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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

Sherwood v. Danbury Hospital, 278 Conn. 163, 195-96 (2006); Biller Associates v. Peterken, 269 Conn. 716, 723-24 (2004); Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 41 (2000); Dunham v. Dunham, 204 Conn. 303, 320-23 (1987), overruled in part on other grounds, Santopietro v. New Haven, 239 Conn. 207, 213 n.8 (1996); DeMorais v. Wisniowski, 81 Conn. App. 595, 606-607, cert. denied, 268 Conn. 923 (2004).

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

Sherwood v. Danbury Hospital, 278 Conn. 163, 195-196 (2006); Cadel Co. v. D'Addario, 268 Conn. 441, 455-57 (2004); Murphy v. Wakelee, 247 Conn. 396, 400-406 (1998); Oakhill Associates v. D'Amato, 228 Conn. 723, 726-27 (1994); Konover Development Corp. v. Zeller, 228 Conn. 206, 219-230 (1994).

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

Konover Development Corp. v. Zeller, 228 Conn. 206, 219-230 (1994); Spector v. Konover, 57 Conn. App, 121, 129, cert. denied, 254 Conn. 913 (2000).

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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