Do All Breach Of Fiduciary Duty Cases Result in Damages?
A breach of fiduciary duty does not always lead to recoverable damages. When a Court rules that a breach of fiduciary duty has occurred, it is possible that they can award no damages or only nominal damages.
Under the Delaware Law, damages are not considered an element that can be claimed if there was a breach of fiduciary duty. This law states that the only elements include the fact that there was a fiduciary duty, and that it was breached. This has been demonstrated in previous cases of breach of fiduciary duty.
Recent Case Only Awarded Nominal Damages for Breach of Fiduciary Duty
One of the recent cases is the case involving the Ravenswood Investment Company LP and The Estate of Bassett S. Winmill. On Winmill & Co’s behalf, the plaintiff had brought derivative claims which stated that a breach of fiduciary duty had occurred. This was due to the company granting themselves stock options deemed to be too generous, as well as causing the company to stop auditing company financials and putting a hold on information dissemination for stockholders of the company as a response to the plaintiff’s contention of their inspection rights.
The Court decided to use the entire fairness test as the defendant directors were involved in both sides of the transaction. The entire fairness test required defendants to establish two things:
- The first was that fair dealing had to be established, and
- The second was that there was fair price with regards to the transaction that was challenged.
The court deemed the board to have failed the entire fairness test. The defendants were also found to have breached their fiduciary duty.
However, despite the defendants being found guilty of breaching their fiduciary duty, the court awarded only nominal damages.
Plaintiff Bears the Burden to Prove Actual Damages
The burden will remain on the plaintiff to prove that there were actual damages, or that the case should have an equitable remedy, despite a breach of fiduciary duty. Although broad discretion is taken by the Court in making such remedies, a large portion of the case’s result will depend on the evidence presented and whether the plaintiff is able to prove actual damages.
The plaintiff would need to prove measurable economic damages, such as lost profits and other financial losses as a result of the breach.
Hence, a breach of fiduciary duty will not always lead to damages. This is one case that illustrates this. A breach of fiduciary duty may result in nominal or no damages awarded, according to the details and evidence presented in each case.
Call Weltz Law For Help Recovering Damages in a Breach of Fiduciary Duty Case
There are many ways a financial advisor or a broker may breach their fiduciary duty towards their client. If you have suffered harm due do your broker’s or financial advisor’s breach of fiduciary duty, it is still possible to pursue claims against them with the help of an experienced and knowledgeable securities lawyer.
At Weltz Law, our team of attorneys provide experienced representation for clients who suffered damages due to securities fraud, negligence, broker misconduct, and more. We can assist in advising them on what they should do next.
Feel free to contact us for a free consultation regarding your case today.