Proof of Damages Not Required to Remedy Fiduciary Breach
The Texas Supreme Court ruled that claims for breach of fiduciary duties do not require proof of actual damages. In the opinion on First United Pentecostal Church of Beaumont v. Parker, the Court partially reversed a lower court’s summary judgment on the determination that fiduciary “breach of loyalty” does not need to be shown to cause any actual damages. “It is the agent’s disloyalty, not any resulting harm, that violates the fiduciary relationship and thus impairs the basis for compensation.”
The case centered on an attorney’s failure to timely inform his client that previous funds deposited in the firm’s trust account had been withdrawn and used by the firm’s owner (who was later convicted of criminal charges). The church argued that the attorney in failing to perform his fiduciary responsibilities was liable for damages, even if the attorney was not the cause of the damages.
The lower court ruled in favor of the attorney: the church did not show causal damages due to his failure as a fiduciary agent of the church. While the Supreme Court agreed that the church had not proved his culpability as a conspirator in the loss of funds, the attorney’s breach of the fiduciary trust did make him liable without requiring the church “to show causation and actual damages as to any equitable remedies it sought.”