Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Tuesday, September 8, 2009

Fiduciary Relationships: Formal vs. Informal Fiduciary Relationship

Breach of fiduciary duty requires the existence of a fiduciary relationship. Without such a relationbship, there cannot be the requisite duty, and hence no breach. As explained by the Dallas Court of Appeals, a fiduciary duty can arise in different contexts: There are two types of fiduciary relationships: formal fiduciary relationships that arise as a matter of law, such as partnerships and principal-agent relationships, and informal fiduciary relationships or “confidential relationships” that may arise from moral, social, domestic, or personal relationships. Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 593-94 (Tex. 1992). But a fiduciary relationship is an extraordinary one and will not be created lightly. In re Estate of Kuykendall, 206 S.W.3d 766, 771 (Tex. App.-Texarkana 2006, no pet.). The mere fact that one party to a relationship subjectively trusts the other does not indicate the existence of a fiduciary relationship. Id.; see also Crim Truck & Tractor Co., 823 S.W.2d at 595 (“[M]ere subjective trust alone is not enough to transform arms-length dealing into a fiduciary relationship.”). A person is justified in believing another to be his fiduciary “only where he or she is accustomed to being guided by the judgment and advice of the other party, and there exists a long association in a business relationship, as well as a personal friendship.” Pabich v. Kellar, 71 S.W.3d 500, 505 (Tex. App.-Fort Worth 2002, pet. denied). The marital relationship is a fiduciary one, Solares v. Solares, 232 S.W.3d 873, 881 (Tex. App.-Dallas 2007, no pet.), but we have already concluded that Smith and Deneve were not spouses. The question is whether the evidence of their longstanding cohabitation, their joint bank account, and their sharing of expenses is sufficient to raise a fact issue as to the existence of an informal fiduciary relationship. SOURCE: Dallas Court of Appeals opinion in No. 05-07-01407-CV

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