The Tort of Betrayal of Trust

Abstract

Fiduciary betrayal is a serious harm. When the fiduciary is a doctor or a lawyer, and the entrustor is a patient or client, this harm frequently goes unremedied. Betrayals arise out of disloyalty and conflicts of interest where the lawyer or doctor puts his or her interest above that of his or her client or patient. It causes dignitary harm that is different than the harm flowing from negligent malpractice. Nevertheless, courts, concerned with overcompensation and double damages, have for the most part refused to allow a separate claim for betrayal. In this Article we assert that betrayal deserves a remedy and propose a new statutory tort with limits on the available money damages. We begin by explaining the importance of trust and the inadequacy of common law remedies such as malpractice, lack of informed consent, and breach of fiduciary duty. We then set out a statutorily-limited monetary proposal and illustrate how this remedy would work by examining a series of cases in which the courts have struggled to address betrayals and then applying our statutory tort to the facts of those cases. Our proposed statutory tort offers a solution to the current failure to hold professionals accountable for disloyalty that will provide justice to those who are injured by the exploitive self-dealing while setting clear parameters that address judicial concerns of runaway juries and overlap with other tort claims.

Keywords: breach of fiduciary duty, malpractice, doctors, lawyers, trust, loyalty, conflict of interest, law reform

JEL Classification: K13