New York court finds privity exists in accountant's case.A New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of state court refused to dismiss a third-party action against an accounting firm--despite the firm's claim that privity A close, direct, or successive relationship; having a mutual interest or right. Privity refers to a connection or bond between parties to a particular transaction. Privity of contract is the relationship that exists between two or more parties to an agreement. did not exist between it and the third party. The accounting firm, Wolfson, Kapit, Melzer, Milowsky, Ettinger & Wieselthier, prepared financial statements for E. Zee Sports Zee Sports is an Indian sports channel owned by Zee Telefilms. Zee Sports is now available on Dish Network on Echostar 7 SAT 119.0°W at 12516 R, tp 20, SR 20000, FEC 5/6. , Inc. E. Zee had entered into a financing agreement with Merchant Factors Corp., the third party. In its suit Merchant claimed Wolfson negligently misrepresented E. Zee's financial condition. Wolfson moved for dismissal, claiming no privity existed between itself and Merchant. In refusing to dismiss the complaint, the court ruled Merchant's allegations satisfied each of the requirements set forth in Credit Alliance Corp. v. Arthur Andersen For the U.S. Supreme Court case commonly known as Arthur Andersen, see . Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing & Company (65 NY2d 536). The judge took into account Merchant's allegations that (1) Wolfson was aware Merchant was financing E. Zee Sports, (2) Wolfson intended Merchant to rely on the report and (3) Wolfson's conduct (for example, discussing its accounting procedures and meeting with Merchant) linked it to Merchant. The court concluded each allegation was supported by an affidavit affidavit Written statement made voluntarily, confirmed by the oath or affirmation of the party making it, and signed before an officer empowered to administer such oaths. or documentary evidence A type of written proof that is offered at a trial to establish the existence or nonexistence of a fact that is in dispute. Letters, contracts, deeds, licenses, certificates, tickets, or other writings are documentary evidence. that, if proven accurate at trial, would establish a "direct and not insubstantial relationship" between Merchant and Wolfson, satisfying the requirements of privity. (Merchant Factors Corp. v. Wolfson, Kapit, Melzer, Milowsky, Ettinger and Wieselthier, no. 27471/92, New York County, Supreme Court) |
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