Commercial Division Blog

Posted: June 26, 2017 / Categories Commercial, Fiduciary Duties

Attorney for 50% Shareholder Had No Fiduciary Duty to Other Shareholder

On June 7, 2017, the Second Department issued a decision in Gall v. Colon-Sylvain, 2017 NY Slip Op. 04424, holding that the attorney for a 50% shareholder had no fiduciary duty to the other shareholder, explaining:

To recover damages for a breach of a fiduciary duty, a plaintiff must establish (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant's misconduct. A fiduciary relationship exists between two persons when one of them is under a duty to act for or give advice for the benefit of another upon matters within the scope of the relation. Such a relationship may exist where one party reposes confidence in another and reasonably relies on the other's superior expertise or knowledge, but an arms-length business relationship does not give rise to a fiduciary obligation. . . . Determining whether a fiduciary relationship exists is a fact-specific inquiry and the essential elements are reliance by one party, and de facto control and dominance by the other.

Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove a breach of fiduciary duty against Camisa. The evidence did not establish that Camisa, who was the attorney for the purchaser and the lender, had any duty to act or give advice for the benefit of the plaintiff.

(Internal quotations and citations omitted).