Breach of Fiduciary Duty – The Court of Appeals Finally Answers a Question After 23 Years

BREACH OF FIDUCIARY DUTY

This has been a troublesome concept in Maryland law until today when the Court of Appeals filed its opinion in Plank v. Cherneski https://mdcourts.gov/data/opinions/coa/2020/3a19m.pdf

The Court’s explanation of the trouble over the years is set out in the first paragraph of the opinion:

Does Maryland recognize an independent cause of action for breach of fiduciary duty? Courts and commentators have been asking this question for 23 years since this Court articulated its holding in Kann v. Kann, 344 Md. 689 (1997). When attempting to
answer the question, Maryland appellate courts have not spoken uniformly on this issue.
Indeed, this Court has made seemingly inconsistent pronouncements, at times calling for a case-by-case analysis, see Kann, 344 Md. at 713, and at other times, making a blanket assertion that “Maryland does not recognize a separate tort action for breach of fiduciary duty.” Int’l Bhd. of Teamsters v. Willis Corroon Corp. of Md., 369 Md. 724, 727
(2002). Litigants pick and choose which statement they believe to be controlling,
depending on which outcome benefits their position. Understandably, the muddled state of our jurisprudence has created inconsistent and irreconcilable conclusions by the Court of Special Appeals, federal courts, and state circuit courts. For this reason, the Court of Special Appeals filed a Certification pursuant to Maryland Rule 8-304, requesting that this Court provide guidance concerning whether an independent cause of action exists, as well as its scope and parameters.

In the next paragraph, the Court answered the question as follows:

For the reasons more fully outlined below, we answer the certified questions as
follows. This Court recognizes an independent cause of action for breach of fiduciary duty. To establish a breach of fiduciary duty, a plaintiff must demonstrate: (1) the existence of a fiduciary relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary. Under our Kann analysis, a court should consider the nature of the fiduciary relationship and possible remedies afforded for a breach, on a case-by-case basis. If a plaintiff describes a fiduciary relationship, identifies a breach, and requests a remedy recognized by statute, contract, or common law applicable to the specific type of fiduciary relationship and the specific breach alleged, a court should permit the count to proceed. The cause of action may be pleaded without limitation as to whether there is another viable cause of action to address the same conduct. To be clear, this does not mean that every breach will sound in tort, with an attendant right to a jury trial and monetary damages. The remedy will depend upon the specific law applicable to the specific fiduciary relationship at issue.