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One Way to Defeat a Breach of Fiduciary Duty Claim in New York

 

As noted in "How You Can Breach a Fiduciary Duty Claim in New York Even Without a Contract," there are times where a plaintiff can  establish all the required elements of a cause of action for breach of a fiduciary duty under New York law - and still lose.

 

In fact, the plaintiff can lose such a claim pretty much right out of the gate, on a motion to dismiss.

 

"How can that be?" you ask.

 

The answer is where the plaintiff's claim for breach of fiduciary duty is essentially the same as a breach of contract claim, then the plaintiff's avenue of recovery will be limited to breach of contract rather than breach of fiduciary duty; cloaking the same claim in different terms will (or should) fail. New York's courts have summarized this rule as follows:

 

"Where a defendant owes no duty to the plaintiff outside of that created by the contract, a breach of fiduciary duty claim will not lie. See, e.g., id. (noting that defendant was not a fiduciary of the plaintiff); Bullmore, 846 N.Y.S.2d at 148 (holding that breach of fiduciary duty claim could go forward, notwithstanding the similarity with the conduct constituting breach of contract, as defendants had an independent duty toward plaintiffs). Even if a defendant were in a position of trust with respect to the plaintiff, there is no breach of fiduciary duty claim when the complaint alleges a breach of a contractual, rather than fiduciary, duty. See William Kaufman Organization, Ltd. v. Graham & James LLP, 703 N.Y.S.2d 439, 442 (1st Dep't 2000)."

 

To crystallize this concept, New York's Appellate Division, First Department held in Celle v. Barclays Bank P.L.C., 851 N.Y.S.2d 500, 501 (1st Dep't 2008) that where a contract "cover[s] the precise subject matter of the alleged fiduciary duty," then a claim for breach of fiduciary duty must be dismissed as duplicative." See also, Pane v. Citibank, N.A., 797 N.Y.S.2d 76, 77(1st Dep't 2005) (holding that defendant's actions cannot "be deemed a breach of fiduciary duty given a formal written agreement covering the precise subject matter of the alleged fiduciary duty").