In life and business, trust is paramount. Unfortunately, breaches of trust occur. In personal matters, the recourse might be limited to forgiving the person or holding a grudge. In the business realm, however, the law provides real remedies against those who violate duties of trust.
At Capital Partners Law, we understand the complexities of fiduciary duties and the consequences of breaching them. This article explains what constitutes a breach of fiduciary duty in Florida, the elements a plaintiff must prove, the deadline for filing suit, and the remedies available to affected businesses and individuals.
The Legal Definition of a Fiduciary in Florida
A fiduciary is an individual or entity authorized and obligated to act on behalf of another party in situations involving trust, particularly regarding finances or property. The person or entity for whom the fiduciary acts (the “beneficiary”) must have complete trust and confidence in the fiduciary’s actions.
In Florida, a fiduciary relationship exists between:
- broker/client
- trustee/beneficiary
- guardian/ward
- partners to other partners
- corporate directors to shareholders
- general partners to limited partners
- managing members of limited liability companies to other members
- a fiduciary duty may also be implied if one party relies on another to act on its behalf and in its best interest
Fiduciary Duties
A fiduciary has several legal responsibilities, including:
- Duty of Care: Exercise due diligence in making decisions or taking actions affecting the beneficiary. In other words, a fiduciary must conduct a comprehensive assessment of all practically available material relevant to the matter, prior to making a decision or taking action on the beneficiary’s behalf. A fiduciary must also use reasonable caution when making decisions or taking any action on behalf of a beneficiary, whether it be an individual or a business.
- Duty of Loyalty: Prioritize the beneficiary’s interests above all else, including personal interests. A fiduciary must also disclose any personal conflict(s) of interest that become apparent.
- Duty of Good Faith: Act in the beneficiary’s best interests, especially in matters involving confidentiality and conflict of interest.
- Duty of Confidentiality: Protect all information related to the beneficiary and refrain from using it for personal gain.
- Duty of Prudence: Exercise utmost care, caution, and skill in decisions and actions.
- Duty to Disclose: Reveal all information that could impact the beneficiary or the fiduciary’s capacity to act as such.
The Elements of a Breach of Fiduciary Duty Claim in Florida
The Florida Supreme Court has stated the elements of a claim for breach of fiduciary duty simply: “the existence of a fiduciary duty, and the breach of that duty such that it is a proximate cause of the plaintiff’s damages.” Gracey v. Eaker, 837 So. 2d 348, 353 (Fla. 2002). In practice, a Florida court will ask four questions:
- Did a fiduciary relationship exist between the parties (by law, by agreement, or implied from the circumstances)?
- Did the fiduciary breach a duty owed — loyalty, care, good faith, disclosure, or confidentiality?
- Did the breach proximately cause harm?
- Can the harm be measured as damages?
Each element matters. A trusted advisor who made an honest, careful decision that turned out badly has not necessarily breached anything; a fiduciary whose self-dealing caused no measurable loss may face other consequences, but a damages claim requires proof of harm.
Fiduciary Relationships in Florida Businesses
Fiduciary relationships are common in partnerships and corporations. Business partners owe fiduciary duties to each other and the partnership, while corporate directors owe such duties to the corporation and its shareholders.
Fiduciary Duties in a Partnership
According to Fla. Stat. § 620.8404, partners must fulfill duties of loyalty and care, which include:
- Accounting for any property, profit, or benefit derived from the partnership.
- Avoiding conflicts of interest and competition with the partnership.
- Refraining from gross negligence, reckless conduct, intentional misconduct, or knowing violations of the law.
Fiduciary Duties in a Corporation
Directors of Florida corporations must act in good faith and in the best interest of the corporation, exercising the care that a sensible person would find appropriate (Fla. Stat. § 607.0830).
Because directors oversee the management of the business and affairs of the corporation, their actions play a pivotal role in the success or failure of an organization. Every director must therefore work for the benefit of all shareholders, even if nominated by a particular group of shareholders.
Fiduciary Duties in a Florida LLC
Most South Florida businesses today are limited liability companies, and Florida’s Revised LLC Act spells out who owes what. Under Fla. Stat. § 605.04091, managers of a manager-managed LLC and members of a member-managed LLC owe the company — and, in a member-managed company, each other — fiduciary duties of loyalty and care. The duty of loyalty includes accounting to the company for profits and business opportunities, avoiding self-dealing, and refraining from competing with the company. The duty of care requires refraining from grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law. Disputes among LLC members — often called business divorces — frequently turn on exactly these statutory duties.
