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Texas Breach of Fiduciary Duty

©2014 Mark Courtois

This tort occurs when a fiduciary violates his duty to act in the best interest of another. The elements of a claim for breach of fiduciary duty are: 1) there is fiduciary relationship between the plaintiff and defendant; 2) the defendant breached his fiduciary duty to the plaintiff; and 3) the defendant's breach proximately caused injury to the plaintiff or benefit to the defendant. Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.- Dallas 2006, pet. denied). A fiduciary relationship may be formal or informal. Fiduciary duties arise as a matter of law in certain formal relationships, including attorney- client, partnership and trustee relationships. Meyer v. Cathey, 167 S.W.3d 327, 331 (Tex.2005). An informal fiduciary relationship may arise where one person trusts in and relies upon another, whether the relationship is a moral, social, domestic, or purely personal one. Id. To impose an informal fiduciary relationship in a business transaction, a special relationship of trust and confidence must exist prior to, and separate from, the parties' agreement. Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex.1997). The fact that one businessman trusts another, and relies upon his promise to perform a contract does not rise to a confidential relationship. Every contract includes an element of confidence and trust that each party will faithfully perform his obligation under the contract. Neither is the fact that the relationship has been a cordial one, of long duration, evidence of a confidential relationship. Crim Truck & Tractor v. Navistar Intern., 823 S.W.2d 591, 594-5 (Tex. 1992).

The duty owed by a fiduciary is one of loyalty and good faith, strict integrity and accountability, and fair and honest dealing. Sassen v. Tanglegrove Townhouse Condominium Ass'n, 877 S.W.2d 489, 492 (Tex. App.--Texarkana 1994, writ denied); see also Douglas v. Aztec Petroleum Corp., 695 S.W.2d 312, 318 (Tex. App.--Tyler 1985, no writ). There is a "general prohibition against the fiduciary's using the relationship to benefit his personal interest, except with the full knowledge and consent of the principal." Hawthorne v. Guenther, 917 S.W.2d 924, 934 (Tex. App.--Beaumont 1996, writ denied) (quoting Chien v. Chen, 759 S.W.2d 484, 495 (Tex. App.---Austin 1988, no writ)).