Breach Of Fiduciary Duty

How Complex Business Disputes Arise

Business disputes can occur when parties to a contract breach their obligations, when shareholders have disagreements, or in a number of other situations a company may face at any given time. When this type of conflict is referred to as complex, it usually means that it involves multiple parties or multiple venues.

Lawsuits involving multiple parties, whether individuals, entities, or a combination, are considered complex because any issue becomes considerably more challenging to unravel as the number of parties involved increases. For example, contractors, subcontractors, builders, and homeowners might all be involved in a disagreement over the same parcel of property. Officers, board members, and shareholders might all have a stake in a dispute over how to run a partnership or corporation. When so many interests and needs are involved, it is more complicated than when litigation simply pits two parties with opposing goals against each other.

Multiple venues refer to simultaneous litigation in more than one court. For example, a dispute in which different motions are filed in various jurisdictions, or across state and federal judicial systems, would be considered complex by an attorney. Even though motions may be filed in different locations, they could all involve the same core legal issue.

Complex disputes often arise in the context of whether one or more partners or corporate directors have violated their required fiduciary duties. Depending on the type of organization that they create and what the agreement establishing it says, people running a business have certain responsibilities to manage it in a way that makes it as successful as possible. This includes a duty of care, which requires partners or managers to act in good faith and a reasonably prudent manner. More commonly, however, disputes arise under the duty of loyalty, where personal financial interests may clash with the overriding responsibility to prioritize the success and profitability of the entity. An individual managing a partnership or corporation cannot exploit its resources for their own gain or fail to disclose a potential conflict of interest.

If you believe that someone running a business which you are involved with has violated a fiduciary duty, you may have the right to take legal action. In some instances, you would be suing not on your own behalf but on the behalf of the entity. These derivative lawsuits have specific preliminary procedural requirements, and a knowledgeable lawyer is essential to ensuring that your rights and those of your business are not waived.