Defendant's Brief in Support of Defendants Motion for Summary Judgment - Research Paper Example

Defendant's brief in support of defendant’s motion for Summary Judgment Introduction Agnes Sweet is a 61 year old widow who has enlisted the service of Richie Rich, an accountant for the provision of advice regarding the investments that Sweet should make in different companies. Despite the fact that both Sweet and Rich has had a long working relationship, a single investment advice given by Rich to sweet has caused her to lose substantial amount of money. This occurred when Rich recommended that Sweet invests in Kuick Kash, a check cashing business, where Rich was the accountant of the Firm. The plaintiff depended fully on the dependant, since they had a long working relationship, and her vision was worsening as she grew older, therefore, when she was given the investment recommendation, she glanced at it casually, and then accepted the recommendation, despite the fact that there was a disclaimer on the recommendation, which would have informed her on the risks associated with investing in the company. The plaintiff accused the defendant for Accountant Professional Negligence and Negligent Misrepresentation, after she suffered the loss of the money she had invested in the company. Therefore, this discussion seeks to assess the liability of the defendant for the two accounts on which he is accused, with a view to submit a defendant's brief in support of defendant’s motion for Summary Judgment, in the case Agnes Sweet V. Richie Rich. Statement of facts There are various facts that underlie the case. The fundamental fact underlying this case is traceable in the case Robert Wooler Co. v. Fidelity Bank, 479 A.2d 1027 (1984), which outlines the elements of professional negligence for an accountant. The case gives the distinctive definition of accounting services; audited or unaudited. In both forms of accounting services, the accountant agrees to prepare financial statements for the clients, but the fundamental difference is that; in audited accounting services, the accountant assumes the responsibility for the accuracy of the figures appearing on the statements, while in the unaudited accounting services, the accountant is not responsible for the accuracy of the figures given in a report (Masel, 47). In this case, the plaintiff, Sweet, had contracted the defendant, Rich for the provision of investment advice, without any further contract for audited accounting engagement. This shows that their contract was a contract for unaudited accounting services, which does not place any liability for errors on the financial report on the accountant. In this case, the defendant does not warrant any responsibility of ensuring the accuracy of the financial report information. Therefore, the defendant was not liable for Professional Negligence (Blanchard, William and Roderick, 90). The plaintiff was in a position to rescind the recommendation, since the decision-making role on the issue of investment was the mandate of the plaintiff (Blanchard, William and Roderick, 92). Thus, despite the fact that the defendant could have owed the plaintiff a duty of care; based on the existence of a normal accountant-to-client relationship, the defendant did not bear any responsibility for decision making. The duty of the defendant was to give an investment recommendation report to the plaintiff, who in turn was responsible for decision-making. Therefore, the defendant bears no responsibility for the poor decision that the plaintiff made in this case; to invest in Kuick Kash. The other fact underlying the case is that, the plaintiff was put in a better position to discover the risks that were eminent in investing in the company recommended to her, since the report included a disclaimer, which warned that the company had not audited or reviewed the accompanying financial statements and supplementary schedules accordingly, and thus they did not express an opinion or any other form of assurance on them. This places personal negligence on the side of the plaintiff, who failed to read the recommendation report carefully, and thus make informed decision regarding whether to invest in the company or not (Masel, 54). Legal argument A. Accountant professional Negligence According to the case Alten v. Atlantic Financial Federal, 805 F. Supp. 5 (E.D. Pa. 1992), which provides the legal basis and requirement of reliance, it is required that the plaintiff should show the existence of four elements namely the existence of false information, justifiable reliance on the information, causation, and pecuniary loss resulting from the reliance on the false information (Pockson, 80). The facts in this case indicate that, the fourth element: justifiable reliance, which is necessary to prove that the defendant was liable for the accounts he is charged with, is missing. This is because, the plaintiff was presented with an investment recommendation report, which had a disclaimer warning that the financial information presented should not be relied upon, since it was not audited by the company. Despite this warning, the plaintiff went ahead and made a decision to invest in the Kuick Kash Company, which makes her culpable for personal negligence (Pockson, 77). Therefore, the case is missing the element of the legal requirement for reliance, and thus does not find the defendant liable for any wrongdoing. Additionally, according to the case Bortz v. Noon, 729 A.2d 555 (Pa. 1999), which addresses the elements of Negligent Misrepresentation, the affirmative misrepresentation of facts qualifies to be a fraudulent act on the part of the accountant, while the mere silence may not qualify as an act of negligent misrepresentation (Pockson, 86). In this case, the defendant; Rich, failed to disclose restrictions on the use of the company’s cash, but did not engage in any form of affirmative misrepresentation of facts. Therefore, the defendant is not liable for negligent misrepresentation. The case also lacks the element of professional negligence for accountants, as provided for under the case the case Robert Wooler Co. v. Fidelity Bank, 479 A.2d 1027 (1984). The case provided that for the accountant to be held liable for professional negligence, the contract for service signed between the accountant and the client must qualify the description of audited accounting services (Masel, 49). According to this provision, audited accounting service places the accountant liable to audit the financial reports, and thus holds him/her responsible for the accuracy of the figures given in the reports, while holding him liable for erroneous figures given. Considering that the contract between Sweet and Rich was not for audited services, but rather for the provision of investment advices, the element of accountant professional negligence is missing in this case (Blanchard, William and Roderick, 97). Therefore, the case lacks the element of negligence misrepresentation, thus making the defendant not liable for such a mistake. B. Negligent Misrepresentation However, the argument traceable in the cases Landell v. Lybrand, 107 A. 783 (1919); Guy v. Liederbach, 459 A.2d 744 (Pa. 1983), which addresses the requirement of Privity is that; a client can legally hold a course of action against any professional who offers misleading information negligently (Pockson, 81). In this case, the plaintiff had depended on the defendant, since he owed the plaintiff a duty of care, having been aware of the misrepresentations in the financial statements of the company and also the presence of the warning disclaimer, and thus was privy to requisite information. However, the plaintiff was the one in charge of decision-making, thus placing the entire act of negligence on her. Conclusion In the case Sweet vs. Rich the defendant has been accused with two accounts; Accountant Professional Negligence and Negligent Misrepresentation, yet none of the counts can be justified before the court, since the elements necessary to justify these counts are missing in the facts of the case, as presented under the legal arguments. This makes the case Sweet vs. Rich untenable, since the plaintiff is not able to prove to the court that the defendant was either liable for negligently misrepresenting facts or for acts constituting to accountants professional negligence. It is based on these facts and arguments, that the court should find the case Sweet vs. Rich, as lacking the legal threshold to stand trial, since none of the counts allegedly committed by the defendant can be proven by the plaintiff. Therefore, it is prudent for the courts to find the case Sweet vs. Rich unsubstantial and thus issue a Summary Judgment, dismissing the case Agnes Sweet V. Richie Rich. Works Cited Blanchard, Roderick D, William M. Hart, and Roderick D. Blanchard. Litigation and Trial Practice. Clifton Park, NY: Thomson Delmar Learning, 2006. Print. Masel, Geoffrey R. Professional Negligence of Lawyers, Accountants, Bankers, and Brokers. North Ryde, N.S.W: CCH Australia, 1989. Print. Pockson, Jonathan R. H. H. Accountants' Professional Negligence. London: Macmillan, 1982. Print. Read More