Fraud and Breach of Fiduciary Duty

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Fraud and Breach of Fiduciary Duty

FRAUD, MISREPRESENTATION AND BREACH OF FIDUCIARY DUTY CLAIMS

Fraud, misrepresentation, and breach of fiduciary duty are all business tort claims that attorneys assert in lawsuits based on Connecticut’s common law. Essentially, this means that these claims are not based on codified law or statute, but instead, they are based on decisions of the Connecticut courts going back years to the 1800’s. Common law is sometimes referred to as case law because it is law made by decisions of the courts and judges. In an ordinary circumstance, a trial judge in Connecticut will be bound to follow the law of fraud or misrepresentation that already has been established by earlier Connecticut appellate court decisions.

When representing a client in a fraud or misrepresentation case, lawyers will research past court decisions to determine which Connecticut law should apply. Lawyers will then use the case law requirements from past court decisions to see if the law fits the facts of the particular case. When the facts and the law fit, an attorney can draft a complaint seeking damages for fraud or misrepresentation.

ATTORNEYS FOR FRAUD AND MISREPRESENTATION CASES IN CONNECTICUT

Under Connecticut law, an attorney may establish a fraud case by proving the following elements: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party acted upon that false representation and did so to his injury. Further, the plaintiff must have relied on that representation to have suffered harm as a result of that reliance.
With common law, a fraud case is essentially the same as intentional misrepresentation. Proof of the misrepresentation must be coupled with proof that the plaintiff relied upon the statements or communications and then sustained damages. Fraud can include acts, omissions (failure to act or speak), or concealment. Proof of fraud also typically requires a higher burden of proof. In other words, it can be harder to prove fraud than other types of cases in civil court.
If you prove a fraud case in Connecticut, you can recover damages caused by the fraud. Alternatively, a successful party in a lawsuit for fraud may also undo or rescind a contract or transaction based on fraud. In this manner, proof of fraud works as a defense to someone seeking to enforce a contract procured through fraud. The court essentially invalidates the contract because of fraud. Finally, a court may also consider awarding punitive damages in cases involving fraud when the evidence shows particular reckless indifference to someone’s rights or intentional conduct.
Whereas fraud is sometimes known as intentional misrepresentation, there is also a cause of action in Connecticut based on negligent misrepresentation. This claim is similar to fraud, but the proof is less rigorous. These claims are frequently raised in business-related lawsuits. Negligent misrepresentation requires proof one who, in the course of his business, profession, or employment, supplied false information for the guidance of others in their business transactions. This person may be subject to liability for pecuniary loss or damages if he failed to exercise reasonable care or competence in obtaining or communicating the information.

BREACH OF FIDUCIARY RELATIONSHIPS FOR CONNECTICUT CORPORATIONS OR LIMITED LIABILITY COMPANIES

In business disputes, it can be very advantageous if one party can establish proof that a fiduciary relationship existed. The biggest reason is that if an attorney can prove that a fiduciary relationship existed, the burden of proof shifts to the fiduciary to prove good faith and fair dealing. The burden shifting can be very important in cases where direct evidence of misconduct is lacking or financial information has been withheld or destroyed.

To prove breach of fiduciary duty under Connecticut case law, your lawyer will need to prove that a fiduciary relationship existed, which gave rise to (a) a duty of loyalty on the part of the defendant to the plaintiff, (b) an obligation on the part of the defendant to act in the best interests of the plaintiff, and (c) an obligation on the part of the defendant to act in good faith in any matter relating to the plaintiff.

There is no clear test for determining whether a fiduciary relationship exists. Courts will look at past case law and the circumstances of the case. The courts are guided by past decisions that state a fiduciary or confidential relationship can exist where there is a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill, or expertise and is under a duty to represent the interests of the other. As an example, fiduciary relationships can be proven in Connecticut in cases involving agents or employees, business partners, trustees, and directors and officers of corporations.

At Aeton Law, we have had several cases involving fiduciary relationships including:

  • Partnership disputes where the partners owe a fiduciary duty to each other.
  • Corporate disputes where officers or directors owe a fiduciary duty to shareholders.
  • Trust mismanagement where the trustee owes a fiduciary duty to the beneficiaries.
  • Employee theft or unfair competition where high level employees owe the employer a duty of loyalty as a fiduciary.
  • Investment partners or joint ventures where the parties owe each other a fiduciary duty of loyalty.

Every case presents its own unique facts. Contact Aeton Law Partners at 860.785.2099 to set a conference with an attorney to see if you have a case for fraud, misrepresentation, or breach of fiduciary duty.

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