A quick reading of KBL, LLP v Community Counseling & Mediation Servs. 2014 NY Slip Op 08581 [123 AD3d 488] December 9, 2014
Appellate Division, First Department leads one to ask, what did plaintiffs intend to prove, and had they considered the question of “proximate cause?”
“Defendant is a not-for-profit organization that provides services funded in large part through government agencies. In 2005 and 2006, defendant applied for and obtained funding from the Administration for Children’s Services (ACS).
For 2007, defendant sought approximately $2.7 million in funding from ACS and hired plaintiff to perform an audit and prepare the audited financial statements for its fiscal year ending June 30, 2006, which were required for the application. In May 2007, plaintiff prepared the statements, which indicated twelve deficiencies in defendant’s financial reporting and practices. Defendant forwarded the statements to ACS, which denied the application five days later.”
“The jury found that plaintiff departed from good and accepted accounting standards and practice in the preparation of the audit report. However, it found that plaintiff’s malpractice was not a substantial factor in causing defendant money damages.”
“”[I]f you find that the accountant was negligent that negligence must be the cause of the damages that [defendant] claims, and [defendant] must establish beyond the point of speculation and conjecture that there was a causal connection between its losses and [plaintiff’s] actions.”
Viewed in this light, it can not be said the jury verdict was either contrary to the weight of the evidence or inconsistent. The sole question with regard to causation was why ACS declined to fund defendant for 2007. However, among other things, neither side called anyone from ACS to provide evidence of the reason for ACS’ s decision and testimony from defendant’s CEO downplayed the significance that ACS placed on the audit findings, with the CEO stating: “So there were 12 [audit] findings. They were very insignificant, petty and in a way outrageous that even the refunders, even the funders saw it that way. They could have really beaten us up on those 12. They didn’t.”
Thus, it was not utterly irrational for the jury to find that defendant did not establish “beyond the point of speculation and conjecture that there was a causal connection between its losses and [plaintiff’s] actions.” The jury could find that defendant failed to establish that but for plaintiff’s negligence, ACS would have provided the funding (see Cannonball Fund, Ltd. v Marcum & Kliegman, LLP, 110 AD3d 417 [1st Dept 2013]). Concur—Mazzarelli, J.P., Renwick, Andrias, Saxe and Kapnick, JJ.”