Opinion ID: 1195176
Heading Depth: 3
Heading Rank: 1

Heading: Aiding and Abetting a Breach of Fiduciary Duty

Text: 14. While we believe New Mexico has implicitly endorsed tort liability for intentionally causing a fiduciary to breach his or her duties, we now explicitly recognize this form of tort liability. We note that in some states, it is still unclear whether there is aiding and abetting tort liability of the kind set forth in [Section] 876(b) of the Restatement [(Second) of Torts (1979) ]. Central Bank v. First Interstate Bank, 511 U.S. 164, 181-82, 114 S.Ct. 1439, 1450, 128 L.Ed.2d 119 (1994) (holding that Section 10(b) of the Securities Exchange Act of 1934 does not provide a private civil action for aiding and abetting, relying on the text of the statute and congressional intent). Nonetheless, New Mexico recognizes tort liability for aiding and abetting another's tortious conduct. 15. This Court has cited with approval the notion that a person is under a duty to refrain from intentionally causing another to violate a duty to a third. Wolf & Klar Cos. v. Garner, 101 N.M. 116, 118, 679 P.2d 258, 260 (1984) (quoting Restatement (Second) of Agency § 312 cmt. a (1958)) (referring to Restatement (Second) of Torts § 871 (1979)). Where one participates with or aids or abets an agent in an act which perpetrates a fraud upon the principal, he is equally liable with the agent to the principal for any damages suffered. Wolf & Klar, 101 N.M. at 118, 679 P.2d at 260 (allowing a claim for constructive fraud). In addition, New Mexico has adopted Restatement (Second) of Torts Section 876, which recognizes the liability of third persons for the tort of another if the person knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself. Rael v. Cadena, 93 N.M. 684, 684-85, 604 P.2d 822, 822-23 (Ct.App.1979) (allowing an action for battery against one who yelled encouragement to the primary tortfeasor); accord Halberstam v. Welch, 705 F.2d 472, 481 (D.C.Cir.1983) (discussing aiding and abetting liability in tort and citing Rael as an example of its application); Alleco v. Harry & Jeanette Weinberg Found., Inc., 340 Md. 176, 665 A.2d 1038, 1049-50 (1995). Thus, it is clear that tort liability for aiding and abetting a tortious action exists in New Mexico. However, New Mexico courts have not directly addressed the question of whether a person can be liable to an injured party for intentionally causing another to breach a fiduciary duty. 16. The Restatement has taken the position that liability should attach for intentionally causing another to breach a fiduciary duty. Restatement (Second) of Torts § 874 cmt. c (referencing Section 876). In addition, courts in other states have allowed such a cause of action. See, e.g., Holmes v. Young, 885 P.2d 305, 308-09 (Colo.Ct.App.1994) (applying aiding and abetting a breach of fiduciary duty to a partnership situation and citing Rael ); Morris v. Consolidation Coal Co., 191 W.Va. 426, 446 S.E.2d 648, 657 (1994) (recognizing the liability of a third party to a patient under Section 874, comment c, for inducing the patient's physician to breach his fiduciary relationship by disclosing confidential information). Finally, this Court has demonstrated a willingness to recognize new causes of action in tort based on intentional wrongful conduct. Coleman v. Eddy Potash, Inc., 1995 NMSC 070, 120 N.M. 645, 649, 905 P.2d 185, 189 (recognizing intentional spoliation of evidence); Schmitz v. Smentowski, 109 N.M. 386, 394, 785 P.2d 726, 734 (1990) (recognizing prima facie tort). Because the duty involved in a fiduciary relationship cannot be distinguished from other tort duties in this context, New Mexico's recognition of aiding and abetting liability logically extends to a breach of fiduciary duty. 17. Therefore, we today hold that New Mexico recognizes tort liability for the aiding and abetting of a breach of fiduciary duty. In order to state such a claim, a plaintiff must allege and prove the following: (1) a fiduciary of the plaintiff breached a duty owed to the plaintiff; (2) the defendant knew of such a duty; (3) the defendant intentionally provided substantial assistance or encouragement to the fiduciary to commit an act which the defendant knew to be a breach of duty; and (4) damages to the plaintiff were caused thereby. Cf. Holmes, 885 P.2d at 309. 18. An injured party need not have a direct relationship with the third party against whom liability is sought as an aider and abettor. See Rael, 93 N.M. at 684, 604 P.2d at 822 (stating that liability extends to any person who by any means aids or encourages the act) (emphasis added); cf. Wilschinsky v. Medina, 108 N.M. 511, 515, 775 P.2d 713, 717 (1989) (recognizing a duty on the part of a physician to an unrelated third party injured by the physician's patient); Holmes, 885 P.2d at 309 (The gravamen of a claim of aiding and abetting a breach of fiduciary duty is the defendant's `knowing participation' in the fiduciary's breach of trust....). Rather, the injured party must have a fiduciary relationship with the principal tortfeasor, and the third party must occupy the role of an accomplice in relation to the principal tortfeasor. Thus, tort liability for aiding and abetting is consistent with one of the principal goals of tort law, the deterrence of wrongful actions that result in harm. See Folz v. State, 110 N.M. 457, 467, 797 P.2d 246, 256 (1990) (Under our fault system, there is a policy of deterrence associated with responsibility for compensatory damages.). We now address whether GCM has alleged sufficient facts to support the first element of aiding and abetting a breach of fiduciary duty.