Atkins Nutritionals, Inc. v. Ernst & Young LLP
| Decision Date | 21 January 2003 |
| Citation | 301 A.D.2d 547,754 N.Y.S.2d 320 |
| Parties | ATKINS NUTRITIONALS, INC., et al., Respondents-Appellants,<BR>v.<BR>ERNST & YOUNG, LLP, Appellant-Respondent, and<BR>CAP GEMINI ERNST & YOUNG U.S., LLC, Appellant. |
| Court | New York Supreme Court — Appellate Division |
Ordered that the order is modified by (1) deleting the provision thereof denying those branches of the motion of the defendant Ernst & Young, LLP, which were to dismiss the second cause of action, the fifth cause of action, so much of the third cause of action as sought consequential damages, and so much of the sixth cause of action as sought punitive damages, and substituting therefor a provision granting those branches of the motion, and (2) deleting the provision thereof denying those branches of the motion of the defendant Cap Gemini Ernst & Young U.S., LLC, which were to dismiss the fourth cause of action insofar as it sought consequential damages and the sixth cause of action insofar as asserted against it and substituting therefor a provision granting those branches of the motion; as so modified, the order is affirmed insofar as appealed and cross-appealed from, with one bill of costs to Cap Gemini Ernst & Young U.S., LLC, payable by the plaintiffs.
The plaintiff Atkins Nutritionals, Inc. (hereinafter Atkins), entered into an agreement with the accounting firm Ernst & Young, LLP (hereinafter E & Y), in which E & Y was to assist Atkins in selecting a computer accounting system for its new distribution center. In April 2000, E & Y recommended that Atkins acquire a computer software system called Cayenta. In May 2000 E & Y sold its consulting services component to Cap Gemini, S.A., and acquired shares in the new entity Cap Gemini Ernst & Young U.S., LLC (hereinafter CGEY).
In June 2000 E & Y recommended that Atkins engage CGEY to oversee implementation of the Cayenta system. Atkins and CGEY entered into such an agreement in August 2000. After numerous problems with the Cayenta system, Atkins and its majority shareholder Dr. Robert Atkins commenced this action against E & Y and CGEY.
The Supreme Court properly dismissed the first cause of action asserted against E & Y, as it alleged a claim to recover damages for malpractice in the selection and implementation of a computer system. E & Y was acting as a computer consultant, and the courts of this state do not recognize a cause of action to recover damages for professional malpractice by computer consultants (see Richard A. Rosenblatt & Co. v Davidge Data Sys. Corp., 295 AD2d 168). Even though E & Y is an accounting firm, it had a conventional business relationship with Atkins with respect to the computer consulting services which did not create a fiduciary relationship independent of the contract (see RKB Enters. v Ernst & Young, 182 AD2d 971). The fact that E & Y performed personal accounting services for Dr. Atkins did not give rise to a fiduciary relationship with Atkins, the corporate entity.
The lack of a special relationship distinct from and independent of the contract also precludes the second cause of action against E & Y to recover damages for negligent misrepresentation (see WIT Holding Corp. v Klein, 282 AD2d 527; Andres v LeRoy Adventures, 201 AD2d 262; RKB Enters. v Ernst & Young, supra; cf. Kimmell v Schaefer, 89 NY2d 257). "It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated" (Clark-Fitzpatrick,...
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