Legal Memorandum: Breach of Fiduciary Relationship Claim

Issue: In a breach of fiduciary relationship clam, what determines whether a fiduciary relationship existed?

Area of Law: Business Organizations & Contracts, Litigation & Procedure, Personal Injury & Negligence
Keywords: Breach of fiduciary duty claim; Fiduciary relationship
Jurisdiction: Federal, Minnesota
Cited Cases: 672 N.W.2d 912; 457 F.3d 784; 477 U.S. 242; 153 N.W.2d 832; 712 N.W.2d 772; 293 Minn. 418; 361 N.W.2d 801; 732 N.W.2d 324
Cited Statutes: None
Date: 01/01/2009

In a breach of fiduciary duty claim in Minnesota Federal District Court, Minnesota law determines whether a fiduciary relationship exists.  Hope v. Klabal, 457 F.3d 784, 787 (8th Cir. 2006).  Whether a person owes a fiduciary duty to another person is determined by the relationship between the parties.  A “fiduciary” is a person who “enjoys a superior position in terms of knowledge and authority and in whom the other party places a high level of trust and confidence.”  Carlson v. Sala Architects, Inc., 732 N.W.2d 324, 330-31 (Minn. Ct. App. 2007) (citing Toombs v. Daniels, 361 N.W.2d 801, 809 (Minn. 1985)).  See also Target Stores, Inc. v. Twin Plaza Co., 277 Minn. 481, 153 N.W.2d 832, 844 (1967) (“A fiduciary relationship exists when one party places its trust and confidence in the other.”).  A relationship giving rise to fiduciary duties “transcends the ordinary business relationship which, if it involves reliance on a professional, surely involves a certain degree of trust and a duty of good faith.”  Id. at 331.  Persons in a fiduciary relationship must disclose material facts to each other.  Klein v. First Edina Nat’l Bank, 293 Minn. 418, 421, 196 N.W.2d 619, 622 (1972).

Certain relationships automatically create a fiduciary relationship.  See Interstate Realty One v. Crippa, No. C4-95-1253, 1996 WL 22319, at *4 (Minn. Ct. App. Jan. 23, 1996) (fiduciary relationship created between broker and seller when listing agreement […]