Business Fraud and Breach of Fiduciary Duty Lawyer
Serving Cambridge and Worcester
Business Fraud
As a Cambridge MA business fraud lawyer, and law firm, we have substantial experience in prosecuting fraud and securing compensation and punitive damages for our Cambridge and Worcester-area clients who have been harmed as a result of business fraud or misrepresentation.
Elements of Business Fraud. You may have been the victim of fraud if a person with whom you are in business makes a false representation of material fact relating to a transaction, knowing that the fact is false, in order to induce you to act on the representation, and you reasonably relied on the fact and suffered financial or reputational harm as a result.
Negligent Misrepresentation Is Actionable. Negligent misrepresentation does not require an intent to deceive or actual knowledge that a statement is false. To prevail on a negligent misrepresentation claim, you must establish that a person supplied false information without exercising reasonable care or competence in obtaining or communicating the information, you justifiably relied on the information, and you suffered financial or reputational harm as a result.
Damages For Business Fraud. Usually, damages for fraud will be measured by the benefit expected from the promises or representations that were made. In other words, the measure of damages typically will be what you should have received had the representations been true minus what you did receive. That there may be some uncertainty in the calculation will not prevent you from receiving damages for the harm caused by the misrepresentation.
Punitive Damages For Business Fraud Under Chapter 93A of the Massachusetts General Laws. The Massachusetts Consumer Protection Statute, Massachusetts General Law Chapter 93A, provides for multiple damages of at least 2 times and up to 3 times the actual damages for business fraud. In one case, more fully explained on our home page and in our results section, we secured punitive damages for business fraud perpetrated by a commercial landlord and for intentional misconduct by its banking institution, resulting in a total recovery for our client of more than seven times the amount of their actual underlying loss. Business fraud and bad faith can prove costly for those who commit it. As a Cambridge MA business fraud lawyer, and law firm, we are dedicated to holding fraudsters accountable.
When Is A Misrepresentation of Fact Actionable?
A fact must be “material” to be actionable, and it is material if a reasonable person under the circumstances would have considered it important to the decision made.
A fraud may be perpetrated by an implied as well as by an express representation of fact. For example, it is a fraudulent statement of fact if you were buying a car and the seller told you the car was in good condition when he knew that a significant repair needed to be made to ensure the car was safe to drive. The statement implies that no repairs are needed to make the car safe.
Half-truths may be fraudulent. If someone speaks about a matter, he or she must speak honestly and disclose all the important facts about that matter within their knowledge. For example, if you were buying a house and the seller told you the septic system works fine, the seller had a duty to tell you if he or she knew the system would likely stop working soon and would need to be replaced. On the other hand, the seller had no duty to volunteer information in the absence of a question, so the seller would have had no duty to disclose the septic system would likely stop working soon if the septic system was never discussed.
Opinions And Statements Relating To Future Events. A pure opinion is not a fact. An opinion is a personal belief or view that the speaker cannot prove right or wrong with certainty, such as who manufactures the best automobile. In some cases, however, a statement that sounds like an opinion might suggest that the speaker knows facts to justify the opinion. In the car example above, the statement that the car is in good condition may ordinarily be an considered an opinion, but since the seller knew the car needed a significant repair for the car to run safely, the statement is considered a misrepresentation of fact.
A statement about a future event usually is not a fact, unless the speaker has more knowledge or expertise about the particular future event than the person to whom the fact is told. Further, statements of present intention as to future conduct may be the basis for a fraud action if the statements misrepresent the actual intention of the speaker and were relied upon by the recipient to his harm.
Breach of Fiduciary Duty
A fiduciary relationship is established when one person justifiably places confidence and trust in someone else, and seeks that person’s help or advice in some matter. A breach of fiduciary duty occurs when the fiduciary, entrusted to act in the other person’s best interest, fails to do so.
A Fiduciary Owes The Beneficiary A Duty Of Utmost Good Faith and Loyalty. Under Massachusetts law, all fiduciaries must exercise the utmost good faith and loyalty to the beneficiary of the trust. That means the fiduciary must act solely in the beneficiary’s interest, even at the expense of his own interest, in matters connected with the fiduciary relationship. The fiduciary may have dealings with the beneficiary of his trust but only if the fiduciary makes a full and fair explanation to the beneficiary of every material fact known to the fiduciary as well as the legal implications of those facts. In other words, the fiduciary cannot conceal relevant facts in his dealings with the beneficiary.
Proving A Breach. In order to prove a breach of fiduciary duty, we must prove that:
- a fiduciary relationship existed giving rise to a duty of utmost good faith and loyalty;
- the fiduciary breached the duty by not acting in the best interest of the beneficiary of his trust; and
- the beneficiary suffered harm as a result of the breach of fiduciary duty.
Remedies For Violation Of Fiduciary Duty Include Compensatory Damages And Injunctions To Stop The Conduct. If a fiduciary violates his duty of utmost good faith and loyalty, and acquires some gain or advantage for himself, the law places that gain in trust for the beneficiary and deprives the fiduciary of any gain. So, for example, if a fiduciary transfers a beneficiary’s property, whether real property or personal property, without the beneficiary’s knowledge and consent, a trial judge may rescind the conveyance, place the property in constructive trust for the beneficiary, and order the property conveyed to the proper person. Other remedies may include monetary damages to compensate for loss of business opportunities, lost profits, and the fiduciary’s unjust enrichment. Injunctions or receiverships may also be appropriate. In one case, our team prevailed on the trial judge to strike as a nullity a CEO’s bonus provision, establish a dividend policy, and award our client attorneys’ fees. As a Cambridge MA breach of fiduciary lawyer, and law firm, we are dedicated to holding fiduciaries accountable for their breach of trust.
Breach of fiduciary duty and bad faith principals apply equally to trustees, agents, attorneys, guardians, partners, and shareholders in closely-held corporations.
Matters involving a breach of fiduciary duty or trust are usually complex, so it is important to have an experienced breach of fiduciary duty lawyer who can help you achieve a favorable outcome. Raphaelson Law has successfully prosecuted and resolved several breach of fiduciary cases by trial or settlement, and is ready to help you understand your options so that you may make informed decisions toward holding the fiduciary accountable and securing fair and full compensation for your losses.
Call Now For A Free Consultation
As a Worcester and Cambridge lawyer, and law firm, focused on business fraud and breach of fiduciary duty, we are prepared to provide you and your family legal guidance and support to help you move forward. To set up your free consultation, call us at 617-204-9800 or contact us online.