An claim unstated in the pleadings, but which surfaces in discovery may be utilized by Plaintiff.  In Leading Ins. Group Ins. Co., Ltd. (U.S. Branch), Inc. v Friedman LLP 2021 NY Slip Op 03411 [195 AD3d 418] June 1, 2021
Appellate Division, First Department a unique theory of damages was considered, and then rejected.

“Defendant established prima facie that its alleged accounting malpractice did not cause plaintiffs lost-time damages (see generally KBL, LLP v Community Counseling & Mediation Servs., 123 AD3d 488, 488 [1st Dept 2014]). The complaint alleges that defendant failed to detect deficiencies in plaintiffs’ loss reserves during its May 2013 audit of the financial statements they submitted to the Department of Financial Services (DFS) for the 2012 calendar year and that, had the audit been done properly, plaintiffs would have made adjustments and taken corrective measures to avoid the regulatory action. However, plaintiffs’ own regulatory expert opined that DFS would have taken the same action against them regardless of whether defendant had noted their deficient reserves in its audit.

In opposition, plaintiffs failed to raise an issue of fact by way of their claim for lost-time damages. Plaintiffs submitted a report by their expert accountant, who concluded that, had the audit been done properly, DFS would have taken the same actions against plaintiffs that it took nine months later, but plaintiffs would have taken their remedial measures nine months earlier and would not have lost nine months in improving their business.

As a preliminary matter, the motion court properly considered plaintiffs’ theory of lost-time damages because, although the theory was not pleaded in the complaint, it was the subject of discovery, and defendant cannot reasonably claim that it did not have notice of or was surprised by it (see Mitchell v 423 W. 55th St., 187 AD3d 661, 662 [1st Dept 2020]; Penner v Hoffberg Oberfest Burger & Berger, 44 AD3d 554, 555 [1st Dept 2007]).

There is no evidence in the record to support plaintiffs’ expert accountant’s assumption that if DFS had taken the same actions against plaintiffs nine months earlier, plaintiffs would have undertaken the same remedial measures nine months earlier (see Brooks v Lewin, 21 AD3d 731, 734-735 [1st Dept 2005], lv denied 6 NY3d 713 [2006]). None of plaintiffs’ witnesses addressed that issue in their testimony, and plaintiffs failed to submit an affidavit addressing the issue. Moreover, plaintiffs’ regulatory expert testified that it was unclear how plaintiffs would have responded if DFS’s action had been taken earlier.

The cases on which plaintiffs rely, Corcoran v Hall & Co. (149 AD2d 165, 175-176 [1st Dept 1989]) and Town of Kinderhook v Vona (136 AD3d 1202 [3d Dept 2016]), recognize that an accountant may be liable for damages proximately caused by the accountant’s negligent failure to timely uncover deficiencies. However, they do not [*2]establish that plaintiffs are entitled to proceed to trial on a theory of lost-time damages that is premised on speculation. “.