Iv. [§ 3.94] Constructive Fraud
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IV. [§ 3.94] CONSTRUCTIVE FRAUD
John Smith and George Harris were partners in the ownership of a restaurant. Harris, by agreement, was the manager and partner in charge, but he hired a manager and traveled abroad frequently. Harris did not pay close attention to the management or finances of the restaurant, and the restaurant was forced to close. Smith suffered significant financial losses because of the restaurant's failure. Smith sued Harris for constructive fraud.
John Smith (hereinafter "Smith"), Plaintiff, by his attorneys, Marco D'Angelo and D'Angelo & D'Angelo, P.A., sues George Harris (hereinafter "Harris"), Defendant, and states:
1. Plaintiff Smith is a resident of Baltimore City, Maryland.
2. Defendant Harris is a resident of Baltimore City, Maryland.
3. On or about April 8, 2019, Smith and Harris formed a partnership for purposes of establishing and operating a restaurant in Baltimore City known as "The Pride of Baltimore."
4. By agreement, Harris assumed responsibility for the daily operation of the restaurant, the books, and the records.
5. Harris employed James Fielding (hereinafter "Fielding") to be on the premises during business hours of the restaurant and to serve as the actual manager of the restaurant.
6. Harris frequently traveled abroad and, from January 2020 through January 2018, failed to give attention to the management of the restaurant, its books, and records.
7. Fielding was careless in the management of the restaurant. The menu was inadequate, the service was poor, the bills were not paid on time, and the money received by the restaurant was not accounted for. Fielding diverted funds for his own personal use which Harris suspected, but failed to investigate and prevent.
8. By virtue of Harris's position as a partner of Smith and as overseer of the restaurant, Harris owed a fiduciary duty to Smith. Smith reposed trust and confidence in Harris, who had control and influence over all aspects of the restaurant.
9. Among the fiduciary duties owed by Harris to Smith was the duty to properly supervise and manage the restaurant and Fielding, the employee manager.
10. Harris owed the fiduciary duty to prevent Fielding from diverting funds for his own personal use from the restaurant, and Harris was responsible to assure the proper management operation of the restaurant.
11. Harris breached his fiduciary duty intentionally, with malice, and/or with reckless disregard for Smith's rights by ignoring the operation of the restaurant, and by failing to prevent the diversion of partnership funds by Fielding. In his breach of his fiduciary duty to Smith, Harris acted willfully and contrary to the best interests of Smith.
12. As a result of the breach of Harris's fiduciary duty, Smith suffered damages.
WHEREFORE, Plaintiff demands judgment against Defendant in excess of Seventy-Five Thousand Dollars ($75,000) in compensatory and punitive damages, with interest, costs and such other and further relief as this Court deems proper.
__________
Marco P. D'Angelo
AIS No. 0123456789
D'Angelo & D'Angelo, P.A.
250 West Pratt Street
Baltimore, Maryland 21202
Phone: (410) 555-1234
Fax: (410) 555-1235
Email: MDAngelo@DAngeloLaw.com
Attorneys for Plaintiff
Constructive fraud is the breach of a duty, legal or equitable, which the law declares...
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