BREACH OF FIDUCIARY DUTY
A fiduciary relationship is one founded upon trust or confidence reposed by one person in the integrity and fidelity of another. The relationship exists in all cases in which influence has been acquired and abused, in which confidence has been reposed and betrayed. The rule embraces both technical fiduciary relations and those informal relations which exist whenever one man trusts in, and relies upon, another. The relationship might be found between close friends or even based upon prior business dealings. It requires a fact-sensitive inquiry. Penato v. George, 52 A.D.2d 939, 383 N.Y.S.2d 900 (2d Dept. 1976). The plaintiff must establish the existence of the fiduciary relationship and misconduct by the defendant, such as self-dealing or a conflict of interest, that directly causes damages to plaintiff.
Please also read our blog post on this subject: Establishing A Breach Of Fiduciary Duty In A Commercial Case
Lenders as Fiduciaries – Evelyn Scott v. Dime Savings Banks of N.Y., 886 F. Supp. 1073 (S.D.N.Y. 1995) (jury could find fiduciary relationship existed between bank and borrowers where bank encouraged borrowers to borrow extra money, induced them to invest and participated in stock purchases and earned commissions); Frydman & Co. v. Credit Suisse, 272 A.D. 236 (1St Dept. 2000) (investment banking advice – issue of fact as to whether Defendant owed fiduciary duty to plaintiff); Barnett Bank of West Florida v. Hooper, 498 So. 2d 923 (Sup. Ct. FL 1987) (bank may have assumed duty to disclose facts material to transaction, peculiarity within its knowledge, and not otherwise available to its customers, when bank involved in transaction and established confidential or fiduciary relationship and stands to benefit); Wiener v. Lazard Freres & Co., 241 A.D. 2d 114 (1st Dept. 1998) (on-going conduct may give rise to fiduciary relationship).
Aiding and Abetting Breach of Fiduciary Duty –
Liability for [the claim of] aiding and abetting a breach of fiduciary duty requires establishing the following elements: “(1) the party whom the defendant aids must perform a wrongful act that causes an injury; (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance; (3) the defendant must knowingly and substantially assist the principal violation” Aetna Life Ins. Co. v. Appalachian Asset Mgt. Corp., 110 A.D.3d 32, 42 (1st Dept. 2013); Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 424 (1996); Batas v. Prudential Ins. Co. of Am., 281 A.D.2d 260, 264 (1st Dept. 2001); Smallwood v. Lupoli, 107 A.D.3d 782, 784 (2d Dept. 2013); Tuper v. Tuper,101 A.D.3d 1651, 1652 (4th Dept. 2012).