Fiduciary Relationships and Small Businesses in Florida
Small businesses may also engage in fiduciary relationships with external advisors, such as lawyers and accountants. When this happens, the roles may differ depending on the circumstances.
For example, a small business may hire a lawyer or CPA for regular or occasional assistance with relevant business needs. If so, the small business becomes the beneficiary, and the business attorney or CPA takes on the role of a fiduciary.
On the other hand, the owner of an independent accounting firm or small law practice may hire a financial advisor. In that case, the law firm or accounting firm is no longer the fiduciary, but becomes the beneficiary, while the financial advisor becomes the fiduciary.
In either case, it is important that all parties understand the relationship and act accordingly.
Legal Recourse for Breach of Fiduciary Duty
When a fiduciary fails to fulfill their duties, such action (or inaction) may constitute a “breach of fiduciary duty.” Affected businesses or individuals in Florida may pursue legal action for breach of fiduciary duty, typically through litigation in state or federal court.
Remedies depend on the breach and the harm. Florida courts may award compensatory damages for the losses the breach caused, and in appropriate cases equitable relief such as disgorgement of ill-gotten profits, imposition of a constructive trust, or an injunction halting ongoing misconduct.
Punitive damages are reserved for the worst conduct. Under Fla. Stat. § 768.72, a defendant may be held liable for punitive damages only where clear and convincing evidence shows intentional misconduct — actual knowledge of the wrongfulness of the conduct and the high probability of injury, pursued anyway — or gross negligence, meaning conduct so reckless it amounts to a conscious disregard of the rights of others.
How Long Do You Have to Sue? The Four-Year Deadline
A claim for breach of fiduciary duty in Florida is generally subject to a four-year statute of limitations under Fla. Stat. § 95.11(3). Importantly, the Florida Supreme Court has held that the “delayed discovery” doctrine does not extend that deadline for fiduciary-duty claims — the clock is not paused merely because the beneficiary did not yet know about the misconduct. Davis v. Monahan, 832 So. 2d 708 (Fla. 2002). A business that suspects self-dealing or mismanagement should investigate promptly; waiting can extinguish an otherwise strong claim.
Common Defenses to a Breach of Fiduciary Duty Claim
Not every business relationship is a fiduciary one — the most common defense is that the parties dealt at arm’s length, with no duty owed. Corporate directors may also invoke the protections Florida law affords good-faith business judgment, and defendants frequently raise the four-year limitations period. Anticipating these defenses is part of building — or defending — the case.
Frequently Asked Questions
What is a breach of fiduciary duty in Florida?
A breach of fiduciary duty occurs when a person obligated to act in another’s best interests — such as a business partner, corporate director, or LLC manager — violates the duties of loyalty or care and causes harm. Florida law requires proof of a fiduciary relationship, a breach, and damages proximately caused by the breach.
How long do you have to sue for breach of fiduciary duty in Florida?
The statute of limitations is generally four years under section 95.11(3), Florida Statutes. The deadline is not extended simply because the misconduct was discovered late, so prompt investigation is essential.
Do LLC members owe fiduciary duties in Florida?
Yes, in most structures. Under section 605.04091, Florida Statutes, managers of a manager-managed LLC and members of a member-managed LLC owe fiduciary duties of loyalty and care to the company and, in member-managed companies, to the other members.
Can you recover punitive damages for breach of fiduciary duty?
Only in limited circumstances. Under section 768.72, Florida Statutes, punitive damages require clear and convincing evidence of intentional misconduct or gross negligence — a deliberately high bar reserved for egregious conduct.
What remedies are available for breach of fiduciary duty in Florida?
Florida courts may award compensatory damages and, in appropriate cases, equitable remedies including disgorgement of profits, a constructive trust over wrongfully obtained assets, or injunctive relief. Punitive damages are available only where the strict statutory standard is met.
Does Capital Partners Law handle fiduciary-duty disputes?
Yes. Capital Partners Law represents businesses, partners, members, and shareholders on both sides of fiduciary-duty and business-divorce disputes across Miami-Dade, Broward, and Palm Beach counties.
To learn more or speak with a knowledgeable Florida Business Attorney, contact Capital Partners Law today:
- Toll-free at (833) 7-CAPLAW
- Complete a New Client Intake Form (No obligation – an attorney will review your information and contact you to discuss your needs).
- Schedule a Free Consultation
This article is provided by Capital Partners Law for informational purposes only. It is not intended as legal advice and does not form the basis for an attorney-client relationship. If you need legal advice, please contact Capital Partners Law or another licensed attorney.