Breach of Fiduciary Duty

Breach of Fiduciary Duty § 7:2.3
near standardless dimension to the punitive damages equation.” 138.11
However, the Court stated: “Evidence of actual harm to nonparties can
help to show that the conduct that harmed the plaintiff also posed a
substantial risk of harm to the general public, and so was particularly
reprehensible . . . .” 138.12 However, the Court cautioned, “a jury may
not go further than this and use a punitive damages verdict to punish a
defendant directly on account of harms it is alleged to have visited on
nonparties.” 138.13 Thus, “it is constitutionally important for a court to
provide assurance that the jury will ask the right question, not the
wrong one.” 138.14
[C] Prejudgment Interest
Where an accountant is held liable for breach of fiduciary duties, he
or she may also be liable for prejudgment interest on the amount
awarded to the plaintiff. Most courts will award prejudgment interest
in several situations. First, prejudgment interest will be awarded on a
liquidated claim or a claim the amount of which is readily ascertainable.
139 Second, prejudgment interest will be given on an award of
restitution. 140 In the fiduciary context, the prejudgment interest on a
restitutionary recovery operates to deprive the fiduciary of all possible
benefit from his or her breach of fiduciary duty. A court may award
prejudgment interest on a restitutionary award against an ERISA
fiduciary for breach of a fiduciary duty owed to an employee benefit
plan. 141
The traditional view is that prejudgment interest will not be
awarded on a pecuniary claim that is unliquidated or, in other words,
the amount of which can “not be ascertained or computed, even in
may have been lawful where it occurred . . . . Nor, as a general rule, does a
State have a legitimate interest in imposing punitive damages to punish a
defendant for unlawful acts committed outside of the State’s jurisdiction.”
State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S. Ct. 1513, 1522 (2003).
138.11. Philip Morris USA, 127 S. Ct. at 1063.
138.12. Id. at 1064.
138.13. Id. at 1064. In dissent, Justice Stevens stated: “This nuance eludes me.
When a jury increases a punitive damages award because injuries to third
parties enhance the reprehensibility of the defendant’s conduct, the jury is,
by definition, punishing the defendant—directly—for third-party harm.”
Id. at 1067.
138.14. Id. at 1064.
139. DOBBS, REMEDIES § 3.5 at 166–67 (West 1973).
140. See RESTATEMENT OF RESTITUTION § 156 (1937); DOBBS, REMEDIES § 3.5 at
166 and 169–70 (West 1973).
141. Brink v. DaLesio, 667 F.2d 420, 429 (4th Cir. 1982) (district court erred in
not allowing prejudgment interest on amount wrongfully appropriated
from employee benefit plan by defendants).
(Goldwasser & Arnold, Rel. #14, 10/11)
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