An interesting and easily overlooked decision of the Appellate Division, First Department, shows just how flexible fiduciary duty claims can be. In Apollo Mgt., Inc. v. Cernich, 202 A.D.3d 527 (1st Dep’t 2022), the court allowed the plaintiffs to seek money damages on a fiduciary-duty theory of liability for misconduct that really fell under an entirely different legal theory altogether.
In this case, the court held that the plaintiffs could seek damages for the defendants’ misappropriation and misuse of their confidential information. Specifically, the plaintiffs could pursue recovery of the costs they incurred in developing that confidential information—even though they had not actually pled a specific “misappropriation of confidential information” cause of action. But the plaintiffs did plead a fiduciary duty claim, and the court deemed this claim sufficiently “intrinsically tied” to the underling misconduct. As a result, the plaintiffs were allowed to seek money damages for the defendants’ misappropriation and misuse of their confidential information—again, a legal theory they totally failed to plead—under the fiduciary duty theory that they actually did allege.
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