PJC Business

PJC 115.15

D AMAGES

PJC 115.15 Remedies for Breach of Fiduciary Duty (Comment)

Jury questions. Whether equitable relief is granted is for the court to decide based on “the equity of the circumstances”; however, the jury must resolve any con tested fact issues. See Burrow v. Arce , 997 S.W.2d 229, 245 (Tex. 1999), cited with approval in Hill v. Shamoun & Norman, LLP , 544 S.W.3d 724, 741 (Tex. 2018). Fact disputes for the jury to decide may include the existence of a breach, the agent’s culpa bility, the value of the agent’s services, the amount of contractual consideration paid, and the existence and amount of any harm to the principal. See Burrow , 997 S.W.2d at 245–46. The court will then decide whether the breach was clear and serious and whether the remedy would be equitable and just. See Burrow , 997 S.W.2d at 245–46. Equitable relief generally. Where a fiduciary who breaches his duty has profited or benefited from a transaction with the beneficiary, as described in PJC 104.2–104.5, the plaintiff is entitled to equitable relief (such as rescission, constructive trust, profit disgorgement, or fee forfeiture) without having to show that the breach caused dam ages. First United Pentecostal Church of Beaumont v. Parker , 514 S.W.3d 214, 221– 22 (Tex. 2017); Burrow , 997 S.W.2d at 238, 240; see also Restatement (Third) of Agency §8.01 cmt. d (2006) (listing remedies). Where willful actions constituting a fiduciary breach also amount to fraudulent inducement, the contractual consideration received by the fiduciary is recoverable regardless of whether the breach caused actual damages. ERI Consulting Engineers, Inc. v. Swinnea , 318 S.W.3d 867, 873 (Tex. 2010). Rescission. The court may grant rescission of a transaction accomplished by a breach of the defendant’s fiduciary duty. See Allison v. Harrison , 156 S.W.2d 137, 140 (Tex. 1941) (purchase of land done without full disclosure by the fiduciary was void able and could be set aside at plaintiff’s option, even without proof that the price obtained was unreasonable); see also Schiller v. Elick , 240 S.W.2d 997, 1000 (Tex. 1951) (setting aside deed obtained through fiduciary’s breach). Constructive trust. The court may impose a constructive trust to restore property or profits lost through the fiduciary’s breach. See Consolidated Gas & Equipment Co. v. Thompson , 405 S.W.2d 333, 336–37 (Tex. 1966); International Bankers Life Insur ance Co. v. Holloway , 368 S.W.2d 567, 577 (Tex. 1963), superseded by statute on other grounds ; Slay v. Burnett Trust , 187 S.W.2d 377, 388 (Tex. 1945). Injunction. The court may grant injunctive relief. Hyde Corp. v. Huffines , 314 S.W.2d 763, 769–70, 776 (Tex. 1958) (injunction allowed to prevent damage through abuse of confidence in wrongfully appropriating trade secrets); Elcor Chemical Corp. v. Agri-Sul, Inc. , 494 S.W.2d 204, 212 (Tex. App.—Dallas 1973, writ ref’d n.r.e.) (enjoining unfair use of trade secret by party breaching fiduciary relationship). See also Tex. Civ. Prac. & Rem. Code ch. 65. Statutory remedies. Under appropriate circumstances, the court may—

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