Oasis Sportswear, Inc. v Rego

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Oasis Sportswear, Inc. v Rego 2012 NY Slip Op 30218(U) January 24, 2012 Sup Ct, NY County Docket Number: 591092/07 Judge: Joan M. Kenney Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. ANNED ON 113112012 [* 1] SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY I Index Number : 115500/2007 OASIS SPORTSWEAR INC vs. REGO, PATRICIA SEQUENCE NUMBER : 014 MOTION 8EQ. NO. o/ 4 SUMMARY JUDGMENT Tho following papom, numbrrod I to Notice of Motlon/Ordsr to Show Caurs AnlWsdngAmdavlta- Exhibitm >o , ,were read on thl6 motion t o m i % Mfuk J & -AffldavlG - Exhibita l- h YMcl 4 . 4- fldLL4M& M r t m M0hrri.l .A U i r .$- M c -/z (No(m). I INo(r). U Replying Affldavlk i ( -LW7 1 . 5 - 2 y Iw4.- 2 1 &I Upon the foregolng papem, It Is ordered that thlr motlon Is FILED JAN 30 2012 u1 i NEW YORK COUNTY CLERKS OFFICE e n I! ~, MOTION IS DECIDED IN ACCORDANCE I Ii eB 8: ;/ U/Z I Da I . CHECK ONE: ..................................................................... 2. CHECK AS APPROPRIATE: 9. CHECK IF APPROPRIATE: ........................... MOTION IS: ................................................ J.S.C. AN M. KENNEY @ , 0 CASE DISPOSED GRANTED 0SETTLE ORDER DO NOT POST DENIED J.S.C. NON-FINAL DlSPOSlllON 0GRANTED IN PART PE nSUBMlTOR 0FIDUCIARY APPOINTMENT R 0REFERENCF [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 8 OASIS SPORTSWEAR, INC., DECISION & ORDER Index No.: 115500/07 Plaintiff, -againstPATRICIA REGO, PATRICIA REGO CONSULTING, INC. and PAT REGO, I N C . , Defendants. -X - - - - - - r - - - f l - l - - - - l - ~ - - - - - - - - - - - - - - - - PATRICIA REGO and PATRICIA REGO CONSULTING, INC., Third-party Plaintiffs, TP Index No.: 591092/07 -againstJOSEPH TRACHTMAN, CBIZ MAHONEY COHEN, INC., Formerly known as Mahoney Cohen & Company, and GREGG SPIEGEL, Third-party Defendants. JAN 30 2012 -X _ _ _ _ _ _ _ _ _ - - - - - - - - - - - _ _ _ _ _ _ I I _ _ _ _ _ _ _ _ _ JOAN M. KENKEY, J.: Third-party defendants C B I Z Mahoney Cohen, Inc. and Gregg Siegel (Siegel)(together,third-party defendants) move, purauant to CPLR 3212, complaint as for summary asserted judgment agaimt dismissing them. the third-party Defendants/third-party plaintiffs Patricia Rego Consulting (Consulting), Patricia Rego (Rego) and Pat Rego, Inc. (Pat Rego) (collectively, defendants) cross-move, pursuant to CPLR 3124, 3101 and 3120, to compel thirdparty defendants to produce additional tax documents. FACTUAL BACKQROUND This is the 14thmotion, plus associated cross motions, filed in this action and the underlying facts have been previously discussed in the court's prior decisions; therefore, the underlying [* 3] facts will not be reiterated herein. Third-party defendants were engaged as the accountants for plaintiff, whose services included the review of plaintiff s financial statements, the preparation of corporate tax returns, and the preparation of the individual tax returns for plaintiff s principal. Motion, Ex. I. Defendants never engaged third-party defendants in any capacity. According to the third-party complaint, At various times and numerous times, from 2000 through 2007, Trachtman paid the following personal expenses from Oasis funds: mortgage payments on his Connecticut home, real property tax payments for his Connecticut home, rent owed on his New York City apartment, jet aki insurance payments, life insurance payments, monies owed by Trachtman as and for his personal income taxes, various payments in substantial amounts for the care and treatment of animals, and various payments for a private birthday party. Third-party Complaint, 7 37. According to third-party defendants, these payments were usually made by check prepared by plaintiff s internal bookkeeper and signed by plaintiff s principal, and the payments were entered into plaintiff s records by that bookkeeper. Third-party defendants maintain that it calculated plaintiff s yearly profits from the trial balances provided by the company from its records. The third-party complaint alleges two causes of action as against third-party defendants: (1) negligence in that third-party defendants were negligent in the preparation of plaintiff s profit and loss statements, according to acceptable accounting standards 2 [* 4] in the community (id. 1 51); and (2) breach of contract in that third-party defendants breached their contract with plaintiff in preparing these financial records, which significantly reduced plaintiff s profit by deducting the above-referenced items from plaintiff s income, and that defendants beneficiaries of that agreement who were were third-party injured thereby by receiving a smaller profit share. In her examination before trial (EBT), Rego testified that she was aware of the alleged payment of personal expenses by plaintiff for its principal (Trachtman) since, at least, 2006. Rego EBT, at Rego a knowledge of these items of personal expense in 147, 149. 2006 was confirmed by the testimony of Spiegel. 