| RGH Liquidating Trust v Deloitte & Touche LLP |
| 2008 NY Slip Op 00418 [47 AD3d 516] |
| January 24, 2008 |
| Appellate Division, First Department |
| The RGH Liquidating Trust, on Behalf of Reliance GroupHoldings, Inc., and Another, Appellant, v Deloitte & Touche LLP et al.,Respondents. |
—[*1] Kramer Levin Naftalis & Frankel LLP, New York City (Michael J. Dell of counsel), forrespondents.
Order, Supreme Court, New York County (Karla Moskowitz, J.), entered September 29,2006, which, to the extent appealed from, dismissed plaintiff's fourth cause of action forfraudulent conveyance and all causes of action asserted by plaintiff on behalf of Reliance GroupHoldings (RGH) and Reliance Financial Services (RFS), unanimously affirmed, with costs.
The fourth cause of action for fraudulent conveyance was properly dismissed for failure toplead lack of fair consideration (see Debtor and Creditor Law §§ 272, 273).While the complaint alleges deficiencies in the accounting and actuarial work performed bydefendants before RGH and RFS filed for bankruptcy, it does not allege that defendants failed toprovide the services for which they were paid.
The causes of action asserted on behalf of RGH and RFS were improperly dismissed asbarred by the doctrine of judicial estoppel. RGH and RFS and defendant Deloitte & Toucheapplied jointly to the bankruptcy court for an order authorizing RGH and RFS to retain Deloitte,and the order was granted based on the representations of RGH and RFS and Deloitte. Thus, itcannot be said that RGH and RFS obtained a "ruling in their favor" and adverse to Deloitte (see Olszewski v Park Terrace Gardens,Inc., 18 AD3d 349, 350-351 [2005]; see also In re BCP Mgt., Inc., 320 BR 265,275-279 [D Del 2005]). Moreover, it was Deloitte that was in a position to know whether or notthe representation that it was a "disinterested person" under the Bankruptcy Code (11 USC§ 101 [14]; § 1107 [b]) was false (see generally Rome v Braunstein, 19 F3d54 [1st Cir 1994]).
However, plaintiff's fraud claims were properly dismissed as duplicative of its breach ofcontract claim, since they are based on alleged fraudulent misrepresentations related todefendants' obligation under their agreements with RGH and RFS to conduct audits of financialstatements with reasonable care, and allege no misrepresentations collateral or extraneous to theagreements (Coppola v Applied Elec. Corp., 288 AD2d 41, 42 [2001]). The breach ofcontract claim is, as defendants correctly contend, in essence a claim of professional malpractice(as are all plaintiff's claims) (see American Tissue, Inc. v Arthur Andersen, L.L.P., 275 FSupp 2d 398, 405 n 7 [SD NY 2003]), and was properly dismissed as barred by the three-yearstatute of limitations for malpractice claims "regardless of whether the underlying theory is basedin contract or tort" (CPLR 214 [6]; Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co.,Inc.], 3 NY3d 538 [2004]). This action, which alleges deficient accounting services inconnection with audits and actuarial opinions issued in 1999-2000, was not commenced untilJanuary 6, 2006.
We have considered and rejected appellant's remaining contentions. Concur—Tom,J.P., Saxe, Friedman and Buckley, JJ. [See 13 Misc 3d 1219(A), 2006 NY Slip Op51908(U).]