What is a fiduciary duty? Fiduciary duties are obligations of trust and loyalty that individuals owe to one another in certain relationships. A fiduciary duty is undertaken by trustees, officers, directors, executors, administrators, members of a limited liability company (LLC), shareholders or partners.
Understand Fiduciary Duties: In Illinois, LLC members owe fiduciary duties, including the duty of loyalty and the duty of care, to the company and its other members. The duty of loyalty generally requires members to act in the best interests of the company and not for their personal gain. The duty of care requires members to make informed decisions for the company.
Identify the Breach: Breaches of a fiduciary duty occur when a fiduciary obtains profits or other advantages though self-dealing and causes a loss to the other members or shareholders. To bring a breach of fiduciary duty claim, you'll need to identify specific actions or decisions by the LLC member that you believe constitute a breach of their fiduciary duty.
Review LLC Operating Agreement: To determine the duty it is necessary to review the LLC's operating agreement, a shareholders’ agreement or any partnership agreement which are key documents outlining the rights, responsibilities, and duties of the members. It may provide guidance on fiduciary duties. Those agreements may also require an alternative dispute resolution procedure such as mediation or arbitration in lieu of filing a lawsuit. Negotiation or mediation can be a cost-effective way to resolve disputes and reach a settlement with the other party.
Gather Evidence: To analyze a potential claim for breach of fiduciary duty, we need to collect evidence that supports the claim, such as emails, documents, financial records, or witness statements that demonstrate the breach of fiduciary duty.
Consult an Attorney: It's advisable to consult with an attorney experienced in business litigation and Illinois LLC law. They can assess the strength of your claim, provide legal advice, and help you navigate the legal process.
Filing a Lawsuit: If negotiation or mediation fails, you may need to file a lawsuit in an Illinois court. Your attorney can help you prepare the necessary legal documents and guide you through the legal process. But a lawsuit can be a lengthy and complex process. It involves discovery, depositions, and potentially a trial. If the court finds in your favor, potential remedies may include monetary damages, injunctive relief, or other appropriate remedies to address the breach.
If you believe you might have a claim against someone who owes you a fiduciary duty, you should consult with experienced business litigation attorneys for advice tailored to your specific situation. An experienced business litigation lawyer can provide you with the most up-to-date and accurate information regarding your case and guide you through the process. If you believe you have been a victim of someone who owes you a fiduciary duty, contact George Bellas (george@bellas-wachowski.com) for an initial consultation.