FKB’s Rachel Aghassi and Spencer A. Richards successfully obtain a pre-answer dismissal on an action for accounting malpractice.  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 shareholder of a corporation, alleged that FKB’s client failed to timely provide the plaintiff with a final Schedule K-1, which resulted in significant tax liability.  In dismissing the plaintiff’s complaint, Justice Cohen (New York County) agreed with FKB’s argument that under the engagement letter between the corporation and FKB’s client, FKB’s client did not have an obligation to issue the final Schedule K-1 to any shareholders, including the plaintiff. In addition, Justice Cohen agreed with FKB’s argument that the plaintiff is not an intended beneficiary under the engagement letter between the corporation and FKB’s client because the engagement letter explicitly rejected the plaintiff’s allegation that FKB’s client was responsible for issuing the final Schedule K-1 to shareholders. Finally, Justice Cohen agreed with FKB’s argument that the plaintiff lacked standing to pursue an accounting malpractice claim against FKB’s client because the plaintiff was not a party to the engagement letter between the corporation and FKB’s client.

If you have any questions about this decision, or the defense of accountants in general, please contact Rachel Aghassi or Spencer A. Richards.