Mistakes, mistakes, shoddy performance!  This is what malpractice cases are all about.  However, litigation over these issues is rarely simply about the mistake.  It’s the surround that matters so much more.  The “surround” ?  What we mean by this is the more subtle issues such as proximate cause, professional strategy, etc. Vitale v Koenig  2017 NY Slip Op 51557(U)  Decided on October 12, 2017  Supreme Court, New York County  St. George, J. illustrates this concept.

“The undisputed facts, which this Court has condensed from its decision in motion sequence 004, are as follows: In late 2001, Joseph Vitale formed a company which he named Titan Electrical and Elevator Contracting Company (Titan I).^[FN1] Mr. Vitale was the sole owner of the company. In December 2004, Mr. Vitale formed Titan Electrical Company of New York (Titan II). The business became operational after, on August 31, 2005, Mr. Vitale and Mr. Sonzone entered into a partnership. In his capacity as an electrician, Mr. Vitale’s business had worked with Mr. Sonzone’s and his general contracting business Sunrise Contracting. The parties’ partnership agreement provided that the partners would divide the shares of the company and its profits and liabilities equally. Mr. Sonzone took charge of the administrative and financial aspects of the corporation, contributing funds as necessary. The parties agreed that, in addition, Mr. Sonzone would give money to Mr. Vitale and Titan I so that the company could clear up its debts and pay back taxes. The parties dispute whether this money was a loan or was part of the agreement that Titan II would pay the expenses and liabilities of Titan I. In March 2007 Titan II ceased its operations.

At some point after the dissolution of Titan II, the former partners accused each other of fiscal improprieties and numerous other violations of the agreement. Each alleged that, through a variety of methods, the other diverted profits from Titan II and placed them into his own hands. In Vitale v Sonzone (Index No. 111440/2011 [Sup Ct NY County]), Mr. Vitale and Titan II sue [*2]Mr. Sonzone, his contracting business, and other defendants.

The current lawsuit, which is joined for discovery purposes with Vitale v Sonzone, is against Mr. Koenig, who was Titan II’s accountant. Here, plaintiffs assert that in June 2007 Mr. Vitale asked defendant to perform an accounting of Titan II. Plaintiffs states that in response Mr. Vitale simply received a few pages of handwritten notes with the title “Audit.” Allegedly, Mr. Koenig conceded that he did not review the corporate American Express card bills, which would have shown whether Mr. Sonzone made personal charges or otherwise improper charges on his corporate card, along with other bills from the company. Instead, he stated that he relied entirely on the limited papers Mr. Sonzone had provided to him. Moreover, plaintiffs state, defendant refused to evaluate these other charges when Mr. Vitale provided him with the pertinent records. Plaintiffs claim that defendant received more than $7,000.00 for his improper tax and audit work. Justice Billings, who formerly presided over this case, issued an order in 2011 which dismissed plaintiffs’ second, third, and fourth causes of action. Thus, all that remains are the first cause of action, for professional negligence and accounting malpractice, and the third cause of action, for aiding and abetting Mr. Sonzone’s breach of fiduciary duty. Plaintiffs seek damages of at least $120,000.00.”

“In Schmidt v One New York Plaza (153 AD3d 427, 428 [1st Dept 2017]), the First Department reaffirmed the standard of review for a summary judgment motion:

On a motion for summary judgment, the moving party has the initial burden of establishing its entitlement to judgment as a matter of law with evidence sufficient to eliminate any material issue of fact (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1985]). The facts must be viewed “in the light most favorable to the non-moving party” (Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 [2011]). Summary judgment should not be granted where there is any doubt as to the existence of triable issues or there are any issues of fact (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]).

Utilizing this standard, the Court dismisses plaintiffs’ first cause of action. A claim of accounting malpractice or negligence not only “requires proof that there was a departure from accepted standards of practice” but requires a showing “that the departure was the proximate cause of the injury” (D.D. Hamilton Textiles, Inc. v Estate of Mate, 269 AD2d 214, 215 [1st Dept 2000]). Absent a showing of proximate cause, the case for professional negligence must be dismissed (See Charlap v BDO Seidman, 251 AD2d 146, 147 [1st Dept 1998]). Here, defendant [*4]persuasively argues that the claim relating to the 2007 “audit” occurred after the alleged misappropriations of funds and dissolution of the company. Thus, the Court need not reach the issue of defendant’s competence with respect to the 2007 audit.

As for the alleged malpractice relating to the tax returns, defendant was entitled to rely in good faith on the records his clients provided to him, without the need for verification (CFR § 10.34 [d]). Plaintiffs have not set forth facts that show defendant, who was hired by Titan II in a limited capacity, should not have trusted the Quickbooks which Mr. Sonzone provided. In fact, Mr. Vitale himself did not mistrust Mr. Sonzone initially.

Moreover, plaintiffs’ third cause of action must be dismissed because plaintiffs have not raised more than speculative allegations of collusion (See Lichtman v Mount Judah Cemetery, 269 AD2d 319, 321 [1st Dept 2000]). The questions of fact plaintiffs allege relate to the accounting system Mr. Sonzone employed and to the use of credit cards and the payroll system. These were not within the control of defendant, who prepared the taxes but did not create the accounting system for the company. Nor is he chargeable with knowledge simply because Mr. Sonzone retained him for tax services for himself and some of his other businesses.”