Aiding and Abetting a Breach of Fiduciary Duty

Posted & filed under Fiduciary Duty, Limited Liability Company (or LLC).

home-imageA common claim in litigation between and among business owners and a business is a breach of fiduciary duty claim.  A claim for breach of fiduciary duty requires proof of the existence of a fiduciary duty, breach of that duty, and damage proximately caused by the breach.  Importantly, there must be a “fiduciary duty.” For example, a manager in a manager-managed limited liability company generally owes fiduciary duties to the LLC’s members.

Sometimes, however, a wrongdoer does not owe a fiduciary duty to the business owner harmed by the breach of fiduciary duty.  Fortunately, the law may provide a remedy if this individual procured the breach of fiduciary duty.  Although less common, Georgia law recognizes a claim for aiding and abetting a breach of fiduciary duty (i.e., procuring a breach of fiduciary duty) if a plaintiff can show that the wrongdoer engaged in wrongful conduct without privilege (which it had no right to engage in) to procure a breach of the fiduciary’s duty to the plaintiff; that the wrongdoer knew the fiduciary owed a fiduciary duty to the plaintiff but purposely intended to injure the plaintiff; the wrongdoer’s conduct actually procured the breach of the fiduciary’s duty; and the wrongdoer’s conduct proximately caused damage to the plaintiff.  In such cases where a third party intentionally induces an individual owing fiduciary duties to another to breach those duties, the third party (even though he does not himself owe any fiduciary duties to the plaintiff) can be held liable to the plaintiff. This gives the plaintiff an additional avenue of recovery for his damage.

This article is not intended to establish an attorney-client relationship and is not intended to confer legal advice. No attorney-client relationship should be inferred in the absence of a written and executed engagement agreement that expressly indicates the creation of an attorney-client relationship.

Written by: Heather Wagner