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Symbol Technologies, Inc. v. Deloitte & Touche

October 27, 2009

SYMBOL TECHNOLOGIES, INC., APPELLANT,
v.
DELOITTE & TOUCHE, LLP, RESPONDENT.



APPEAL by the plaintiff, in an action, inter alia, to recover damages for accounting malpractice, from an order of the Supreme Court (Elizabeth Hazlitt Emerson, J.), dated June 16, 2008, and entered in Suffolk County, which, upon treating the defendant's motion to dismiss the complaint pursuant to CPLR 3211(a) as a motion to dismiss the amended complaint, granted that branch of the motion which was, in effect, pursuant to CPLR 3211(a)(5) to dismiss the amended complaint as time-barred and that branch of the motion which was pursuant to CLR 3211(a)(7) to dismiss the amended complaint as barred by the doctrine of in pari delicto, and upon the ground that the remaining causes of action, alleging fraud and negligent misrepresentation, were duplicative of the malpractice cause of action.

The opinion of the court was delivered by: Austin, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

REINALDO E. RIVERA, J.P., ANITA R. FLORIO, ARIEL E. BELEN and LEONARD B. AUSTIN, JJ.

(Index No. 33150/06)

OPINION & ORDER

In this action, inter alia, to recover damages for accounting malpractice, the plaintiff Symbol Technologies, Inc. (hereinafter Symbol), alleges, among other things, that the defendant, Deloitte & Touche, LLP (hereinafter Deloitte), in the annual audits it conducted for the fiscal years 1998 through 2001, failed to discover the fraud perpetrated by several members of Symbol's senior management to inflate corporate revenues and earnings. As a result of the fraud, Symbol was caused to pay out more than $100 million in unearned compensation to its senior management, to restate its financial statements for fiscal years 1998 through 2001, and to be subjected to investigations by the Securities and Exchange Commission and the Office of the United States Attorney for the Eastern District of New York.

Deloitte served and filed a pre-answer motion to dismiss the complaint. While the motion was pending, Symbol served and filed an amended complaint. By order dated June 16, 2008, the Supreme Court, treating Deloitte's motion to dismiss the complaint pursuant to CPLR 3211(a)(1) and (7) and, in effect, pursuant to CPLR 3211(a)(5), as a motion to dismiss the amended complaint, granted that branch of the motion which was, in effect, to dismiss the cause of action sounding in non-medical professional malpractice as time-barred. The Supreme Court also determined that the amended complaint was barred by the doctrine of in pari delicto and that the remaining causes of action, alleging fraud and negligent misrepresentation, were duplicative of the malpractice cause of action, warranting their dismissal. We modify.

CPLR 3211(a) Dismissal Standards

To obtain a dismissal pursuant to CPLR 3211(a)(1), the defendant must establish that the documentary evidence which forms the basis of the defense be such that it resolves all factual issues as a matter of law and conclusively disposes of the plaintiff's claim (see Leon v Martinez, 84 NY2d 83; see also Sheridan v Town of Orangetown, 21 AD3d 365).

CPLR 3211(a)(7) permits the court to dismiss a complaint that fails to state a cause of action. The complaint must be liberally construed and the plaintiff given the benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83; Aberbach v Biomedical Tissue Serv., Ltd., 48 AD3d 716; Mitchell v TAM Equities, Inc., 27 AD3d 703). The court must also accept as true all of the facts alleged in the complaint and any factual submissions made in opposition to the motion (see 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409; Alsol Enters., Ltd. v Premier Lincoln-Mercury, Inc., 11 AD3d 493). If the court can determine that the plaintiff is entitled to relief on any view of the facts stated, its inquiry is complete and the complaint must be declared legally sufficient (see Campaign for Fiscal Equity v State of New York, 86 NY2d 307, 318; see also Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409; Stucklen v Kabro Assoc., 18 AD3d 461). While factual allegations contained in the complaint are deemed true, bare legal conclusions and facts flatly contradicted on the record are not entitled to a presumption of truth (see Lutz v Caracappa, 35 AD3d 673, 674l; Matter of Loukoumi, Inc., 285 AD2d 595).

Finally, CPLR 3211(a)(5) permits the defendant to seek and obtain a dismissal of one or more causes of action asserted against it on the ground that the cause of action is barred by the statute of limitations.

Statute of Limitations

Here, the relevant statute of limitations is CPLR 214(6), which provides that an action for non-medical professional malpractice must be commenced within three years of the date of accrual. This three-year statute of limitations applies to all non-medical professional malpractice claims "regardless of whether the underlying theory is based in contract or tort" (CPLR 214[6]; see Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d 538, 541-542; Harris v Kahn, Hoffman, Nonenmacher & Hochman, LLP, 59 AD3d 390, 391; RGH Liquidating Trust v Deloitte & Touche LLP, 47 AD3d 516, 517). Contrary to Symbol's contentions, the breach of contract cause of action alleging, inter alia, that Deloitte violated its agreement with Symbol to provide audit services for the fiscal years 1998 ...


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