Five Towns Pediatrics, P.C. v Billet, Feit & Preis, P.C. 2023 NY Slip Op 32328(U) July 12, 2023 Supreme Court, New York County Docket Number: Index No. 157252/2018
Judge: Andrea Masley is the story of a limited retainer agreement often used by accounting firms. Here, the retainer agreement stated “the scope of
the engagement: prepare tax returns and compilations.” Claims outside of that scope were dismissed.

“This motion is granted, in part. Plaintiff and MWE entered into four engagement
letters in September 2015, January 2016, September 2016, and April 2017. (NYSCEF
102-104, Engagement Letters.) The engagement letters clearly document the scope of
the engagement: prepare tax returns and compilations. (Id.) There is no ambiguity and
plaintiff cannot create one. ( Universal Am. Corp. v National Union Fire Ins. Co. of
Pittsburgh, PA., 25 NY3d 675, 680 [2015] [citation omitted] [“[P]arties cannot create
ambiguity from whole cloth where none exists, because provisions ‘are not ambiguous
merely because the parties interpret them differently.”‘].)

Plaintiff’s attempt to expand the services to be provided based on its “know your
client” theory is barred by the parol evidence rule. “Parol evidence-evidence outside
the four corners of the document-is admissible only if a court finds an ambiguity in the
contract. As a general rule, extrinsic evidence is inadmissible to alter or add a provision
to a written agreement.” (Schron v Troutman Sanders LLP, 20 NY3d 430, 436 [2013];
see also W.W. W. Assocs. v Giancontieri, 77 NY2d 157, 163 [1990] [ citation omitted] [” It
is well settled that ‘extrinsic and parol evidence is not admissible to create an ambiguity
in a written agreement which is complete and clear and unambiguous upon its face.”‘].)
Here, the engagement letters are unambiguous.

MWE was not engaged to perform an audit or forensic accounting or any other
services to determine why plaintiff’s owners were not taking home more money as
plaintiff suggests. The engagement letters make clear that, in providing tax preparation

services, MWE would rely on the documents provided by the plaintiff and would not
audit or verify accuracy of these documents. ( See NYSCEF 101, 103, 104, September
2015 and 2016 and April 2017 Engagement Letters [“As part of our compilation
engagement, we will issue a report that will state that we did not audit or review the
financial statements nor were we required to perform any procedures to verify the
accuracy or completeness of the information provided by management and accordingly, we do not express an opinion, a conclusion, nor provide any assurance on them”]; NYSCEF 102, January 2016 Engagement Letter [“We will not audit or independently verify the data you submit”].) “[A]n accountant and client may contractually agree that the accountant is not to perform certain services, thereby absolving the accountant of liability for not performing them.” (Channel Fabrics, Inc. v Skwiersky, Alpert & Bressler LLP, 2022 NY Misc LEXIS 8980, *4 [Sup Ct, NY County 2022] [citation omitted].)

Further, the court will not permit plaintiff to expand the scope of the engagement
letters based on MWE’s initial proposal when it was pitching its services. (See NYSCEF
100, Proposal.) The engagement letters constitute the parties’ agreement not the initial
proposal. Plaintiff’s belief that MWE was providing consulting and investigatory services
as to why the doctors were not making more money does not make it so and certainly
plaintiff’s belief does not alter the parties’ agreement. While MWE may have been
plaintiff’s company accountant, per the terms of the agreements, it did not agree to be
an auditor or investigator.”