The Restatement (Second) of Torts recognizes liability for a violation of fiduciary duty.[1] Largely resting on the Restatement as its basis, the Court of Special Appeals held: “That breach of fiduciary duty is an independent and viable cause of action in Maryland.”[2] Shortly after the Court of Special Appeals made that pronouncement, such approach was explicitly rejected by the Court of Appeals:
Accordingly, we hold that there is no universal or omnibus tort for the redress of breach of fiduciary duty by any and all fiduciaries. This does not mean that there is no claim or cause of action available for breach of fiduciary duty. Our holding means that identifying a breach of fiduciary duty will be the beginning of the analysis, and not its conclusion. Counsel are required to identify the particular fiduciary relationship involved, identify how it was breached, consider the remedies available, and select those remedies appropriate to the client’s problem.[3]
The key to the Kann decision is that there is no “omnibus tort” but that a plaintiff must identify the specific duty breached.[4] Nevertheless, Kann has been characterized as “a bit muddled:”
To be sure, the post-Kann landscape has been a bit muddled. In McGovern v. Deutsche Post Global Mail, Ltd., JFM–04–0060, 2004 U.S. Dist. LEX IS 15215, at (D.Md. Aug. 4, 2004), Judge Motz stated:
Courts have not entirely agreed on how to interpret the language of Kann. Compare Swedish Civil Aviation Admin. v. Project Mgmt. Enterprises, Inc., 190 F.Supp.2d 785, 801 (D.Md.2002) (breach of fiduciary duty can be part of other causes of action, but no independent tort for breach of fiduciary duty, especially if alternative remedies available), Kerby v. Mortgage Funding Corp., 992 F.Supp. 787, 803 (D.Md.1998) (no universal tort of breach of fiduciary duty, at least where other remedies exist), and Bresnahan v. Bresnahan, 115 Md.App. 226, 235, 693 A.2d 1, 5 (1997) (“in light of Kann, it is doubtful that Hartlove [v. Maryland School for the Blind, 111 Md.App. 310, 681 A.2d 584 (1996), vacated, 344 Md. 720, 690 A.2d 526 (1997),]’s creation of an independent tort of breach of fiduciary tort [sic] has survived”) (dictum), with Garcia v. Foulger Pratt Develop., Inc., 155 Md.App. 634, 682, 845 A.2d 16, 44 (2003) (Kann means that whether there is a tort for breach of fiduciary duty must be determined on a case-by-case basis), and BEP, Inc. v. Atkinson, 174 F.Supp.2d 400, 405–06 (2001) (plaintiff did state claim for breach of fiduciary duty because requirements set forth in Kann were satisfied).[5]
The lesson of Kann in the context of trust litigation, however, is plain: there is no nebulous breach of fiduciary duty action but one must plead and prove a specific breach of a specific duty, the action is an equity action and not a law action, there is no right to a jury trial, and there is no right to punitive damages.
[1] Restatement (Second) of Torts § 874 (1977) (“One standing in a fiduciary relation with another is subject to liability to the other for harm resulting from a breach of duty imposed by the relation.”).
[2] Hartlove v. Maryland School of the Blind, 111 Md.App. 310, 333, 681 A.2d 584, 594 (1996).
[3] Kann v. Kann, 344 Md. 713 A.2d 521 (1997). The Kann Court “disapproved” of the reasoning of the Hartlove Court and, consequently, reversed it. Hartlove v. Maryland School of the Blind, 344 Md. 720, 690 A.2d 526 (1997).
[4] In Maryland, of course, a Circuit Court complaint is required to contain a factual based pleading which, presumably, will set out the specific duty breached. See Paul Mark Sandler & James K. Archibald, Pleading Causes of Action in Maryland, § 1.6 (4th Ed. MICPEL 2008)
[5] Novara v. Manufacturers Traders and Trust Co., Slip Opinion, 2011 WL 3841538 (2011).
