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3.8-2 Fiduciary Duty
Revised to January 1, 2008
A. Description of
Fiduciary Relationship
In the __ count of the complaint,
the plaintiff has alleged that the defendant acted as (his/her/its)
fiduciary for the purpose of <state specific purpose of fiduciary
relationship> and that the defendant breached the fiduciary duty created
by that relationship. The plaintiff must prove, by a preponderance of the
evidence, as I have defined that phrase for you, that a fiduciary
relationship existed between the plaintiff and the defendant and that the
defendant was acting as the plaintiff's fiduciary when the defendant engaged
in <summarize allegations of complaint>.
A fiduciary relationship is one in
which one party, known as the principal, has a unique degree of trust and
confidence in the other party, known as the fiduciary, who has superior
knowledge, skill, or expertise, and who has a duty to act on behalf of the
interests of the principal. You may find that a fiduciary responsibility
existed only where one party to such relationship is unable to protect its
interests fully or where one party has a high degree of control over the
property or subject matter of another and the unprotected party has placed
its trust and confidence in the other. No fiduciary relationship or
responsibility arises between the parties where the parties were acting at
arm's length, lacking a relationship of dominance and dependency, or were
not engaged in a relationship of special trust and confidence.
It is for you to determine, after
a consideration of all the evidence bearing on this point, whether the
plaintiff justifiably placed special trust and confidence in the defendant,
who then exercised superiority, influence and/or control over the
plaintiff's property or interests.
If the plaintiff has failed to
prove that the defendant had a fiduciary relationship with the plaintiff,
then you would return a defendant's verdict on this count. If the plaintiff
has satisfied its burden of proving that the defendant owed the plaintiff a
fiduciary duty with respect to the allegations of the __ count, then you
will proceed to determine if the defendant breached that duty in any of the
ways alleged by the plaintiff.
Authority
B. Liability of Fiduciary
(fraud, self-dealing, conflict of interest)
In this count, the plaintiff has
alleged that the defendant, acting as the plaintiff's fiduciary, engaged in
(fraud / self-dealing / conflict of interest) by <recite pertinent
allegations>.
If the defendant owed the
plaintiff a fiduciary duty, the defendant was obligated to treat the
plaintiff's interests and property, which were the subject of the parties'
relationship, with the utmost sensitivity, honesty, candor, scrupulous good
faith, and undivided loyalty. A fiduciary cannot act toward the principal
as if the fiduciary had merely an ordinary business relationship with the
principal. By principal, I mean the person to whom the fiduciary owed a
duty. A fiduciary must act exclusively in the interests of those depending
upon the fiduciary even if the resulting action is detrimental to the
fiduciary's own interests. The fiduciary must act not merely reasonably,
but also fairly, with regard to the principal.
Therefore, our law presumes that
if the fiduciary gained any financial advantage or benefit at the expense of
the plaintiff, that benefit or advantage was acquired in breach of the
fiduciary duty owed to the principal. As a consequence, the law shifts the
burden of proof of (fraud / self-dealing / conflict of interest) from the
plaintiff to the fiduciary to prove that the transaction which resulted in
benefit to the fiduciary was the product of fair dealing, good faith, and
full disclosure. In addition, the fiduciary is required to prove fair
dealing and proper conduct by the heightened standard of clear and
convincing evidence.
<Instruct on
Clear and Convincing Evidence, Instruction 3.2-2>
If the defendant satisfies you, by
clear and convincing evidence, that any financial gain or benefit acquired
was the result of fair dealing with respect to the plaintiff and not the
product of (fraud, self-dealing, conflict of interest), then you would
return a verdict for the defendant on this count.
If the defendant has failed to
meet its burden of proof, then you would proceed to consider whether the
plaintiff has proved, by a preponderance of the evidence, the amount of
damages, if any, which resulted from the defendant's breach of fiduciary
duty.
<Instruct on compensatory and
punitive damages: see
Damages - General, Instruction 3.4-1 and
Damages - Punitive, Instruction 3.4-4.>
Authority
C. Liability of Fiduciary
(sophisticated, commercial parties)
In this count, the plaintiff has
alleged that the defendant, acting as the plaintiff's fiduciary, engaged in
(fraud / self-dealing / conflict of interest) by <recite pertinent
allegations>.
