Trio Asbestos Removal Corp. v. Gabriel & Sciacca Certified Pub. Accountants, LLP

• Decision Date: 22 August 2018
• Docket Number: 2016-07997,Index No. 448/11
• Citation: 164 A.D.3d 864,82 N.Y.S.3d 127
• Parties: TRIO ASBESTOS REMOVAL CORP., appellant-respondent, v. GABRIEL & SCIACCA CERTIFIED PUBLIC ACCOUNTANTS, LLP, respondent-appellant.
• Court: New York Supreme Court — Appellate Division

164 A.D.3d 864

82 N.Y.S.3d 127

TRIO ASBESTOS REMOVAL CORP., appellant-respondent,

v.GABRIEL & SCIACCA CERTIFIED PUBLIC ACCOUNTANTS, LLP, respondent-appellant.

2016-07997

Index No. 448/11

Supreme Court, Appellate Division, Second Department, New York.

Submitted - March 8, 2018

August 22, 2018

Milber Makris Plousadis & Seiden, LLP, Woodbury, N.Y. (Joseph J. Cooke of counsel), for appellant-respondent.

Hurwitz & Fine, P.C., Buffalo, N.Y. (Andrea Schillaci of counsel), for respondent—appellant.

REINALDO E. RIVERA, J.P., SANDRA L. SGROI, COLLEEN D. DUFFY, ANGELA G. IANNACCI, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for accounting malpractice, the plaintiff appeals, and the defendant cross-appeals, from an order of the Supreme Court, Queens County (Martin E. Ritholtz, J.), dated June 15, 2016. The order, insofar as appealed from, denied the plaintiff's motion for summary judgment on the complaint. The order, insofar as cross-appealed from, denied the defendant's motion for summary judgment dismissing the complaint.

ORDERED that the order is affirmed, without costs or disbursements.

The plaintiff, a closely held corporation (hereinafter the corporation), was held by three shareholders: Christopher Horan, Nicholas Marinelli, and Frank Forte. In 2002, Forte determined that he wanted to sell his shares and, pursuant to the shareholders agreement, offered them to the corporation. The shareholders agreement called for the shares to be valued by the accountants servicing the corporation using normal and usual accounting practices. However, the corporation's accounting firm, the defendant, Gabriel & Sciacca Certified Public Accountants, LLP, advised the corporation that it lacked the specialized expertise to provide that service. The shareholders therefore agreed to a purchase price based upon an estimated range of values provided by the defendant.

In 2003, Marinelli tendered his shares to the corporation and sought a valuation as required by the shareholders agreement. The corporation offered Marinelli the same per-share price it had paid Forte, but Marinelli rejected this offer and instead demanded the formal valuation required under the shareholders agreement. When the corporation requested that the defendant provide this valuation, the defendant replied that it lacked the expertise and licensure to do so and that it would need to engage the services of a firm which specialized in the valuation of closely held corporations. The corporation followed this recommendation and a specialized firm was engaged. That firm produced the required analysis, finding that Marinelli's shares were worth $500,000. This valuation was reviewed and endorsed by the defendant, and the defendant did not perform further analysis.

By this time, the corporation and Marinelli were engaged in litigation over the sale/purchase of Marinelli's shares. The corporation presented the defendant's valuation, supported by the specialized analysis, and the valuation was accepted by the Supreme Court. On appeal, this Court held that because the corporation's regular accountants did not perform the analysis, it did not satisfy the requirements of the shareholders agreement (see Matter of Trio Asbestos Removal Corp. v. Marinelli, 37 A.D.3d 475, 477, 829 N.Y.S.2d 594 ).

The corporation again requested a valuation from the defendant. In a letter dated February 21, 2007, the defendant's principal assured the corporation that the defendant...