What to Do When Your Business Partner Breaches Fiduciary Duty in Florida

Discovering that your business partner has violated their fiduciary duty can feel like a profound betrayal. This breach can threaten the financial health of your company and erode the trust your partnership was built upon. In Florida, partners in limited liability companies (LLCs) and other business entities owe each other and the company specific legal obligations. Understanding what constitutes a breach and knowing the immediate steps to take are critical to protecting your rights and your investment.

What is Fiduciary Duty in a Florida Business Partnership?

Fiduciary duty is a legal obligation of utmost good faith, trust, loyalty, and fairness that certain parties owe to one another. In the context of a Florida business partnership or LLC, members and managers owe fiduciary duties to the company and their fellow members. These duties generally include:

• The Duty of Care: The obligation to act with the care an ordinarily prudent person in a like position would use under similar circumstances.
• The Duty of Loyalty: The obligation to act in the best interests of the company and not for personal benefit at the company’s expense.

For Florida LLCs, these duties are codified in the Florida Revised Limited Liability Company Act (Chapter 605). The statute provides the framework for how these duties are applied and what constitutes a breach.

Common Types of Fiduciary Duty Breaches

A breach occurs when a partner prioritizes their own interests over the company’s. Common examples include:

Self-Dealing

This involves a partner using their position to secure a personal profit from a company transaction without proper disclosure or consent. Examples include selling company assets to themselves at a below-market price or awarding a lucrative contract to a company they secretly own.

Misappropriation of Funds or Opportunities

This is the unauthorized use of company assets, funds, or confidential information for personal gain. It also includes diverting a business opportunity that rightly belongs to the company to a personal venture or a competitor.

Conflicts of Interest

A partner fails to disclose a personal interest that could influence their business decisions. This creates a situation where their personal interests conflict with their duty to act for the company’s benefit, potentially leading to decisions that harm the business.

Action Steps to Take After a Suspected Breach

If you suspect your business partner has breached their fiduciary duty, timely and deliberate action is essential.

1. Document Everything Comprehensively

Begin gathering all relevant evidence. This includes emails, financial records, contracts, meeting minutes, and any communications that demonstrate the questionable activity. Create a detailed timeline of events. Thorough documentation is the foundation of any potential legal claim.

2. Demand a Formal Accounting

Under Florida Statutes Section 605.0410, members of an LLC have the right to inspect and copy company records. You can formally request a complete accounting of all financial transactions. A partner who is breaching their duty may resist this, which itself can be a red flag and used as evidence.

3. Consult an Attorney and Consider Legal Action

Do not delay in seeking counsel from an attorney experienced in Florida LLC disputes. They can review your evidence, advise on the strength of your case, and outline your legal options. A lawsuit for breach of fiduciary duty can seek monetary damages to recover losses and, in some cases, the disgorgement of the partner’s ill-gotten profits.

4. Seek Injunctive Relief

In urgent situations where ongoing actions are causing immediate harm (like the dissipation of assets), your attorney may file for a temporary or permanent injunction. A court order can immediately halt the damaging behavior, such as freezing assets or preventing a harmful transaction, while the lawsuit proceeds.

Protect Your Business’s Future

A fiduciary duty breach in Florida is a serious matter that can destabilize your business. Taking prompt, informed action is the best way to mitigate damage and enforce your legal rights. Understanding the protections offered by Florida’s LLC Act is the first step toward resolving the dispute and securing your company’s future.

Schedule a FREE 2026 Strategy Session at finbergfirm.com to discuss your specific situation with our team.

This article is for informational purposes only and does not constitute legal advice. Every case is different. Consult with an attorney about your specific situation.

By Hao Li, Esq., CFA, CAIA, CGMA, EA