The existence of a fiduciary relationship is central to the cause of action for breach of fiduciary duty. Generally speaking, a fiduciary is a person having a duty to act primarily for the benefit of another person in matters related to that which gives rise to the duty. The fiduciary relationship exists where one person is entrusted to act for the benefit of another and has the legal authority to do so. Some fiduciary relationships are established as a matter of law while others arise out of circumstances particular to the relationship of the people in question.
Common example of relationships that are fiduciary in nature as a matter of law include an attorney’s relationship with a client, the relationship between partners in a business partnership, the relationship between corporate officers and shareholders of the corporation and the relationship between financial planners and their clients. These fiduciary relationships are particularly described in Colorado cases and statutes, and not every similar relationship will be considered fiduciary. For example, an insurance agent does not necessarily have a fiduciary duty with regard to his or her customer. The same can be said about the relationship between a lender and a borrower, a stockbroker and an investor, or family members. Any of these relationships can potentially be fiduciary in nature, but additional facts or circumstances are required to bring about a fiduciary duty.
Where a fiduciary relationship is not defined as a matter of law, it can still exist in under circumstances where one party occupies a superior position over another, with the opportunity to take advantage of that superiority. The unequal relationship does not automatically create the fiduciary duty, the party asserting the claim still must prove that they placed trust or confidence in the other party, that the trust was justified, that the other party manifested an acceptance of that trust and assumed responsibility to act for the benefit of the other party.
Once the existence of the fiduciary relationship has been established, a party must prove that the attendant fiduciary duty has been breached. The breach can be based on willful or merely negligent conduct. The fiduciary owes a duty to exercise the care and skill that an ordinarily prudent person would use to is protecting and preserving his or her own interests or property. A fiduciary cannot allow his or her own personal motives to interfere with that duty. Failure to exercise the appropriate level of care or the allowance of personal motives to interfere with that care is considered a breach of the fiduciary duty.
Like the vast majority of other civil causes of action, the party bringing the claim must prove damages and that the breach of fiduciary duty caused those damages. It is enough that the breach was a substantial contributing cause of the damage, but without damages caused by the breach of fiduciary duty, a party is unlikely to prevail even where a fiduciary relationship and breach are well established.
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