| Health Acquisition Corp. v Program Risk Mgt., Inc. |
| 2013 NY Slip Op 02714 [105 AD3d 1001] |
| April 24, 2013 |
| Appellate Division, Second Department |
| Health Acquisition Corp., Doing Business as Allen HomeHealth Care Bestcare, Inc., et al., Appellants, v Program Risk Management, Inc.,et al., Defendants, and DeChants, Fuglein & Johnson, LLP, et al.,Respondents. |
—[*1] Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, White Plains, N.Y. (Peter J.Larkin, Nicole B. Liebman, and Morgan R. McCord of counsel), for respondentDeChants, Fuglein & Johnson, LLP. Hitchcock & Cummings, LLP, New York, N.Y. (Terry Cummings and RebekahD'Antonio of counsel), for respondent SGRisk, LLC.
In an action, inter alia, to recover damages for professional negligence and negligentmisrepresentation, the plaintiffs appeal from an order of the Supreme Court, NassauCounty (Warshawsky, J.), entered December 29, 2010, which granted the separatemotions of the defendants DeChants, Fuglein & Johnson, LLP, and SGRisk, LLC,pursuant to CPLR 3211 (a) to dismiss the complaint insofar as asserted against each ofthem, and denied the plaintiffs' application for leave to amend the complaint.
Ordered that the appeal from so much of the order as denied the plaintiffs'application for leave to amend the complaint is dismissed, as no appeal lies as of rightfrom an order which does not determine a motion made on notice (see CPLR5701 [a] [2]), and we decline to grant leave to appeal; and it is further,
Ordered that the order is reversed insofar as reviewed, on the law, and the separatemotions of the defendants DeChants, Fuglein & Johnson, LLP, and SGRisk, LLC, todismiss the complaint insofar as asserted against each of them are denied; and it isfurther,
Ordered that one bill of costs is awarded to the plaintiffs.
The plaintiffs are companies engaged in the business of providing home health careservices. The plaintiffs all joined the Health Care Provider Self-Insurance Trust(hereinafter the trust), a now-terminated New York State Workers' Compensation "groupself-insurance trust" established to provide group self-insurance for health care providers(see Workers' Compensation Law § 50). The plaintiff Health AcquisitionCorp. joined the trust in or around 1997, the plaintiff [*2]Bestcare, Inc., joined the trust in or around 1999, and theplaintiff Aides at Home, Inc., was a member of the trust from approximately 1994through 1997, and rejoined the trust in or around 2000. Pursuant to the Workers'Compensation Law, members of a group self-insurance trust are jointly and severallyliable for all worker's compensation claims of each group member (see Workers'Compensation Law § 50 [3-a]).
The defendants Program Risk Management, Inc., PRM Claims Services, Inc., andJohn Conroy provided third-party administration services and claims services for thetrust. The defendant DeChants, Fuglein & Johnson, LLP (hereinafter DFJ), a publicaccounting firm, provided certain services to the trust beginning in or prior to 1998. Thedefendant SGRisk, LLC (hereinafter SGRisk), an actuarial firm, provided services to thetrust beginning in 1994.
The plaintiffs remained members of the trust until 2009, when the trust, which wasinsolvent, was terminated by the Workers' Compensation Board. The Workers'Compensation Board subsequently assessed the plaintiffs for certain trust deficiencies.The plaintiffs brought this action, inter alia, to recover damages for professionalnegligence and negligent misrepresentation, alleging, among other things, that thedefendants hid from them the true financial condition of the trust and the plaintiffs'liability risks as members of the trust.
The Supreme Court erred in granting the separate motions of DFJ and SGRiskpursuant to CPLR 3211 (a) to dismiss the causes of action to recover damages forprofessional negligence and negligent misrepresentation insofar as asserted against them.DFJ and SGRisk argued, inter alia, that these causes of action were conclusively refutedby documentary evidence (see CPLR 3211 [a] [1]), and failed to state a cause ofaction (see CPLR 3211 [a] [7]).
In determining a motion to dismiss a complaint pursuant to CPLR 3211 (a) (7), thecourt must "accept the facts as alleged in the complaint as true, accord plaintiffs thebenefit of every possible favorable inference, and determine only whether the facts asalleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83,87-88 [1994]). Accepting the facts in the complaint as true, the complaint states viablecauses of action to recover damages for negligent misrepresentation and for professionalnegligence.
