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How a Fiduciary Duty is Breached Under New York Law

 

I've often heard people proclaim, in cavalier fashion, that they had been victimized by the breach of fiduciary duty by a former employee, partner or trusted advisor.

 

Naturally, this proclamation inherently assumes (often wrongly) that the person that committed this wrong was, in fact, a fiduciary of theirs, for, as pointed out in "Who Is (And Isn't) a Fiduciary Under New York Law," the categories of people that actually qualify as fiduciaries is rather narrow.

 

Nevertheless, assuming for the sake of argument you can establish that the other side was indeed your fiduciary, a fundamental question remains:

 

What exactly is a breach of fiduciary duty?

 

Fortunately, one of New York's most famous jurists, the Hon. Jack Weinstein recently summarized this principle as follows:

 

"The duties of good faith and loyalty require a fiduciary to avoid self-dealing. They obligate a fiduciary to place the best interest of the beneficiary above his own self-interest. They do not protect beneficiaries from all forms of fiduciary misconduct." See, Barbagallo v. Marcum LLP et ano.

 

Although very brief, this is the best exposition of the current law in the State of New York that I've seen to date.