In any successful business partnership, trust is not just expected; it's essential. When two or more individuals enter into a business venture, they assume legal and ethical obligations to one another. These obligations are referred to as “fiduciary duties,” and they form the foundation of professional cooperation. When a partner prioritizes personal interests over those of the business or the partnership, they may be in violation of these legal duties.

Under Colorado law, fiduciary duties often arise from formal agreements, such as partnership contracts or operating agreements. However, these responsibilities can also stem from the very nature of the relationship. In most partnerships, especially those where each party holds managerial authority, each partner is considered a fiduciary to the others. This means they are expected to act in good faith, exercise reasonable care, and put the success of the business before their own individual gain.

A breach of fiduciary duty can seriously disrupt a company’s operations and lead to legal disputes, financial loss, and reputational harm. Understanding what fiduciary duty entails and how violations are handled in Colorado is key to protecting your business interests.

Core Elements of Fiduciary Duty

Fiduciary duty encompasses several legal and ethical responsibilities that partners owe to one another and to the partnership as a whole. While these duties can vary slightly depending on the structure of the business and any governing documents, the most universally recognized include:

Duty of Loyalty: Partners must not use company opportunities, confidential information, or business relationships for their personal benefit without consent.
Duty of Care: Each partner is expected to make thoughtful, well-informed decisions and avoid reckless behavior that could harm the business.
Duty of Good Faith and Fair Dealing: Partners must treat each other fairly, disclose relevant information, and avoid deceptive practices.

These duties require more than just avoiding outright theft or fraud; they demand proactive honesty and a shared commitment to the business’s well-being.

What Constitutes a Breach of Fiduciary Duty?

A breach occurs when a partner violates one or more of their fiduciary obligations, resulting in harm to the business or the other partner(s). These breaches can be obvious or subtle, and not all are easily detected. Below are some of the most common scenarios that lead to claims of fiduciary breach:

Self-Dealing: A partner diverts a business opportunity, such as a valuable contract or new client, to themselves or a separate business they control.
Misuse of Company Funds: Using partnership funds for personal expenses or failing to properly account for company spending.
Failure to Disclose Conflicts of Interest: Keeping quiet about relationships or interests that could influence business decisions in a biased way.
Unauthorized Business Actions: Entering into contracts, making financial decisions, or selling company assets without the required approval from other partners.
Competing with the Partnership: Launching or assisting a rival business while still actively participating in the partnership.

These actions not only violate legal duties but can also damage the long-term success of the partnership. In many cases, the injured party may not realize the extent of the harm until after the business has suffered a major financial or reputational blow.

Legal Options When a Breach Occurs

If you suspect that your business partner has breached their fiduciary duty, it is crucial to take swift and informed action. Under Colorado law, you have the right to pursue legal remedies when your partner’s misconduct has harmed the partnership or your interests as a co-owner.

Depending on the severity of the breach, the following remedies may be available:

Monetary Damages: Reimbursement for lost profits, devaluation of the business, or other measurable financial harm.
Disgorgement: Forcing the breaching partner to return any personal profits earned from improper use of company resources or opportunities.
Injunctive Relief: A court order preventing the partner from engaging in further misconduct or blocking certain transactions.
Dissolution of the Partnership: In severe cases, dissolving the business entity and distributing assets accordingly.
Removal or Buyout: Forcing the partner to leave the business or sell their ownership interest.

Colorado courts consider the facts of each case carefully. If the breach involved intentional misconduct or resulted in significant damage to the company, the court may impose punitive measures to prevent future harm.

If you’re unsure whether a breach has occurred, consulting with a legal professional can help clarify your situation. Our breach of fiduciary duty attorneys can investigate your case, examine financial records, and assess whether legal action is warranted.

Preventing Breaches with Strong Legal Agreements

One of the best ways to reduce the risk of a fiduciary breach is to clearly define each partner’s role, authority, and limitations in a written agreement. A well-drafted partnership agreement can serve as a roadmap for managing the business and resolving disputes before they escalate.

To prevent misunderstandings and minimize exposure, consider the following proactive steps:

Create an operating or partnership agreement that outlines responsibilities, voting rights, and decision-making processes.
Establish transparency around financial records with shared access to accounting software or regular financial reports.
Include clauses requiring disclosure of conflicts of interest and approval of certain high-value transactions.
Implement oversight through regular partner meetings and external audits when necessary.

While no contract can eliminate all risk, strong agreements can deter misconduct and provide a legal foundation for holding a partner accountable if something does go wrong.

