Business Tort and Fraud Litigation
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Business tort litigation is a general term that describes business litigation in which the legal claims arise from various claims other than from breach of contract claims. In American law, civil liability is divided into two general categories: 1) contract claims and 2) tort claims. A “tort” is a civil wrong or wrongful act, or an infringement of a legal right of another, that causes injury to another. A tort can be intentional or accidental. Tort claims can arise from case law or by statute. Torts include all negligence claims as well as intentional acts which cause harm to others. In business litigation, the line between contract litigation and business tort litigation can be fuzzy.
Business tort claims can include the following types of claims:
Breach of Fiduciary Duty
A fiduciary is person (or company) who has an obligation to act in the best interests of others, even if doing so results in a disadvantage to the fiduciary. Business people can have fiduciary duties to shareholders, investors, partners, or others. Fiduciary duties can arise in a wide range of circumstances. Below are some of the times of fiduciary duties that can arise in the business context:
- An officer or director of a corporation have fiduciary duties to the company’s shareholders;
- A majority owner of a company can have fiduciary duties to the minority owners;
- Business partners have fiduciary duties to each other;
- A manager of a limited liability company can have fiduciary duties to the LLC’s members;
- An employee can have fiduciary duties to his or her employer;
- A lawyer has fiduciary duties to a client and, under states under some circumstances, to people other than the client;
- A trustee can have a fiduciary duty to the trust’s beneficiaries;
- An agent can have a fiduciary duty to the principal;
- A stockbroker or investment adviser can have a fiduciary duty to a client-investor;
- An executor or personal representative of an estate has fiduciary duties to the decedent’s heirs;
- A real estate broker may have fiduciary duties to the seller or buyer of real property;
- The trustee of an ERISA plan has fiduciary duties to the beneficiaries of the plan; and
- Lenders may have fiduciary duties to borrowers.
Fraud & Misrepresentation
Fraud is a common law tort claim that permits the victim of the fraud to recover his or her losses caused by the deception.
Conversion and Civil Theft
Conversion is a common law tort claim to recover for losses of property misappropriated by another. To recover with a common law claim for conversion, a plaintiff must prove 1) that the plaintiff had the right to ownership or possession of the property in question; 2) the defendant’s wrongful dominion and control over the property; and 3) damages.
Tortious Interference With Prospective Business Relations
Many states recognize the intentional tort of interference with a prospective business relationship. When determining whether a defendant has improperly interfered with a plaintiff’s business relationship, it is not necessary for the plaintiff to show that it actually formed a contract. Rather, the plaintiff must show that the defendant intentionally and improperly interfered with the plaintiff’s prospective business relationships, and thus prevented the plaintiff from forming the contract
Computer Fraud & Abuse Act
The Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 (2006), is a federal statute originally passed to give the FBI a weapon for prosecuting computer hackers. CFAA also provides victims of computer hacking with statutory basis to sue the person accused of hacking, or aiding the hacker. We have represented companies whose employees have been accused of hacking into a competitor’s computer network, and we have represented companies who are victims of such attacks.
Racketeer Influenced and Corrupt Organizations Act.
The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961 through 1968, imposes criminal and civil liability upon persons who engage in certain “racketeering activities” as defined in § 1961(1). Section 1962 lists prohibited activities, and almost all of RICO claims against professionals allege a violation of § 1962(c). To successfully state a RICO claim, a plaintiff must sufficiently allege 1) conduct 2) of an enterprise 3) through a pattern 4) of racketeering activity. “Racketeering activity” includes a multitude of illegal acts, including state-law crimes, crimes indictable under federal statute, and certain federal offenses. 18 U.S.C. § 1961(1). A “pattern of racketeering activity” consists of two or more acts of racketeering activity that have occurred within the last 10 years. 18 U.S.C. § 1961(5)
Fraudulent Transfer Act.
A fraudulent conveyance is a transfer undertaken by a debtor with intent to place property beyond reach of creditors.
The attorneys at Ogborn Mihm Quaintance have decades of experience representing business clients in high-stakes litigation involving business torts. Unlike many business litigation firms, who usually litigate on paper and settle, we have substantial experience trying such cases to juries and judges. We have successfully represented clients in hundreds of jury trials, bench trials and arbitrations involving a wide variety of business disputes.
