A claim for breach of a fiduciary duty is generally an action at law.1 The Restatement of Torts provides that:
One standing in a fiduciary relationship with another is subject to liability to the other for harm resulting from a breach of duty imposed by the relation.2
The courts of South Carolina have said that a fiduciary relationship exists when "... one reposes special confidence in another so that the latter, in equity and good conscience, is bound to act in good faith and with due regard to the interests of one reposing the confidence."3 The South Carolina Supreme Court has said that "an action for a breach of a fiduciary duty may sound in law or equity depending on the nature of the relief sought."4 When equitable relief is sought, the plaintiff does not have the right to a jury trial for the alleged breach.5 The existence of a fiduciary relationship is a question of law for the court, but whether a fiduciary duty has been breached is generally a question of fact for a jury to determine.6 A fiduciary relationship is more than a casual one, and as a general rule it cannot be created unilaterally, but requires that the fiduciary must have actually accepted or induced the confidence placed in him or her.7 A clergy-parishioner relationship, for example, is not necessarily a fiduciary one.8
The concept of fiduciary relationship is somewhat amorphous, and courts have purposefully retained elasticity in the definition to address new interactions.9 Courts have found fiduciary relationships to exist in the following circumstances: an agent holding power of attorney;10 a broker; an attorney;11 partners;12 the director of a non-profit organization,13 corporate promoters; officers and directors of a corporation in relation to shareholders;14 controlling shareholders,15 an escrow agent;16 a bank in relation to its depositors in certain circumstances,17 although, not when the relationship is that of creditor and debtor.18 Additionally, a fiduciary duty is owed future, unknown, or contingent creditors when a corporation becomes insolvent.19 The developers of a Planned Unit Development have also been found to be in a fiduciary relationship with unit purchasers.20 The imposition of fiduciary duties has traditionally been reserved for legal or business settings — often where one person entrusts money to another — and in Hendricks v. Clemson Univ.21 the South Carolina Supreme Court declined to recognize the relationship between an advisor and student as fiduciary. Courts have also declined to find fiduciary relationships between insured and insurers,22 employers and employees,23 between a hospital and patient with respect to a hospital's contractual duty to submit an insurance claim,24 and financial advisors and their clients.25
When an attorney agrees to represent a client to file a lawsuit on that client's behalf, the attorney's fiduciary duty requires him or her to take action to prosecute it and failure to take any action is a breach of the attorney's duty to the client.26
Courts rarely discuss defenses to claims for breach of fiduciary duty, but one defense is the statute of limitations which is three years.27
A plaintiff is entitled to tort damages for harm caused by the breach of a fiduciary duty owed him or her.28 Damages in an action for breach of a fiduciary duty are those proximately resulting from the wrongful conduct of the defendant.29 Punitive damages may be awarded, but only if the plaintiff proves by clear and convincing evidence that the defendant's misconduct was willful, wanton, or in reckless disregard of the plaintiff's rights and only if there is an underlying finding of actual damages.30 Equitable relief is also a possible remedy for breach of a fiduciary duty.31
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Notes:
[1] Kuznik v. Bees Ferry Assocs., 342 S.C. 579, 538 S.E.2d 15 (Ct. App. 2000). There is also a cause of action for aiding and abetting a breach of fiduciary duty the elements of which are: (1) breach of a fiduciary duty owed to the plaintiff; (2) defendant's knowing participation in that breach; and (3) damages. Bennett v. Carter, 421 S.C. 374, 380, 807 S.E.2d 197, 200 (S.C. 2017); Future Group, II v. Nationsbank, 324 S.C. 89, 478 S.E.2d 45 (1996); Vortex Sports & Entm't, Inc. v. Ware, 378 S.C. 197, 662 S.E.2d 444 (Ct. App. 2008). Note Uhlig LLC v. Shirley, ___ F. Supp. 2d ___, 2012
U.S. Dist. LEXIS 99387 (D.S.C. 2012) (cause of action for breach of fiduciary duty is assignable).
[2] Restatement (Second) of Torts § 874 (1979). See Gauld v. O'Shaugnessy Realty Co., 380 S.C. 548, 671 S.E.2d 79 (Ct. App. 2008) (existence of damages is element of breach of fiduciary cause of action). Note, American Bankers Life Assurance Co. of Florida v. Frederick, 315 S.C. 97, 431 S.E.2d 636 (Ct. App. 1993) (breach of a fiduciary duty cannot occur where contract on which duty is based specifically allows for action complained of).
[3] SSI Medical Services, Inc. v. Cox, 301 S.C. 493, 392 S.E.2d 789, 794 (1990); Steele v. Victory Savings Bank, 295 S.C. 290, 368 S.E.2d 91 (Ct. App. 1988); Goddard v. Fairways Development General Partnership, 310 S.C. 408, 426 S.E.2d 828 (Ct. App. 1993).
[4] Verenes v. Alvanos, 387 S.C. 11, 690 S.E.2d 771 (2010) (while court has held that action alleging breach of fiduciary duty is one at law, it may sound in equity if relief sought is equitable). See also Hendricks v. Clemson Univ., 353 S.C. 449, 578 S.E.2d 711 (S.C. 2003) (whether fiduciary relationship exists is equitable issue); Moore v. Benson, 390 S.C. 153, 700 S.E.2d 273 (Ct. App. 2010) (finding that main purpose of breach of fiduciary duty action was for equitable remedy to rescind contract and reconvey property).
[5] Verenes v. Alvanos, 387 S.C. 11, 690 S.E.2d 771 (2010) (where remedy sought for alleged breach of fiduciary duty of loyalty was disgorgement, remedy was equitable and appellant did not have right to jury trial).
[6] Spence v. Wingate, 395 S.C. 148, 716 S.E.2d 920 (S.C. 2011).
[7] Steele v. Victory Savings Bank, 295 S.C. 290, 368 S.E.2d 91 (Ct. App. 1988).
[8] See, e.g., Brown v. Pearson, 326 S.C. 409, 483 S.E.2d 477 (Ct. App. 1997). In Brown several women members of a church brought an action against the South Carolina Conference of the United Methodist Church and its district...
