On July 14, 2020, the Maryland Court of Appeals issued its opinion in Plank v. Cherneski, (Misc. No. 3, Sept. Term 2019) (July 14, 2020), which finally harmonized Maryland case law as to the existence of a standalone “breach of fiduciary duty” claim. The Court held that such a claim exists under Maryland law and that its elements are: “(1) the existence of a fiduciary relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary.” The Court stressed that the nature of the fiduciary relationship and available remedies are fact specific and considered on a case-by case basis. “If a plaintiff describes a fiduciary relationship, identifies a breach, and requests a remedy recognized by statute, contract, or common law applicable to the specific type of fiduciary relationship and the specific breach alleged, a court should permit the count to proceed.” The remedy available depends on the specific fiduciary relationship at issue.
Running Down a Dream: The Facts and Procedural History
In Plank, the defendant James Cherneski was “a former professional soccer player who invented and patented a non-slip athletic sock.” In April 2011, together with Sanford Fisher and Jeff Ring, Mr. Cherneski established Trusox, LLC to produce and distribute the patented sock. In October 2013, the plaintiff William H. Plank, II acquired a 20% membership interest in Trusox by investing $1.5 million in the company, leaving Cherneski with a 65% membership interest, and Fisher and Ring each owning 7.5% of the company. In late 2015, minority members of the company became dissatisfied with Cherneski’s management of Trusox, and in June 2016, “Messrs. Fisher and Plank, filed an action against Mr. Cherneski and Trusox, alleging, among other things, that Mr. Cherneski was violating the Operating Agreement, had engaged in unlawful conduct related to investors and employees, and had breached contractual and fiduciary duties.” The complaint alleged nine causes of action, one of which, as relevant hereto, was breach of fiduciary duty.