📋 What is Fiduciary Duty Breach?
A fiduciary is someone legally obligated to act in your best interest, placing your interests above their own. When a fiduciary breaches this duty through self-dealing, conflicts of interest, or neglect, California law provides powerful remedies that go beyond ordinary contract damages.
Who Owes Fiduciary Duties?
📜 Trustees
Trust trustees owe beneficiaries the highest duty of loyalty and care under Probate Code 16000+
🏢 Corporate Directors/Officers
Directors and officers owe duties to shareholders under Corporations Code 309
🤝 Business Partners
Partners owe each other duties of loyalty and care under Corporations Code 16404
👤 Agents
Agents owe principals duties under common law agency principles
Common Types of Fiduciary Breach
- Self-Dealing: Using their position to benefit themselves at your expense
- Conflict of Interest: Taking positions adverse to your interests without disclosure
- Usurping Opportunities: Taking business opportunities that belonged to you
- Misappropriation: Using trust assets or company funds for personal benefit
- Failure to Account: Refusing to provide financial records or accountings
- Competing Business: Starting or working for a competitor while still a fiduciary
💰 Powerful California Remedies
Fiduciary breach claims are powerful because you can recover:
- Disgorgement: ALL profits the fiduciary gained from the breach
- Compensatory Damages: Your actual losses caused by the breach
- Punitive Damages: For malicious, oppressive, or fraudulent conduct
- Attorney's Fees: In many trust and corporate cases
⚖ California Fiduciary Law
California has robust statutory and common law protections for those owed fiduciary duties. The key statutes depend on the type of fiduciary relationship.
Key California Statutes
Probate Code Section 16000-16015 (Trustees)
Establishes duties of trustees including loyalty, impartiality, prudent administration, and duty to account. Trustees must administer the trust solely in the interest of beneficiaries.
Corporations Code Section 309 (Directors)
Directors must perform duties in good faith, in the best interests of the corporation, and with the care of an ordinarily prudent person. Applies to both corporations and LLCs.
Corporations Code Section 16404 (Partners)
Partners owe each other duties of loyalty and care, including accounting for profits, refraining from adverse dealings, and competing only after proper dissolution.
Civil Code Section 2322 (Agents)
Agents must act within scope of authority and in good faith. Common law imposes duties of loyalty, care, and full disclosure on all agents.
Statute of Limitations
📅 4-Year General Limit
Most fiduciary breach claims have a 4-year statute of limitations under CCP 343
📅 3-Year Trust Claims
Trust breach claims may have a 3-year limit under Probate Code 16460
📅 Discovery Rule
Limitations period starts when you discovered or should have discovered the breach
⚠ Burden of Proof Shifts
In California, once you establish a fiduciary relationship and a transaction that benefited the fiduciary, the burden shifts to the fiduciary to prove the transaction was fair. This is a significant advantage for plaintiffs in fiduciary breach cases.
✅ Evidence Checklist
Gathering strong evidence is critical to proving fiduciary breach. Use this checklist to organize your case.
📄 Relationship Documents
- ✓ Trust documents, partnership agreements, or corporate bylaws
- ✓ Operating agreements or shareholder agreements
- ✓ Employment contracts or agency agreements
- ✓ Board resolutions or meeting minutes
💰 Financial Evidence
- ✓ Bank statements showing misappropriation
- ✓ Profit and loss statements
- ✓ Tax returns showing undisclosed income
- ✓ Evidence of self-dealing transactions
📧 Communications
- ✓ Emails showing breach or concealment
- ✓ Text messages or chat logs
- ✓ Letters demanding accounting or records
- ✓ Responses refusing to provide information
📊 Damages Proof
- ✓ Evidence of fiduciary's profits from breach
- ✓ Your actual losses documented
- ✓ Expert valuation if needed
- ✓ Lost business opportunities
🚨 Demand Records Immediately
Send a formal written demand for books and records immediately. Fiduciaries who refuse to provide accountings face adverse inferences at trial, and their refusal itself may be evidence of breach.
📝 Sample Demand Letter Language
Use these sample paragraphs to draft your fiduciary breach demand letter. Customize the highlighted portions for your specific situation.
I represent [CLIENT NAME] regarding your breach of fiduciary duty as [trustee of the [TRUST NAME] Trust / partner in [PARTNERSHIP NAME] / director of [CORPORATION NAME]]. As you are aware, your position as [trustee/partner/director/agent] imposes upon you the highest duties of loyalty and care under California law.
