Sec. Investor Corp. v. BDO Seidman, Docket Nos. 99-7719
Citation | 245 F.3d 174 |
Decision Date | 09 February 2000 |
Docket Number | Docket Nos. 99-7719 |
Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Parties | (2nd Cir. 2001) SECURITIES INVESTOR PROTECTION CORPORATION and JAMES W. GIDDENS, as trustee for the liquidation of the business of A.R. Baron & Co., Inc., Plaintiffs-Appellants, - v. - BDO SEIDMAN, LLP, Defendant-Appellee. (L), 99-7720(C) Argued: |
KENNETH J. CAPUTO (Stephen P. Harbeck, on the brief), Washington, D.C., for Plaintiff Appellant Securities Investor Protection Corporation.
JAMES B. KOBAK, JR., Hughes Hubbard & Reed LLP (Daniel H. Weiner, on the brief), New York, NY, for Plaintiff Appellant James W. Giddens, as Trustee for the liquidation of the business of A.R. Baron & Co., Inc.
MICHAEL R. YOUNG, Willkie Farr & Gallagher (Jeffrey O. Grossman, Willkie Farr & Gallagher; Scott M. Univer & Barbara A. Taylor, BDO Seidman, LLP, on the brief), New York, NY, for Defendant Appellee.
Before: MESKILL and SOTOMAYOR, Circuit Judges, and KEENAN, District Judge*
Based upon the resolution of two questions certified to the New York Court of Appeals to determine whether claims brought by plaintiff-appellant Securities Investor Protection Corporation on its own behalf for fraud and negligent misrepresentation state a claim upon which relief may be granted under New York law, we affirm the judgment of the district court.
This is the second occasion on which we address this appeal of a judgment of the United States District Court for the Southern District of New York (Loretta A. Preska, Judge) dismissing plaintiffs-appellant's claims for breach of contract, fraudulent misrepresentation, and negligent misrepresentation against defendant-appellee BDO Seidman, LLP ("Seidman"), the independent certified public accountant for securities broker-dealer A.R. Baron & Co. ("Baron"). Plaintiffs-appellants Securities Investor Protection Corporation ("SIPC") and James W. Giddens, as trustee for the liquidation of Baron (the "Trustee") alleged that Seidman's filing of false audit reports on behalf of Seidman caused financial damage both to Baron's customers and to SIPC itself. SIPC sued both for its own damages and, as subrogee of the claims of Baron's customers claims against Seidman, for their damages as well. The Trustee sued for Baron's customers' damages as their representative in liquidation proceedings. The district court (i) dismissed SIPC's claims on its own behalf for lack of standing, and (ii) dismissed SIPC's and the Trustee's claims on behalf of Baron's customers for failure to state a claim upon which relief could be granted. Securities Investor Protection Corp. v. BDO Seidman, LLP, 49 F. Supp. 2d 644, 653, 655-57 (S.D.N.Y. 1999).
In our prior opinion, we affirmed the district court's dismissal of the claims brought by both plaintiffs on behalf of Baron's customers. Securities Investor Protection Corp. v. BDO Seidman, LLP, 222 F.3d 63, 71-76 (2d Cir. 2000). We disagreed, however, with the district court's holding that SIPC lacked standing to sue on its own behalf. Id. at 69-71. We were thus presented with the question of whether SIPC's claims on it own behalf are claims for which relief could be granted under New York law. Finding that these claims raised issues that had not been clearly resolved by New York caselaw, and that resolution of these issues required a delicate balancing of state policy concerns, id. at 76-82, we certified the following two questions to the Court of Appeals:
1. May a plaintiff recover against an accountant for fraudulent misrepresentations made to a third party where the third party did not communicate those misrepresentations to the plaintiff, but where the defendant knew that the third party was required to communicate any negative information to the plaintiff and the plaintiff relied to his detriment on the absence of any such communication?
2. May a plaintiff recover against an accountant for negligent misrepresentations where the plaintiff had only minimal direct contact with the accountant, but where the transmittal to the plaintiff of any negative information the accountant reported was the "end and aim" of the accountant's performance?
The Court of Appeals has answered both questions in the negative. Securities Investor Protection Corp. v. BDO Seidman, LLP, 2001 N.Y. Slip. Op. 01470, 2001 WL 139117 (N.Y. Feb. 20, 2001) ( ). Accordingly, we affirm the district court's dismissal of SIPC's claims on its own behalf, albeit on a slightly different ground. See Shumway v. United Parcel Serv., Inc., 118 F.3d 60, 63 (2d Cir. 1997).
Because no other issues remain to be resolved, the judgment of the district court is hereby AFFIRMED.
v.
v.
v.
KENNETH J. CAPUTO, FOR APPELLANT SECURITIES INVESTOR.
MICHAEL R. YOUNG, FOR RESPONDENT.
NEW YORK STATE SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS; AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, AMICI CURIAE.
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