How Maryland Courts Handle Breach of Fiduciary Duty Claims Between Business Partners

• May 26, 2026
• Business Litigation

Maryland courts evaluate breach of fiduciary duty claims by examining whether a business partner violated duties such as loyalty or care and caused harm to the business or another partner. These cases often turn on financial records, internal agreements, and whether one partner acted for personal gain at the expense of the business.

Business partners in Maryland owe each other core fiduciary duties. The duty of loyalty requires partners to avoid self-dealing, hidden profits, or conflicts of interest. The duty of care requires partners to make informed, reasonable decisions and avoid reckless conduct.

When a partner misuses funds, withholds opportunities, or acts in bad faith, it can create grounds for a legal claim. A Maryland business litigation attorney can help you structure a claim and build the supporting evidence.

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Key Takeaways for Breach of Fiduciary Duty

• Maryland law recognizes that partners in a business owe fiduciary duties to each other, including a duty of loyalty and a duty of care.
• Common breaches include a partner misusing company funds, stealing business opportunities for personal gain, or having a hidden conflict of interest.
• A written partnership or operating agreement is critical evidence, as it often defines the specific duties and responsibilities of each partner.
• Proving a claim requires showing the existence of the duty, a specific breach of that duty, and direct financial harm resulting from the breach.
• Possible court-ordered remedies include financial damages, forcing the return of wrongfully taken profits, and, in some cases, the dissolution of the business.

What Creates a Fiduciary Relationship Between Business Partners in Maryland?

A fiduciary relationship forms when one person places trust and confidence in another, and the law requires that trust to be honored. In a Maryland business partnership, that relationship usually exists as part of the partnership itself.

What Is the Duty of Loyalty?

The duty of loyalty requires a partner to put the business’s interests ahead of personal interests. A partner may breach that duty by competing with the company, taking a business opportunity for personal benefit, or engaging in self-dealing that helps them at the company’s expense.

What Is the Duty of Care?

The duty of care requires a partner to avoid grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law when making business decisions. A partner doesn’t breach that duty just because a decision turns out badly.

The bigger issue involves reckless conduct, grossly careless decisions, or actions taken without basic diligence.

What Are Common Examples of a Breach of Fiduciary Duty?

A breach of fiduciary duty can take many forms, but the common thread involves a partner putting personal interests ahead of the business. In Maryland, partnership disputes often involve misuse of funds, hidden conflicts, or conduct that undermines the company.

When a partner starts acting without transparency or using the business for personal gain, it may point to a larger fiduciary problem.

Common examples include:

• Misuse of Company Assets: A partner may breach their duties by using business funds for personal expenses or mixing company money with personal accounts. This can include unauthorized spending on personal bills, travel, or other non-business costs.
• Taking a Business Opportunity: One partner may act improperly by taking a deal, client, or growth opportunity for personal benefit instead of presenting it to the business first.
• Self-Dealing and Conflicts of Interest: A partner may breach fiduciary duties by directing company business into a transaction that benefits them personally, especially without full disclosure to the other partners.
• Competing With the Business: One partner may violate the duty of loyalty by running or supporting a competing business that undermines the partnership’s interests.

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How Do You Prove a Partner Violated Their Duty in Maryland?

Successfully bringing a claim for a breach of fiduciary duty requires presenting clear evidence that demonstrates that it’s more likely than not that a breach occurred and caused specific damages. In a Maryland court, the plaintiff—the partner bringing the lawsuit—has the burden of proof.

The process of gathering and presenting this evidence is where a business dispute can become legally intricate. A Maryland business litigation lawyer can help you build a compelling case based on documented facts.

The Importance of the Partnership Agreement

Your company’s foundational documents, such as the partnership agreement or a limited liability company (LLC) operating agreement, are often the starting point. These agreements spell out the rules of the business and the specific responsibilities of each partner.

A well-written agreement can define what constitutes a conflict of interest, outline procedures for major financial decisions, and even set rules for resolving disputes. The court will closely examine this document to determine whether a partner violated the explicit terms they agreed to.

Gathering Financial Evidence and Documentation

Hard evidence is critical when bringing a breach of fiduciary duty claim. Simply claiming your partner was dishonest is not enough. You must show the court exactly how the business was harmed.

This often involves a process called discovery, where your attorney can formally request financial records, communications, and other relevant documents from the other party.

Evidence often includes:

• Financial Records: Bank statements, profit and loss reports, tax filings, and company credit card statements can reveal unauthorized withdrawals or questionable expenses.
• Emails and Communications: Written communications can show a partner’s intent to deceive or hide information from others.
• Contracts and Invoices: Reviewing deals made by the partner can uncover self-dealing or undisclosed conflicts of interest.
• Forensic Accounting: In complex cases, a forensic accountant may be needed to trace missing funds and quantify the exact financial losses caused by the breach.

FAQ for Breach of Fiduciary Duty

Can I Sue a Partner for Making Bad Business Decisions?

You may be able to sue a partner for making bad business decisions, but it depends on the facts of your case. Maryland law limits a partner’s duty of care to grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.

If a bad decision was the result of gross negligence, a failure to conduct basic research, or was tainted by a conflict of interest, it may cross the line into a breach of the duty of care.

How Long Do I Have To File a Claim for Breach of Fiduciary Duty in Maryland?

In Maryland, the statute of limitations for a civil claim like a breach of fiduciary duty is generally three years. However, the clock may not start ticking until the date you discovered, or reasonably should have discovered, the wrongful act.

Since deadlines can be complicated, speak with a Maryland business litigation attorney as soon as you suspect a breach.

What Happens to the Business After a Breach of Fiduciary Duty?

When a judge rules that a partner committed a breach of fiduciary duty, the court may order several different remedies. The court can force the dishonest partner to return stolen profits or pay financial damages directly to the company.

In severe cases, the judge may order the legal dissolution of the partnership, which requires the owners to close the business and divide the remaining assets.

Can I Force a Dishonest Partner Out of Our Maryland Company?

You may be able to remove a problem partner, but the specific steps depend heavily on your foundational company documents. Your partnership agreement or operating agreement may outline the exact rules for expelling an owner.

If your documents lack these rules, a judge may intervene and formally remove a partner from a partnership to protect the business from further harm.

Protect Your Business Interests

When a business partner violates your trust, it can threaten the company you have worked hard to build. At Lusk Law, LLC, our team has the experience to guide you through the complexities of business litigation and partnership disputes.

If you suspect a breach of fiduciary duty, contact our office today at (443) 535-9715 or online to discuss your situation.

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