Darby Scott, Ltd. v Michael S. Libock & Co. LLC CPAs  2020 NY Slip Op 34343(U) December 31, 2020 Supreme Court, New York County
Docket Number: 653044/2013 Judge: Robert D. Kalish is a script for how a CPA malpractice case is put together and defended against.  It ultimately failed for statute of limitations,  lack of duty, and lack of damages.

“As a threshold matter, it is clear that all of plaintiff’s claims for damages are time-barred. The statute of limitations for nonmedical malpractice, including accounting malpractice, is three years, which applies “regardless of whether the underlying theory is based in contract or tort” (CPLR 214(6); see RGH Liquidating Trust v Deloitte & Touche LLP, 47 AD3d 516, 517 [1st Dept 2008]; Maya NY, LLC v Hagler, 106 AD3d 583, 586 [2013]). The “claim accrues when the malpractice is committed, not when the client discovers it” (Williamson ex rel. Lipper Convertibles, L.P. v PricewaterhouseCoopers LLP, 9 NY3d 1, 7–8 [2007]). More specifically, the cause of action “accrues upon the client’s receipt of the accountant’s work product since this is the point that a client reasonably relies on the accountant’s skill and advice” (id. at 8, quoting Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]).

“This action was commenced on August 30, 2013, a date which would render time-barred claims for any act of malpractice committed prior to August 30, 2010. Plaintiff has not identified, and the record does not reflect, any work product produced by defendants after that cut-off date.”

“Plaintiff’s claims would fail even if they were asserted in a timely manner. “A party alleging a claim of accountant malpractice must show that there was a departure from the accepted standards of practice and that the departure was a proximate cause of the injury,” (KBL, LLP v Cmty. Counseling & Mediation Servs., 123 AD3d 488, 488 [1st Dept 2014]; see D.D. Hamilton Textiles, Inc. v Estate of Mate, 269 AD2d 214, 215 [1st Dept 2000]). Furthermore, “[i]t is well settled that a plaintiff must establish, beyond the point of speculation and conjecture, a causal connection between its losses and the defendant’s actions” (Herbert H. Post & Co. v Sidney Bitterman, Inc., 219 AD2d 214, 224 [1st Dept 1996]). Although the scope of professional
accounting standards generally go beyond simple bookkeeping and auditing, the obligations may be expressly defined, and limited, by the terms of the parties’ engagement agreement (Friedman v Anderson, 23 AD3d 163, 165 [1st Dept 2005]; Italia Imports, Inc. v Weisberg & Lesk, 220 AD2d 226, 226–27 [1st Dept 1995]; Cumis Ins. Soc,, Inc. v Tooke, 293 AD2d 794, 797 [3d Dept 2002] [“express terms of the contractual agreements” governed accountant obligation to
“discover irregularities, errors and defalcations”]). ”

“The court finds that defendants have prima facie established that plaintiff has not suffered any damages and that any possible damages were caused by defendants. In response, plaintiff has failed to establish a triable issue of fact on this point. The only actual analysis of plaintiff’s inventory was performed by its employee Mayo, who is not an accountant. In her deposition she admitted she was not familiar with QuickBooks, whether it was or could be used to track inventory, or whether it employed a perpetual inventory system. She did not know whether the items in plaintiff’s inventory had unique identifiers such as barcodes prior to her employment. She also admitted that she did not attempt to secure missing vendor receipts. In the end, her
affidavit does not establish that any item of inventory was actually missing, but only that some items were “unaccounted for” based on the available records. ”