Understanding Fiduciary Duty

by John F. Mariani, Christopher W. Kammerer, and Nancy Guffey-Landers

What is  Fiduciary Duty” -– other than one of the most elusive concepts in  Anglo-American law?  This Florida Bar article facilitates an understanding of the true meaning of Fiduciary Duty and offers practical guidance to develop strategies about the scope, limitation, and remedies that may apply under the circumstances.

When does a person owe another a fiduciary duty? Unless their relationship is one of the classic relationships that impose fiduciary duties, such as the attorney/client, executor/heir, guardian/ward, agent/principal, trustee/beneficiary, or corporate officer/shareholder, the answer is often unclear. Courts in recent years have imposed a fiduciary duty on persons in numerous other types of relationships. Depending on the particular facts, lenders, clerics, and even wives have all been saddled with fiduciary duties. Commentators have attempted to isolate a defining principle that specifies the circumstances or relationships that warrant the imposition of fiduciary duties. None of their theories, however, fully captures the myriad applications of fiduciary duty, leading one commentator to refer to the fiduciary relationship as “one of the most elusive concepts in Anglo-American law,” another to describe it as “a concept in search of a principle,” and yet another to state that it may be more accurate to speak of relationships having a fiduciary component to them rather than to speak of fiduciary relationships as such. The purpose of this article, then, is to facilitate an understanding of the fiduciary relationship and to offer practical guidance regarding when a fiduciary duty might arise in a given relationship, the scope and limitations of the duty, and the remedies available.

Determining the Fair Value of Minority Ownership Interests in Closely Held Corporations: Are Discounts for Lack of Control and Lack of Marketability Applicable?

by Rebecca C. Cavendish and Christopher W. Kammerer

This Florida Bar Journal article considers the nuances and strategies to employ when in litigation concerning the fair financial value of a company and the appropriate portion of that value to be distributed to an owner of a minority share.

A shareholder who owns a minority interest in a closely held corporation can be in a difficult position when faced with management decisions with which they disagree. Whereas a shareholder in a corporation whose shares are publicly traded can simply sell his or her shares on the open market at the current market price, no comparable market or well-established market price exists for shares of closely held corporations.1 Instead, shareholders who own a minority interest in a closely held corporation must rely on statutory or contractual provisions providing for the valuation and liquidation of their shares in such situations. However, when considering whether to obtain a valuation pursuant to Florida’s statutory provisions, a minority shareholder must be aware that Florida law is unsettled with respect to how minority shares should be valued, and there are two conflicting views that can produce vastly different results.