Breach of Fiduciary Duty

Breach of Fiduciary Duty § 7:2.3
disclose relevant facts about the investment to the client. 121 Or, where
an accountant is employed to assist in the liquidation of a client’s real
estate and fails to reveal an offer to purchase the real estate, the
accountant is liable for the amount by which the proceeds of the sale
would have been increased by acceptance of the offer. 122 Similarly, an
accountant who is a fiduciary under ERISA is “personally liable to
make good to such plan any losses to the plan resulting from” a breach
of a duty imposed by ERISA. 123
Several limitations apply to the recovery of compensatory damages.
Generally the plaintiff is required to prove the amount of damages
with as much certainty as is reasonably possible under the circumstances.
124 In addition, the plaintiff may not recover damages for any
harm which could have been avoided after the wrongful act through
reasonable effort or expenditure of money. 125
Where an accountant is found liable under two separate theories for
a single injury, the client is only entitled to one compensatory award.
For example, where an accountant engaged in management consulting
is found to have breached his or her fiduciary duty and to have acted
negligently, the jury may not award compensatory damages under the
two separate theories for the same injury. 126
121. Cf. Dominguez v. Brackey Enters., 756 S.W.2d 788 (Tex. Ct. App. 1988)
(jury found against accountant and others on breach of fiduciary duty
claim and other claims; $53,000 actual damages awarded), writ of error
denied.
122. Cf. Allen Realty Corp. v. Holbert, 227 Va. 441, 318 S.E.2d 592 (1984)
(reversing trial court judgment dismissing action against accountant and
accounting firm).
123. 29 U.S.C. § 1109(a). This section creates liability to a benefit plan. To
enforce the right, an action must be brought under 29 U.S.C. § 1132(a)(2).
The Supreme Court has held that recovery under this section for breach of
fiduciary duty must inure to the benefit of the employee benefit plan and
not to the benefit of an individual beneficiary of the plan. Mass. Mut. Life
Ins. Co. v. Russell, 473 U.S. 134, 105 S. Ct. 3085 (1985). However, in
Varity Corp. v. Howe, 516 U.S. 489, 116 S. Ct. 1065 (1996), the Court held
that an individual beneficiary of a plan may bring an action under 29
U.S.C. § 1132(a)(3) for individual equitable relief for breach of fiduciary
duty. Three justices dissented, arguing that the Court’s holding was in
conflict with the reasoning of the Russell case. See id., 116 S. Ct. at 1079
(Thomas, J., dissenting).
124. RESTATEMENT (SECOND) OF TORTS § 912 (1979).
125. Id. § 918(1).
126. See Diversified Graphics, Ltd. v. Groves, 868 F.2d 293, 295, 297 (8th Cir.
1989) (duplicative awards under negligence and breach of fiduciary duty
theories; award of damages for breach of fiduciary duties vacated).
(Goldwasser & Arnold, Rel. #14, 10/11)
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