Under [Probate Code Section 16002 / Corporations Code Section 16404 / Corporations Code Section 309], you are required to act solely in the interest of [the beneficiaries / your partners / the corporation and its shareholders] and to avoid any conflict between your personal interests and your duties.
This transaction was not authorized, was not disclosed to [the beneficiaries / your partners / the board of directors], and served only your personal financial interests. Under California law, the burden is now on you to prove that this transaction was entirely fair and reasonable. Any profits you derived from this breach are subject to disgorgement.
Under California law, a fiduciary may not take for themselves an opportunity that belongs to the [corporation/partnership/trust]. All profits you have derived from [this property/contract/business opportunity] belong to [the corporation/partnership/trust] and must be disgorged.
1. All bank statements and financial records
2. Documentation of all transactions involving [trust/partnership/corporate] assets
3. Records of all payments made to you or entities you control
4. Tax returns for the [trust/partnership/corporation]
5. All contracts or agreements entered into on behalf of the [trust/partnership/corporation]
Please provide this accounting within 30 days. Failure to do so will result in an immediate petition to the court and may support an inference of wrongdoing.
Disgorgement of Profits: $[AMOUNT] - representing all profits you obtained from the breach
Compensatory Damages: $[AMOUNT] - representing actual losses to [the trust/partnership/corporation]
Interest: At the legal rate from the date of breach
Attorney's Fees: To be determined
Given your intentional breach of the duties owed to my client, punitive damages may also be sought pursuant to Civil Code Section 3294.
To avoid litigation, my client demands payment of $[SETTLEMENT AMOUNT] within 30 days of this letter. If payment is not received, I am authorized to file suit seeking the full measure of damages available under California law.
❓ Frequently Asked Questions
Who owes fiduciary duties in California?
▼In California, fiduciary duties are owed by trustees to beneficiaries (Probate Code 16000+), corporate directors and officers to shareholders (Corporations Code 309), partners to each other (Corporations Code 16404), agents to principals, attorneys to clients, real estate brokers to clients, and financial advisors to clients. The duty requires loyalty, care, and good faith in all dealings.
What is the standard for proving fiduciary breach?
▼To prove fiduciary breach in California, you must show: (1) existence of a fiduciary relationship, (2) breach of fiduciary duty through self-dealing, conflicts of interest, or failure to act in the beneficiary's best interest, (3) causation linking the breach to your damages, and (4) actual damages or the fiduciary's unjust profits. The fiduciary bears the burden of proving fairness in any self-dealing transaction.
What is disgorgement versus compensatory damages?
▼Disgorgement requires the breaching fiduciary to surrender ALL profits gained from the breach, even if those profits exceed your actual losses. Compensatory damages reimburse you for actual losses caused by the breach. In California, you can pursue both: disgorgement of the fiduciary's ill-gotten gains PLUS compensation for your losses. This makes fiduciary breach claims especially powerful.
What is the statute of limitations for fiduciary breach?
▼California fiduciary breach claims generally have a 4-year statute of limitations under CCP 343, running from breach or discovery. However, trust claims may have a 3-year limit under Probate Code 16460. The discovery rule delays the start until you knew or should have known of the breach. Fraudulent concealment can toll the deadline. Corporate director liability under Corporations Code 309 has a 4-year limit.
🚀 Get Legal Help
Fiduciary breach cases can be complex, involving detailed financial analysis and sophisticated legal arguments. Here's when to seek professional help.
Consider Hiring an Attorney If:
- The breach involves substantial assets or complex transactions
- Multiple fiduciaries may be liable
- The fiduciary has refused to provide an accounting
- You need forensic accounting to trace misappropriated funds
- The fiduciary has hired their own attorney
- You're seeking punitive damages for intentional misconduct
My Fee Structure
💰 Contingency Fee
33-40% of recovery. No fee unless I win. Available for cases with clear liability and substantial damages.
📅 Hourly Rate
$240/hour for complex fiduciary matters requiring ongoing representation.
📄 Flat Fee
Starting at $450 for demand letter drafting and initial case evaluation.
Betrayed by a Fiduciary?
I help victims of trustee misconduct, partner self-dealing, and corporate officer breaches recover the compensation they deserve under California law.