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Ghiz v. Schreck and Co.

Supreme Court, New York County

August 9, 2013

RONALD GHIZ, D.D.S. and R.S.G. DENTAL HEALTHCARE, P.C., Plaintiff,
v.
SCHRECK AND COMPANY, CPA'S, P.C., CAROLINA VALLARIO, ANTHONY VALLARIO and ELVIRA SCARNATI, Defendants Index No. 158805/2012

Unpublished Opinion

HON. EILEEN A. RAKOWER, J.S.C.

Presently before the Court is defendant Schreck and Company, CPA's, P.C. ("Schreck") motion for an Order, pursuant to CPLR §§3211(a)(5) and (a)(7), to dismiss Plaintiffs' Complaint, and for summary judgment pursuant to CPLR §3211(c). In support, Schreck submits the affidavit of Marc E. Schreck, President of Schreck. Plaintiffs oppose.

The Complaint alleges that for many years prior to, and after 2007, Schreck was engaged by Plaintiffs as certified public accountants and auditors. Schreck "undertook to examine, verify and advise with respect to the accounting and bookkeeping methods and records of plaintiffs in accordance with generally accepted auditing and accounting standards" and had "full and unfettered discretion to perform whatever services it deemed necessary for plaintiffs."

The Complaint alleges that "[n]o written scope of work agreement or other written contract as to Schreck's services for plaintiffs was ever created or executed by plaintiffs or Schreck" and that Schreck "verbally represented to plaintiffs that they would do everything that plaintiffs needed accounting-wise and that plaintiff just needed to trust them, to sit back and relax knowing Schreck would take care of everything."

According to the Complaint, Schreck balanced Plaintiffs' check registers, reconciled Plaintiffs' bank statements, prepared and filed Plaintiffs' tax returns, and represented Plaintiffs regarding tax issues, reviewed and filed Plaintiffs' quarterly payroll returns, drafted Plaintiffs' profit and loss statements, reviewed and verified Plaintiffs' payroll expenses, and prepared and certified the accuracy and fairness of the Plaintiffs' consolidated financial statements. Plaintiffs allege that they "wholly and completely relied upon Schreck's professional judgment, acumen and integrity in the matters Schreck undertook" and that Schreck was "fully aware.. .that plaintiffs would wholly and exclusively rely upon Schreck's services, professional acumen and experience..."

The Complaint alleges that between approximately March 2007 until August 2009, defendant Carolina Vallario ("Vallario") was employed by Plaintiffs to run their dental offices. Vallario's tasks included drafting but not signing checks, paying bills, balancing banking accounts and recording various financial transactions in Plaintiffs' books. The Complaint alleges that Vallario began misappropriating Plaintiffs' funds at some point after Plaintiffs retained Schreck as their accountant. The Complaint alleges that Vallario was convicted on June 9, 2011 of Grand Larceny of the Third Degree for the theft/embezzlement of over $400, 000 from Plaintiffs during the course of her employment.

The Complaint alleges that at some point in time Schreck employees discovered the embezzlement, "but failed to disclose the nature of said scheme to plaintiffs" and that this failure "increased the damages" that Plaintiffs suffered. The Complaint further alleges that, in connection with Schreck's alleged discovery of the embezzlement and subsequent failure to notify Plaintiffs, Schreck prepared profit and loss statements, which were "false and/or knowingly based on false information to deceive plaintiffs and hide the fact that plaintiffs' funds had been looted."

In their Complaint, Plaintiffs further allege that Schreck has "continuously represented plaintiffs regarding claims by various government bodies as to said tax penalties and liabilities up and until September 2012 as well as rendered its usual and customary services to plaintiffs and attempted to restate and correct the mistakes made during the period of defendant Schreck's malfeasance."

As against Defendant Schreck, the Complaint asserts a cause of action for accounting malpractice (first cause of action), punitive damages (second cause of action), breach of fiduciary duty (third cause of action), breach of contract (fourth cause of action), and unjust enrichment (fifth cause of action).

Defendant Schreck now moves, pursuant to CPLR §3211(a)(5) and (a)(7), to dismiss all five causes of action on the grounds that the first, third, fourth and fifth causes of action are barred by the applicable statute of limitations, and that Plaintiffs have failed to state of cause of action for the second, third, fourth, and fifth causes of action. Schreck additionally moves pursuant to CPLR §3211© to treat its motion to dismiss as a motion for summary judgment.

CPLR §3211 provides, in relevant part:

(a) a party may move for judgment dismissing one or more causes of action asserted against ...

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