The Statute of Limitations on Breach of Fiduciary Duty in Maryland

It is commonly said that the Maryland courts do not recognize an independent cause of action for breach of fiduciary duty. Although that stated rule is subject to interpretation beyond the scope of this article (with some opinions indicating that under certain circumstances, an independent cause of action could exist), statute of limitations issues (SOL) arise regardless of how a claim is formally plead. A statute of limitation sets the period of time someone has to take legal action. Once the statute has run, a case is generally subject to dismissal.

In order to best preserve your chances of successfully bringing a claim relating to breach of fiduciary duty, it’s essential to be aware of statutes of limitation. An experienced Baltimore fiduciary litigation attorney can deliver the critical guidance needed to ensure that your claims are not time-barred by the statute of limitations. The attorneys of the Heyman Law Firm can provide aggressive advocacy and strategic assistance on all matters relating to breaches of fiduciary duties and business litigation. To schedule a confidential legal consultation, call (410) 305-9287 or contact us online today.

Types of Fiduciary Duty Suits in Maryland

There are various ways to seek relief when there has been improper action by a fiduciary. Fiduciary duties arise for persons serving in certain financial capacities (such as an investment advisor), as a trustee, personal representative of an estate, attorney-in fact under a Power of Attorney, and as corporate officers and directors. The following are actions or omissions by a fiduciary that can give rise to a cause of action in Maryland:

• A failure to account for assets regularly
• Improper handling of debts owed to creditors by an estate or entity
• Improperly favoring one beneficiary over another beneficiary
• Misappropriation of estate, trust, or entity assets
• Failure to disclose conflicts of interest
• Failing to observe the duty of loyalty owed by officers and directors to a corporation
• Commingling personal or business funds with the assets of the estate or entity
• Failure to make prudent investments
• Excessive spending or alleged waste of assets
• Improper use of one’s position for self-dealing

Keep in mind that this list is not exhaustive, and it’s important to consult with an experienced attorney to investigate potential claims and, if appropriate, create the proper litigation strategy.

When Does the Clock Start to Tick on Breach of Fiduciary Duty Suits in Maryland?

Since there is no formal cause of action for breach of fiduciary duty, the answers to statute of limitations questions are not clear-cut. The type of offense must first be categorized into the proper cause of action to determine the SOL. These offenses can take the form of a tort, fraud, breach of contract, or even legal malpractice depending on the facts. The SOL for these common causes of action in Maryland are as follows:

• Breach of Contract = 3 years
• Tort (Negligence) = 3 years from the date it accrues (unless another provision applies)
• Fraud = 3 years
• Legal Malpractice = 3 years

It’s important to remember that court rulings determine the way statutes are interpreted and that often decisions are very dependent on the facts. There are also some events that will serve to toll the SOL (discussed below) and give the plaintiff additional time.

What is the Purpose of Statutes of Limitation in Maryland?

The purpose and effect of statutes of limitations are essentially to protect defendants. Plaintiffs are required under Maryland law to pursue their cause of action with reasonable diligence. The definition for what constitutes “reasonable” can vary from case to case depending upon the facts and type of claim. If a “stale” claim is litigated, a defendant may have lost the evidence necessary to defend the plaintiff’s claim. Evidence in favor of the plaintiff may also have deteriorated and become unreliable if too much time has passed. It is also considered generally inconsistent with the interests of justice to litigate a long-dormant claim.

Can Statutes of Limitation Be Defeated in Maryland?

Statutes of limitation often provide only the starting place for legal deadlines. There are some nuances and loopholes that can be used to extend a statute of limitations. For instance, if the harm was unknowable to the plaintiff at the time it occurred, the plaintiff is often granted a tolling of the statute. This means the statute will not begin to run until the time when the harm was actually discovered (or in some instances reasonably discoverable) to the plaintiff. For the best chance of defeating a statute of limitations issue, contact an experienced business or fiduciary litigation attorney.

Contact an Experienced Baltimore Fiduciary Litigation Attorney Today

The rules surrounding breach of fiduciary duty lawsuits are easy to misinterpret. Maryland residents may have an especially difficult time due to some ambiguity in the law. If you are facing a lawsuit for a breach of a fiduciary duty or believe that you have been harmed by the actions of a person acting in a fiduciary capacity, the Baltimore fiduciary litigation attorneys of the Heyman Law Firm can provide clarity and confidence. The lawyers of the Heyman Law Firm have successfully litigated numerous fiduciary claims involving trusts, guardianships, probate proceedings, corporate officers and directors, and financial advisors. To schedule a confidential consultation with a Baltimore fiduciary litigation attorney, contact the Heyman Law Firm at (410) 305-9287 today.