Accountants may be "held liable in certain circumstances for negligentmisrepresentations made to parties with whom they have had no contractual relationship,but who have relied to their detriment on inaccurate financial statements prepared by theaccountant" (Caprer vNussbaum, 36 AD3d 176, 196 [2006], citing Credit Alliance Corp. v ArthurAndersen & Co., 65 NY2d 536, 551 [1985]). In order to establish such liability, therelationship between the accountant and the party must be found to approach privity,through a showing that the following prerequisites are satisfied: "(1) the accountantsmust have been aware that the financial reports were to be used for a particular purposeor purposes; (2) in the furtherance of which a known party or parties was intended torely; and (3) there must have been some conduct on the part of the accountants linkingthem to that party or parties, which evinces the accountants' understanding of that partyor parties' reliance" (id. at 551; see Caprer v Nussbaum, 36 AD3d at196). Here, contrary to the contentions of DFJ, the complaint sufficiently alleges theseelements. Similarly, the complaint also sufficiently alleges these elements againstSGRisk. In particular, the complaint sufficiently alleges that DFJ and SGRisk knew orshould have known that the members of the trust bore joint and several liability for all ofthe worker's compensation claims asserted against trust members (see Workers'Compensation Law § 50 [3-a]), and that the sole purpose of the trust was toself-insure the members with respect to worker's compensation claims. Thus, thecomplaint sufficiently alleges that DFJ and SGRisk knew that their work was to be usedprimarily or entirely for a particular purpose, for the benefit of the trust members, aknown group of entities, which would rely upon that work, as well as "linking conduct"evincing their understanding of those matters. Under these circumstances, the complaintadequately alleges the required elements of "near-privity" (see White v Guarente,43 NY2d 356 [1977]; see also Caprer v Nussbaum, 36 AD3d at 194-195; Chaikovska v Ernst & Young,LLP, 21 AD3d 1324, 1325 [2005]; Allianz Underwriters Ins. Co. v Landmark Ins. Co., 13 AD3d172, 175 [2004]) as well as the remaining elements of the negligent mispresentationcauses of action against SGRisk and DFJ.[*3]
Further, the documentary evidence submitted byDFJ and SGRisk does not "conclusively establish[ ] a defense as a matter of law," withrespect to the negligent mispresentation and the professional negligence causes of actionagainst them (Mendelovitz vCohen, 37 AD3d 670, 670-671 [2007]; see CPLR 3211 [a] [1]).
Contrary to the contention of DFJ, the complaint sufficiently alleges the elements ofthe professional negligence cause of action against it, including a departure from theapplicable standard of care, causation, and damages (see Hoffman v Colleluori, 85 AD3d 1119, 1120 [2011]; see also Ofman v Katz, 89AD3d 909, 910 [2011]). In addition, DFJ failed to establish that some or all of theplaintiffs' causes of action against it are time-barred (see CPLR 214 [6]; see also Symbol Tech., Inc. vDeloitte & Touche, LLP, 69 AD3d 191, 194-196 [2009]).
Further, the Supreme Court erred in granting that branch of the motion of SGRiskwhich was pursuant to CPLR 3211 (a) (7) to dismiss the plaintiffs' cause of action torecover damages for professional negligence insofar as asserted against it for failure tostate a cause of action. Because an actuary is not required to be licensed, is not regulated,and is not subject to a State-created disciplinary system, an actuary is not a "professional"for purposes of a malpractice cause of action (see Castle Oil Corp. v ThompsonPension Empl. Plans, 299 AD2d 513, 514 [2002]; see also Chase ScientificResearch v NIA Group, 96 NY2d 20, 28-29 [2001]; Certain Underwriters atLloyd's, London v William M. Mercer, Inc., 7 Misc 3d 1008[A], 2005 NY Slip Op50507[U], *9 [Sup Ct, NY County 2005]; cf. New York Dist. Council of CarpentersPension Fund v Savasta, 2005 WL 22872, *3, 2004 US Dist LEXIS 26242, *11 [SDNY 2005]). Nevertheless, an actuary, possessing special knowledge, can be held liablefor the negligent performance of its services (see Castle Oil Corp. v ThompsonPension Empl. Plans, 299 AD2d at 514; see also PJI 2:15). Thus, thecomplaint sufficiently alleges a cause of action against SGRisk on a theory ofcommon-law negligence, and should not have been dismissed.
Moreover, contrary to the contention of SGRisk, the complaint sufficiently statescauses of action that are not wholly derivative of claims that may be asserted by the trustitself (see Craven v Rigas,85 AD3d 1524, 1527 [2011]).
The plaintiffs' remaining contention is without merit. Rivera, J.P., Hall, Lott andAustin, JJ., concur. [Prior Case History: 2010 NY Slip Op 33594(U).]