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Agreeing to Negotiate: Enough for an NY Breach of Fiduciary Duty Claim?

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When bringing a breach of fiduciary duty claim in New York, a plaintiff must first prove that a fiduciary duty existed between the parties. New York law established strict categories of relationships that qualify as fiduciaries. A breach of this duty will only be found when the relationship between the parties is inherently one that calls for a greater level of trust than would be found between two strangers who are doing business together. What happens when the alleged breach of such duty, however, occurs before a formal joint venture agreement was executed by two parties, but after they agreed to negotiate in good faith?

This question is currently being heard by a New York Appeals Court in Manhattan. In that action, two corporate entities had allegedly agreed to jointly pursue the acquisition of another company. The defendant is accused of breaching its fiduciary duty to the plaintiff by cutting the plaintiff out of the deal and purchasing the company on its own. The plaintiff argues that the fiduciary duty arose when the two parties agreed to negotiate together in good faith. The defendant, however, argues that agreeing to negotiate in good faith does not give rise to a fiduciary duty.

In order to successfully win a New York breach of fiduciary duty claim, a plaintiff may have to show the following:

  • A fiduciary duty existed between the parties
  • The defendant engaged in self-dealing
  • The defendant placed his own best interest above that of the interest of the plaintiff
  • If there was no formal agreement in place, the conduct of the defendant amounted to a breach of a contractual obligation even where no such contract existed
  • Policy gave rise to a fiduciary duty even where a formal contract between the parties did not
  • The defendant must have owed a fiduciary duty to the plaintiff outside of that duty which would have been created by a contract 

Issues surrounding fiduciary duty claims in New York are highly complex. For guidance, contact an experienced New York breach of fiduciary duty attorney today. Call our office at (888) 497-3410 for a free consultation.

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