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Legal Memorandum: Requirements for a Fiduciary Relationship

Issue: What is required to create a fiduciary relationship in the absence of a written agreement?

Area of Law: Business Organizations & Contracts, Estate Planning & Probate, Litigation & Procedure, Real Estate Law
Keywords: Fiduciary relationship; Written agreement absent
Jurisdiction: Arizona
Cited Cases: 813 P.2d 710; 259 P.2d 554
Cited Statutes: None
Date: 06/01/2010

Berry v. Stewart Tit. & Trust of Phoenix, 604 P.2d 610 (Ariz. 1979) (“In its fiduciary capacity the escrow agent must conduct the affairs with which he is entrusted with scrupulous honesty, skill, and diligence.”).

Burkens v. Ticor Tit. Ins. Co., 813 P.2d 710 (Ariz. 1991) (“Berry requires the escrow agent to disclose information when it ‘knows that a fraud is being committed.’ It does not require the escrow agent to investigate and search for fraud.  But our reading of Berry also leads to the conclusion that it does not permit the escrow agent to close its eyes in the face of known facts and console itself with the thought that no one has yet confessed fraud. Although not required to investigate, when the agent is aware of facts and circumstances that a reasonable escrow agent would perceive ‘as evidence of fraud,’ then there is a duty to disclose.”).

Malta v. Phoenix Tit. & Trust Co., 259 P.2d 554 ) (Ariz. 1953) (“It is true that an escrow agent is a trustee and must act in strict accordance with the terms of the escrow agreement or it will be liable in damages for any loss suffered by reason of any departure from those terms.”).

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