintiff proves that a fiduciary relationship exists, the standard and burden of proof changes.  A plaintiff has to prove that a fiduciary duty exists by a preponderance of the evidence. Once established, the burden shifts to the fiduciary as a defendant to prove good faith and fair dealing.  Further, the fiduciary must prove good faith by clear and convincing evidence.

Because of the burden shifting and higher standard, fiduciary cases are often won or lost on the legal characterization of the relationship.