If the defendant owed the
plaintiff a fiduciary duty, the defendant was obligated to treat the
plaintiff's interests and property, which were the subject of the parties'
relationship, with the utmost sensitivity, honesty, candor, scrupulous good
faith, and undivided loyalty. A fiduciary cannot act toward the principal
as if the fiduciary had merely an ordinary business relationship with the
principal. By principal, I mean the person to whom the fiduciary owed a
duty. A fiduciary must act exclusively in the interests of the principal
even if the resulting action is detrimental to the fiduciary's own
interests. The fiduciary must act not merely reasonably, but also fairly,
with regard to the principal.
Therefore, our law presumes that
if the fiduciary gained any financial advantage or benefit at the expense of
the plaintiff, that benefit or advantage was acquired in breach of the
fiduciary duty owed to the principal. As a consequence, the law shifts the
burden of proof of (fraud / self-dealing / conflict of interest) from the
plaintiff to the fiduciary to prove that the transaction which resulted in
benefit to the fiduciary was the product of fair dealing, good faith, and
full disclosure. In addition, the fiduciary is required to prove fair
dealing and proper conduct by the heightened standard of clear and
convincing evidence.
<Instruct on
Clear and Convincing Evidence, Instruction 3.2-2>
Among sophisticated, commercial
parties, like the plaintiff and defendant in this case, the parties may
contractually agree that the fiduciary will gain some advantage or benefit
at the expense of the principal while still maintaining the fairness of the
transaction in question. Such a beneficial transaction is permissible and
does not breach the defendant's fiduciary duty as long as the transaction
under scrutiny was explicitly part of the contract between the parties and
consideration of the factors described below convince you that the defendant
has dealt fairly with the plaintiff.
Important factors in determining
whether a particular transaction is fair include a showing by the fiduciary:
1) that the fiduciary made a free and frank disclosure of all the relevant
information which the fiduciary possessed surrounding the transaction; 2)
that the compensation received by the principal was adequate; 3) that the
principal had competent and independent advice before completing the
transaction; and 4) the relative sophistication and bargaining power among
the parties.
If the defendant satisfies you, by
clear and convincing evidence, that any financial gain or benefit acquired
was the result of fair dealing with respect to the plaintiff, and not the
product of (fraud /self-dealing / conflict of interest), then you would
return a verdict for the defendant on this count.
If the defendant has failed to
meet its burden of proof, then you would proceed to consider whether the
plaintiff has proved, by a preponderance of the evidence, the amount of
damages, if any, which resulted from the defendant's breach of fiduciary
duty.
<Instruct on compensatory and
punitive damages: see
Damages - General, Instruction 3.4-1 and
Damages - Punitive, Instruction 3.4-4.>
Authority
D. Fiduciary Liability
Where No Fraud, Self-Dealing, Conflict of Interest Alleged
Note: Under Cadle Co. v.
D'Addario, 268 Conn. 441, 456-57 (2004), there is no burden shifting in
the absence of allegations of fraud, self-dealing, or conflict of interest
which benefit the fiduciary.
In this count, the plaintiff
alleges that the defendant breached the fiduciary duty owed to the plaintiff
in the following specific ways: <recite allegations in complaint>.
If you find that the plaintiff has
failed to prove, by a preponderance of the evidence, any of the plaintiff's
allegations of breach of fiduciary duty, then you will return a verdict for
the defendant on this count.
However, if you find that the
plaintiff has proven, by a preponderance of the evidence, that the defendant
violated the fiduciary duty owed to the plaintiff in one or more of the ways
alleged, then you will proceed to determine if the breach of fiduciary duty
proven caused the damages which the plaintiff claims resulted from such
violation.
In summary, in order to prevail
the plaintiff must prove, by a preponderance of the evidence: 1) that the
defendant was acting as a fiduciary of the plaintiff with respect to <state
specific purpose of fiduciary relationship>, 2) that the defendant
breached this fiduciary duty, and 3) that this breach of fiduciary duty
caused the plaintiff's damages.
<Instruct on compensatory and
punitive damages: see
Damages - General, Instruction 3.4-1 and
Damages - Punitive, Instruction 3.4-4.>
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