In Mamoon v Dot Net Inc. 2019 NY Slip Op 31053(U) April 5, 2019 Supreme Court, New York County Docket Number: 652902/2013, Judge Lucy Billings describes the intersection of privity and near privity in an accounting malpractice setting.
“Since accountants owe no duty to the public at large, “privity,” a contractual relationship or similar connection with a mutuality of interest between plaintiff and the Khan defendants, is a necessary
predicate for the Khan defendants’ liability. Parrott v. Coopers & Lybrand. L.L.P., 95 N.Y.2d 479, 483-84 (2000) i State of Cal. Pub. Employees’ Retirement Sys. v. Shearman & Sterling, 95 N.Y.2d
427, 434 (2000); Ossining Union Free School Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 419 (1989); Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536, 553-54 (1985).
Consistent with the flexible concept of privity in different contexts, a party without contractual privity still may sustain a claim for malpractice if she maintained a relationship with the professional that was the functional equivalent of contractual privity. Alphas v. Smith, 147 A.D.3d 557, 558 (1st Dep’t 2017); Good Old Days Tavern. Inc. v. Zwirn, 259 A.D.2d 300, 300 (1st
Dep’t 1999); Town Line Plaza Assocs. v. Contemporary Props., 223 A.D.2d 420, 420 (1st Dep’t 1996). See AG Capital Funding Partners. L.P. v. State St. Bank & Trust Co., 5 N.Y.3d 582, 595
(2005); Learning Annex. L.P. v. Blank Rome LLP, 106 A.D.3d 663, 663 (1st Dep’ t 2013) . ”
“Plaintiff demonstrates a direct professional relationship with a mutuality of interest, near contractual privity, with the Khan defendants. She testified, and they do not dispute, that
she was the president and sole shareholder of the Khan defendants’ client, Dot Net, so that their work for Dot Net directly affected her livelihood. She further testified, continually referring to her amended complaint, that this effect was injurious, as their work rendered her personally liable for
credit card, contractual, and tax debts accrued by Dot Net. Rubin Aff. Ex. C, at 132, 149, Ex. H ~~ 17-19, 69; Alphas v. Smith, 147 A.D.3d at 558; Good Old Days Tavern. Inc. v. Zwirn, 259 A.D.2d at 300. Khan’s deposition testimony that, knowing plaintiff was the sole shareholder of Dot Net, he met and advised her on tax issues relating to the corporation on two separate occasions further demonstrates a direct professional relationship between plaintiff and the Khan defendants. Rubin Aff. Ex. A, at13-16. “