|
In this Issue:
Revisiting Accountant Liability to Non-Clients
By: Bradley M. Zamczyk
Following recent revelations of corporate corruption, large accounting firms, accountants and their accounting practices are being increasingly publicly scrutinized. Questionable accounting practices and "cooked books" caused shareholders in some companies to lose billions of dollars, and caused many employees to lose their pensions upon public disclosure of these companies' true financial condition. Several of the nation's leading accounting firms have admitted to or have been charged with negligence in executing their duties as auditors. Most notably, the behemoth Arthur Andersen dissolved in the wake of Justice Department investigations and civil suits related to Enron. It is doubtful that most accountant malpractice claims will be as staggering in scope as those against Arthur Andersen and the current "Big 4." Nevertheless, accountants should be aware of differing approaches to accountant liability for all sized losses suffered by third parties in jurisdictions around the country. This article examines the three major schools of thought regarding accountant liability to third parties and recent developments regarding the issue.
Recent Rulings
Accountants
Florida Court Holds that Defense Expert on Causation Was Proper to Rebut Plaintiff’s Claims that Accountant Caused Plaintiff’s Damages
Courtland Group, Inc. v. Phillips Gold & Company LLP (2004) 876 So.2d 629 (Florida).
Real Estate
Appraisers Liability to Purchasers
Zanaty Realty, Inc. v. Williams (2005) 2005 WL 3082791) (Alabama).
Accountants
Texas Court Affirms Dismissal Based on Lack of Causation Because Client Didn’t Follow Accountant’s Recommendations
Board of Trustees of Fire and Police Retiree Health Fund v. Towers, Perrin, Forester & Crosby, Inc. (2005) 2005 WL 3115532 (Texas).
Insurance Agents and Brokers
“Unofficial” Position of the California Department of Insurance on Insurance Agents and Brokers' Fiduciary Duties
Case Summaries and Conclusions
Property Managers
Liability as “Lessor”
Kutcher v. Barry Realty, Inc., et. al. (2005) Ill. 1st Dist. Case No. 1-04-3698 (Illinois).
Accountants
Second Circuit Rejects Plaintiff's Attempt to Shift Burden of Proof to Accountant Defendant Regarding Claims of Billing Fraud Under Pennsylvania Law
Shared Communication Services, Inc. v. Goldensberg Rosenthal, LLP (2005) 2005 WL 3263807 (Pennsylvania)
Architects
Illinois Appellate Court Reaffirms Economic Loss Doctrine
Martusciello v. JDS Homes, Inc., et al. (2005) Ill.App.1st Div., Case No.1-04-1495 (Illinois).
This newsletter has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. |