Aiding and Abetting a Breach of Fiduciary Duty

The California Court of Appeal issued a recent case addressing aiding and abetting a breach of fiduciary duty.  The case is entitled Nasrawi v. Buck Consultants LLC (Nov. 6, 2014) 179 Cal.Rptr.3d 813, 14 Cal.Daily Op. Serv. 12,672, 2014 Daily Journal D.A.R. 14,927.

“A defendant is liable for aiding and abetting another in the commission of an intentional tort, including a breach of fiduciary duty, if the defendant ‘knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act.’  The elements of a claim for aiding and abetting a breach of fiduciary duty are: (1) a third party’s breach of fiduciary duties owed to plaintiff; (2) defendant’s actual knowledge of that breach of fiduciary duties; (3) substantial assistance or encouragement by defendant to the third party’s breach; and (4) defendant’s conduct was a substantial factor in causing harm to plaintiff.”  See CACI No. 3610; American Master Lease LLC v. Idanta Partners, Ltd (2014) 225 Cal.App.4th 1451, 1478.

Some cases suggest that a plaintiff also must plead specific intent to facilitate the underlying tort.  The Nasrawi court did not address that issue because it found that the complaint in that case alleged intent.

In a demurrer to the plaintiffs’ complaint, the defendants contended that plaintiffs failed to state a claim against them because the defendants did not owe a fiduciary duty to plaintiffs.  The court noted that defendants’ argument “ignores the distinction between liability based on conspiracy to commit a tort and liability for aiding and abetting a tort.  ‘[T]ort liability arising from conspiracy presupposes that the coconspirator is legally capable of committing the tort, i.e., that he or she owes a duty to plaintiff recognized by law and is potentially subject to liability for breach of that duty.’  By contrast, ‘a defendant may be found liabile for aiding and abetting a breach of fiduciary duty even though the defendant owes no independent duty to the plaintiff.'”

The Court of Appeal reversed the judgment of dismissal and ordered the case remanded to the superior court.

Los Angeles based Wagenseller Law Firm handles breach of fiduciary duty lawsuits, often in the context of partnership and corporate litigation.  For more information, please contact Laine Wagenseller at (213) 286-0371.