Protecting Your Business When Trust Breaks Down

When a trusted business partner betrays their obligations, the impact can be both personal and professional. Many business owners feel blindsided when a longtime associate begins acting against the interests of the company. These situations require more than just emotional reactions; they require strategic legal guidance.

If you suspect wrongdoing, don’t delay in seeking legal support. The longer a breach continues, the more damage it can cause. With experienced counsel, you can uncover evidence, assess liability, and take steps to protect your business’s value and future.

If you’re dealing with a possible breach of fiduciary duty in your business partnership, contact us today to schedule a consultation. We’ll work with you to pursue accountability, secure your rights, and restore trust where it matters most.

To answer that questions, one only needs to look at real-life examples of the business world. Right here in Denver parent company of the Denver Post, MediaNews Group, put its neck out there and voiced its outright opposition to Randstad North America Inc.’s $429 million purchase of Monster Worldwide Inc.

MediaNews’s Senior Vice President Joe Anto wrote a letter to Monster stating that Randstad’s $429 million offer for the company was too low. MediaNews owns approximately 11.6 percent of Monster’s stock. Additionally, Anto claimed Randstad’s “$3.40 per share deal would represent the textbook definition of selling at the bottom.”

Additional Transaction Details and Allegations of the Monster Acquisition

The following transaction details and allegations of the acquisition of Monster by Randstad were collected from media reports:¹

MediaNews claimed Monster’s share price could go as high as $8 per share within 18 months following the sale.

“(Monster’s shares) woefully underperformed versus its peers and the market over any relevant period of time,” Anto stated in a letter to Monster’s board.

As a result of the undervalued purchase and to reduce expenses, MediaNews reported that Monster could cut anywhere from 1,600 to 3,700 jobs to try and recoup $136 million.

The letter to the board members also claims that Monster has too many layer of management and support, as well as too large of a sales force.

Anto alleged that Monster is in too many money-losing international operations

When is it Appropriate to Sue a Board of Directors?

Obviously, board of directors of any company wield quite a bit of authority over the company operations, and they are beholden to shareholders. Shareholders represent partial ownership stake in those companies, and when the board of directors makes poor business decisions the shareholders have every right to display their disdain and possibly even take legal action to correct any infraction.

Here is a list of fiduciary duties that boards of directors are typically subject to:

Board of directors have a duty of care they must exemplify when managing company or corporate affairs and assets.

Board of directors have a duty of loyalty to avert undisclosed conflict of interest.

Individual board members cannot undertake actions for self-profit on behalf of the company.

Board of directors should also never take advantage of business opportunities as a result of their relationship to the company/corporation.

Contact a Denver Business Attorney at Downey & Associates, PC

Has your board of directors taken an action that either profited its members or unknowingly hurt the bottom line of your company or corporation? If so, you can count on a Denver Business Attorney with Downey & Associates, PC. Since 1983, Thomas Downey and the legal team at Downey & Associates, PC, have been exhibited exceptional legal representation for their clients in all manner of business-related matters, including contract negotiations, workplace accidents, and corporate conflicts.

For a free, no-hassle consultation about our legal services, please call our Denver business attorney today at (303) 647-9399 or by emailing us using the contact form on this page.

From our law offices in Englewood, we serve clients throughout Colorado and the U.S.

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¹“Denver Post parent company vehemently opposes Randstad’s purchase of Monster” published in Denver Business Journal, Sept. 2016.

Zillow is set to pay $130 million in one of the most contentious online real estate cases in history. Zillow has agreed to settle with Move, which operates Realtor.com for the National Association of Realtors (NAR), according to a Securities and Exchange Commission filing.

As the settlement agreement explains:

It is understood and agreed that this is a compromise settlement of disputed claims and counterclaims and potential disputed claims and counterclaims... This settlement agreement is solely the result of a good faith compromise and settlement between the parties. Nothing contained herein is or is to be construed as an admission by any of the parties of liability, wrongdoing, or responsibility, and the parties deny any such liability or wrongdoing and continue to disclaim such responsibility.