50, Spiegel EBT, at 53-54. Third-party defendants contend that the third-party complaint asserted as against them should be dismissed, based upon the claim that the action is time-barred and because defendants fail to evidence that third-party defendants purported negligence proximately caused defendants any damage. In opposition, defendants assert that their negligence claim is one for negligent misrepresentation, not professional malpractice, and, therefore, is governed by a six-year statute of limitations. Defendants do n o t challenge that more than three years elapsed from the time that they last received any financial documents from third-party defendants until the institution of the 3 [* 5] present lawsuit. In reply, third-party defendants maintain that the cauEleB af action appearing in the third-party complaint all involve professional malpractice and that defendants are seeking to avoid dismissal on statute of limitation grounds by attempting to couch the claims as ones for negligence and breach of contract. Thirdparty defendants argue that the court should look at the essence of the claim and not the label that defendants attempt to attach to it. In addition, third-party defendants point out that defendants do not dispute that they were aware of the items of account about which they now complain, and even assert, in defendants' opposition memo, that Rego was so suspicious that she relayed thoae suspicions to third-party defendants. Opp. at 14. Hence, state third-party defendants, since defendants admit that they were in possession of facts indicating an alleged misrepresentation, they cannot now claim negligent misrepresentation by third-party defendants. Lastly, third-party defendants object to defendants' request to have the court compel them to produce the tax recorda for plaintiff and plaintiff's principal, since, if relevant, thoae records could be demanded of those parties directly. DISCUSSION "The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, 4 [* 6] tendering sufficient evidence to eliminate any material issues of fact from omitted] .'I the case [internal quotation markg and citation Santiago v F i l s t e i n , 35 AD3d 184, 185-186 (' 1 ' Dept evidentiary facts in admissible form sufficient to raise a genuine, AD3d 227, 228 (lE' Dept 2006) ; see Zuckeman v C i t y of New York, 49 Third-party defendants' motion is granted and the third-party complaint is dismissed as to C B I Z Mahoney Cohen, Inc. and Siegel. malpractice must be commenced within three years of the date of malpractice is committed, not when it is discovered. Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 7 - 8 (2007). The court is unpersuaded by defendants' argument that their rather than for professional malpractice. '[Wlhere the underlying complaint is one which essentially claims that there was a failure to utilize reasonable care or where the acts of omiasion or negligence are alleged or claimed, the statute of limitations shall be three yeare if the case comes within the purview of CPLR Section 214 ( 6 ) , regardless of whether the theory is based in tort or in a breach of contract [internal quotation marks and 5 [* 7] citation omitted] . Matter o f R.M. Kliment I ' & Frances Halsband, Architects (McKinsey & eo., Inc.), 3 NY3d 5 3 8 , 541-542 ( 2 0 0 4 ) ; Harris v Kahn, H o f f m a n , Nonenmacher & Hochman, LLP, 59 AD3d 390 (2d Dept 2 0 0 9 ) . Accounting malpractice iB defined as an accountant failing to perform accounting services with due care and in accordance with recognized and accepted accounting practices. A c k e r m a n v Price Waterhouse, 84 NY2d 535 (1994); Herbert H. Post B i t t e r m a n , I n c . , 219 AD2d 214 (lar Dept & Co. v Sidney 1996). This definition of accounting malpractice is almost identical to the allegations appearing in paragraph 51 of the third-party complaint. Defendants cannot now attempt to avoid the atatute of limitations by arguing that they actually meant negligent misrepresentation. See Rosenbach v D i v e r s i f i e d Group, Inc. , 12 Misc 3d 1 1 5 2 ( A ) , 2006 NY Slip Op 503856 (U) (Sup Ct, NY County 2006). Additionally, defendants have not challenged the argument that a cause of action asserted by them for professional malpractice would be time-barred. Further, the court finds that defendants' claim for breach of contract is duplicative of their negligence (malpractice) claim and is properly dismissed. Moskowitz, E d e l m a n & Ulico C a s u a l t y Co. v Wilson, E l s e r , Dicker, 5 6 AD3d 1 ( l a Dept 2008). t As a consequence of the foregoing, third-party defendants CBIZ Mahoney Cohen, 1 n c . I ~ and Gregg Siegel's motion for summary 6 [* 8] judgment dismissing the third-party action asserted a6 against them is granted, and defendants' cross motion ia denied as moot, since C B I Z Mahoney Cohen, I n c . and Siege1 are no longer parties to this calendar, Dated: January 24, 2012 n Joan M , Kenney, J . S .C . 7 JAN 30 2012

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