FKB’s Rachel Aghassi and Christopher D. Skoczen succeeded on a motion to dismiss an action for accounting malpractice which sought millions in damages from FKB’s client. The Supreme Court, New York County held that Plaintiff had failed to state a valid claim for accounting malpractice, requiring dismissal of the Complaint.
Plaintiff, a textile company, alleged that FKB’s client improperly conducted a financial review of Plaintiff by failing to uncover that Plaintiff was millions of dollars in debt. Plaintiff alleged that if it was aware of its financial status, it would have taken measures to save the company from financial insolvency. The Court agreed with FKB that Plaintiff’s action failed to show any breach of duty by FKB’s client to Plaintiff, accepting FKB’s argument that the documentary evidence rebutted Plaintiff’s allegations that the client had a duty to investigate and verify financial information provided to it by the Plaintiff. The Court agreed that that the accounting firm’s review engagement did not require the firm to second-guess its client. The Court agreed with FKB as well that Plaintiff had not presented ascertainable damages sufficient to support its accounting malpractice claims. The Court further dismissed Plaintiff’s claims for breach of contract and breach of fiduciary duty.