A Look at the Allegations & Details of the Case

The following details were gathered from news reports and the Securities and Exchange Commission filing:¹

Move had alleged that Errol Samuelson, former Move chief strategy officer, stole proprietary information and trade secrets, before going to work for Zillow in 2013.
Move claimed Zillow owned it approximately $2 billion in damages.
Move originally sued Zillow after CSO Samuelson resigned from Move on March 5, 2014 and joined Zillow as the second highest paid executive on the very same date.
The lawsuit alleged breach of contract, misappropriation of trade secrets, breach of fiduciary duty, and accused Samuelson misappropriated stolen trade secrets.
Move further alleged that Zillow attempted to cover up the theft.
The NAR will receive 10 percent of the settlement amount after Move’s litigation costs and fees. Move will receive the remainder of the settlement.
The lawsuit later added another former Move member, Curt Beardsley, who is now Zillow’s vice president of industry development.
All parties agree to dismiss all claims and counter claims, per a separate SEC filing by Zillow. In the filing, Zillow disavows any wrongdoing or admission of liability in the settlement.

“We are pleased to have reached an amicable resolution of this litigation,” Move said in a statement. “We look forward to putting the matter to rest and returning our full focus to simplifying the real estate process for consumers and the real estate professionals who serve them.”

Contact a Denver Real Estate Attorney at Downey & Associates, PC

If you have a real estate deal that needs legal representation or you have a business dealing that needs litigation, you can count on Denver Real Estate Attorney Thomas E. Downey. Since 1983, Thomas Downey and the other legal professionals at Downey & Associates, PC, have been providing individuals and businesses in the Denver Metro Area and throughout the U.S. with the highest level of legal service for their real estate legal issues, litigation, and property taxes.

Our dedication to our clients, coupled with our extensive experience handling complex real estate matters, means that our clients can always trust that we will aggressively protect their rights and help them achieve the best possible outcomes to their sensitive legal matters.

We encourage you to learn more about your rights and options, as well as our various services, by calling us at (303) 813-1111 or by emailing us using the contact form on this page.

From our law offices in Centennial, we serve clients throughout Colorado and the U.S.

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¹“Zillow to pay $130M to settle lawsuit with Move over alleged trade secret theft” published in Housingwire, June 2016.

Fiduciaries, such as attorneys, accountants and even trustees, generally have a financial and/or legal obligation to some other individual or party. When fiduciaries fail to live up to their obligations in this role, they can be sued for breach of fiduciary duties, making them potentially liable for paying a significant amount of damages.

Whether you are a fiduciary or someone who has a relationship with a fiduciary, below are some important facts you should know about breach of fiduciary duties.

Here’s What You Should Know about Breach of Fiduciary Duties

1 – Intent is not necessary to establish a breach of fiduciary duties.

In other words, fiduciaries can be held liable for unintentional mistakes, as well as intended breaches of duties. Some of the more common examples of the mistakes that can lead to allegations of breach of fiduciary duties include (but are by no means limited to):

Accidentally comingling another party’s personal assets with the fiduciary’s assets
Forgetting or failing to keep detailed records regarding assets
Making risky or unsound investments with the assets a fiduciary has been entrusted to manage
Failing to accurately represent the status of some asset or estate
Failing to act impartially in all fiduciary duties.

2 – There are generally 4 things that need to be proved to establish a breach of fiduciary duties.

When allegations of breach of fiduciary duty arise, the following will need to be established in order to prove that a breach of these duties has actually occurred (and, in turn, to win a breach of fiduciary lawsuit):

There was a fiduciary relationship in place.
The fiduciary failed live up to his or her legal and ethical obligations.
The person who is suing (i.e., the plaintiff) was entitled to the fiduciary duties in question.
The breach of fiduciary duties caused the plaintiff some damage or harm.

3 – There are viable defenses to allegations of a breach of fiduciary duties.

While allegations of breach of fiduciary duties can arise for various reasons, there can be a number of legitimate defenses against these allegations. In particular, just some possible defense arguments can include that:

The perceived breach of fiduciary duties never, in fact, occurred.
The plaintiff relinquished certain rights when entering into the relationship with the fiduciary.
The case should be dismissed because the statute of limitations has expired.

Contact an Experienced Denver Business Lawyer at Downey & Associates, PC

If you believe a fiduciary has breached his or her duties with you – or if you are a fiduciary who has been accused of breaching your duties, contact Denver Business Lawyer Thomas E. Downey for help protecting your rights and interests. Since 1983, Thomas Downey and the other legal professionals at Downey & Associates, PC, have been providing individuals and businesses in the Denver Metro Area and throughout the U.S. with the highest level of legal service for their business, litigation and other legal issues.

To learn more about your rights and options, as well as our various services, contact our firm today by calling (303) 813-1111 or by emailing us using the contact form on this page.

From our law offices in Centennial, we serve clients throughout Colorado and the U.S.