We sometimes wonder how people agree to unusual methods of accomplishing very ordinary tasks. How many apartments have been purchased and sold using the traditional contract, price, payment and transfer? Why monkey with it?
Alskom Realty, LLC v Baranik 2020 NY Slip Op 07153 [189 AD3d 745]
December 2, 2020 Appellate Division, Second Department is the story of trying to re-invent the wheel. It want asunder. A lawsuit against the accountant did not progress very well, either.
“The plaintiffs allege accounting malpractice in connection with the defendants’ preparation of a federal income tax return for the year 2007. They claim that the tax return included incorrect information relating to the sale of a condominium apartment to nonparty David Segal, on the ground that they never received the balance of the purchase price at the closing.
The plaintiffs claimed that they transferred title at the closing because Segal promised that he would immediately resell the apartment to another buyer for a profit and that he would then pay the remainder of the purchase price. Thereafter, Segal claimed he paid the purchase price with pieces of artwork from his company. The question of whether the purchase price was in fact paid became the subject of a separate action in the Supreme Court, New York County (hereinafter the New York County action), which was dismissed based upon the statute of frauds, because the plaintiffs did not produce the contract of sale (see Komolov v Segal, 40 Misc 3d 1228[A], 2013 NY Slip Op 51339[U] [Sup Ct, NY County 2013], affd 117 AD3d 557 ).
In preparing the 2007 tax return for the plaintiff Alksom Realty, LLC, the defendants listed a sales price of $4,100,000 for the apartment, a cost basis of $3,564,946, and a capital gain of $535,054. The defendants claim that after the individual plaintiff, Alexander Komolov, and Segal informed the defendants of the transaction, Segal provided a handwritten statement, which stated a [*2]purchase price of $4,100,000 and certain costs.
In 2013, the accountants filed an amended 2007 federal income tax return, but the amended return was rejected as untimely.”
“In order to succeed on a claim for accounting malpractice, a plaintiff must demonstrate a departure from accepted standards of practice and that the departure was a proximate cause of injury (see KBL, LLP v Community Counseling & Mediation Servs., 123 AD3d 488 ; Kristina Denise Enters., Inc. v Arnold, 41 AD3d 788 ; D.D. Hamilton Textiles v Estate of Mate, 269 AD2d 214 ; Estate of Burke v Repetti & Co., 255 AD2d 483 ). Injury is an element of the cause of action (see KBL, LLP v Community Counseling & Mediation Servs., 123 AD3d at 488). No injury was established here. The 2007 tax return was not the basis for the dismissal of the New York County action, which sought recovery of the allegedly unpaid purchase price; rather, that action was dismissed for failure to produce the contract of sale. The plaintiffs did not demonstrate on their motion that the purchase price was never in fact paid with artwork. Further, there is no evidence in this record of increased tax liability.
The capital gain reported in the 2007 return in the amount of $535,054 indicated that the defendants used a cost basis for the calculation. Komolov informed the defendants of the transaction, and did not indicate that the purchase price had not been paid. The record does not indicate whether Segal provided the information in issue without the plaintiffs’ consent.
Further, the affirmation of the plaintiffs’ attorney did not provide evidence in admissible form of whether the defendants complied with acceptable accounting standards. The attorney did not purport to be an expert in standards of accounting practice.
Therefore, the plaintiffs failed to establish their entitlement to judgment as a matter of law on the issue of liability. Accordingly, their motion for summary judgment on the issue of liability on the causes of action to recover damages for accounting malpractice should have been denied. We remit the matter to the Supreme Court, Kings County, for further proceedings on the motions that were denied as academic in light of the court’s determination granting the plaintiff’s motion for summary judgment.”