Breach of Statutory Duty Attorney in Birmingham, Alabama

Most people have heard of the phrase “breach of fiduciary duty.” A fiduciary is someone entrusted with the duty to look out for the best interests of another person or entity. A common example is a financial advisor charged with managing the retirement funds of other people. That person owes a fiduciary duty to manage those funds in the best interest of others and to not use the funds for their own enrichment, as that would constitute a breach of fiduciary duty.

But what of breach of statutory duty? Is that different from fiduciary duty?

Breaches of statutory duty involve actions that run counter to statutes governing the type of business being operated. Bernie Madoff, for example, had both a fiduciary duty and a statutory duty to his investors not to siphon off their money for personal use. In doing so, his actions were both unethical and illegal. In other words, he breached the statutes that govern his profession and also failed in his fiduciary responsibilities.

The laws involving breaches of statutory duty can be complex and often hard to pinpoint at times. If you are a shareholder of a corporation, a member of a limited liability company, or a partner of a partnership, and you believe that you have suffered damages due to a board member, director, manager, fellow member, or fellow partner’s breach of statutory duty, you have the right to take legal action.

If you live in or around Birmingham, Alabama, or anywhere throughout Alabama and the Florida Panhandle, and you suspect a breach of statutory duty has occurred to the detriment of you or others — contact the Clark Law Firm PC today for help.

Statutory Duties –
Definition and Examples

Statutory duties are those duties imposed on a business or persons operating a business by statute. There can also be statutory duties imposed on individuals as well. Driving laws are statutes that impose requirements — or duties — on those operating vehicles to do so in a safe manner.

Suppose you run a convenience store that sells cigarettes and liquor. By statute, you cannot sell those items to people underage. If you do so, you can be both criminally and civilly liable. For example, you sell a six-pack to someone 18 who then goes out and gets killed in a drunk driving accident. You may be held civilly liable for a statutory breach, as that person’s parents can sue to recover damages from you. You can also be sent to prison as well for breaking the law.

Health and Safety Statutes

On a larger scale, businesses are governed by statutes involving the health and safety of their employees. If a corporation that manufactures toxic chemicals fails to enforce strict safety precautions that are required by statute, that can constitute a breach of statutory duty. The employees who are affected by the lax enforcement can file a lawsuit based on a breach of statutory duty. Depending on the circumstances, they may also be able to file a personal injury claim unless preempted by workers’ compensation insurance.

Likewise, if a director or officer of a corporation breaches a statute either for personal gain or for a misguided attempt to improve the company’s prospects, a derivative lawsuit on behalf of the shareholders may be in order. Members in a legal partnership or a limited liability company (LLC), if they’ve been harmed individually or companywide by any statutory lapse committed by another member, may also resort to legal action.

Duty of Care and Duty of Loyalty

These statutes impose a duty of care on individuals and businesses, whereby they must protect others and serve their well-being by following the mandates of the statutes. On a corporate level, officers and directors also have a duty of loyalty toward the shareholders not to violate a statute for purposes of personal or company gain.

The same goes for partners in a business. If one partner breaks a statutory duty for self-enrichment, or to cut corners and improve profits, the other partners can hold that person legally responsible.

A breach of statutory duty lawsuit would require the plaintiff to show that:

• The defendant owed a duty of care by statute

• That statutory duty of care was breached

• The breach resulted in harm to the plaintiff

• The harm — monetary, physical, reputational, or otherwise — resulted in damages

On the corporate level, shareholders can file a derivative lawsuit when there has been a breach of statutory duty detrimental to the company itself, and not causing a direct injury to the shareholder. Derivative lawsuits are filed by one or more shareholders representing the interests of all shareholders and the corporation. A single shareholder can file an individual lawsuit only if that shareholder was personally harmed.