In Badgett v. G’Sell, a client retained a financial advisor to manage her account. No. 01-22-00587-CV, 2024 Tex. App. LEXIS 8185 (Tex. App.—Houston [1st Dist.] November 26, 2024, no pet.). Over several years, the account lost most of its worth, and the client sued the advisor for breach of fiduciary duty and other related claims. The trial court found for the client and awarded her actual damages. The trial court found that “[Badgett’s] breach of fiduciary duty caused harm to [G’Sell],” namely, that “[t]he the [Brokerage] Account suffered a [net] loss of $307,037 ($98,383 in 2014, $44,983 in 2015, $163,671 in 2016).” After offsetting an arbitration award, the trial court awarded the client actual damages of $196,037. The advisor appealed. The court of appeals first discussed the legal standards for a breach of fiduciary duty claim and damages:

Generally, the elements of a breach of fiduciary duty claim are (1) the existence of a fiduciary duty; (2) breach of the duty; (3) causation; and (4) damages. A plaintiff cannot recover an award of actual damages on a breach-of-fiduciary-duty claim unless she proves “that the defendant’s breach of their fiduciary duties proximately caused the plaintiff’s damages.” Proximate cause has two components: (1) foreseeability and (2) cause in fact. “Cause in fact is essentially but-for causation.” “Cause in fact is established when the act or omission was a substantial factor in bringing about the injuries, and without it, the harm would not have occurred.” If the defendant’s negligence merely furnished a condition that made the injuries possible, there is no cause in fact. Proximate cause “cannot be established by mere conjecture, guess or speculation.” To establish causation, the evidence “must show more than a possibility.” “Verdicts must rest upon reasonable certainty of proof.”

Id.

The client asserted that the advisor breached his fiduciary duty because he failed to inform her that the brokerage account was declining in value. The court of appeals stated:

On appeal, the dispositive inquiry is whether the record contains evidence showing that Badgett’s failure to inform G’Sell about the declining value of her account proximately caused her damages—those damages being the brokerage account’s lost net value of $307,037… For Badgett’s non-disclosure to be the cause in fact, the evidence needed to demonstrate that it was a substantial factor in bringing about the brokerage account’s loss of value, and that, if he had disclosed the information, the account would not have lost its value. The evidence showed that G’Sell’s brokerage account lost value due to several factors, including G’Sell’s withdrawal of cash, Badgett’s sale of stock from the account to satisfy the margin calls, and Badgett’s poor stock trading choices. The parties did not dispute that Badgett had the authority to take these actions as G’Sell’s authorized agent. The evidence showed that, if Badgett had not sold stock from the account to satisfy the margin calls, the brokerage firm would have selected and sold securities from the account to cover the margin deficiency. G’Sell emphasized in her closing argument that her breach-of-fiduciary-duty claim was not based on Badgett’s handling of the account. She recognized that Badgett could not be held liable for the uncertainty of the stock market. And, even if Badgett’s handling of the account could be considered negligent, G’Sell did not pursue a negligence-based claim at trial…

G’Sell asserts that the non-disclosure caused her account to incur a net loss of $307,037. But, even when viewed in the light most favorable to G’Sell, the record contains no evidence from which a reasonable inference could be drawn that the non-disclosure was a substantial factor in bringing about the brokerage account’s loss of value, and that, if Badgett had disclosed the information, the account would not have lost its value. In other words, there was no evidence that the non-disclosure was the cause in fact of the loss. G’Sell did not offer evidence showing that, if she had learned of the declining value earlier, such as in 2014 or 2015, she would have terminated Badgett’s agency at that time. Nor did she offer evidence showing that, if she had terminated Badgett’s agency earlier, the brokerage account would not have lost its value or would have loss less… We hold that the evidence was legally insufficient to show that Badgett’s non-disclosure about the decline in the brokerage account’s value proximately caused the account’s loss in value.

Id. Interestingly, even though the client had requested equitable relief, the trial court had no awarded such. The court of appeals stated:

 We note that the Supreme Court of Texas has held that a plaintiff asserting a claim for breach of fiduciary duty need not show causation or actual damages to be entitled to an equitable remedy for the breach. Here, G’Sell sought the equitable remedy of disgorgement of Badgett’s fees, but the trial court did not grant that remedy. The trial court awarded actual damages—damages which G’Sell was required to prove were proximately caused by Badgett’s breach of fiduciary duty.

Id.