Claims Against Accounting Firm Survive Dismissal

Claims Against Accounting Firm Survive Dismissal


The North Carolina Court of Appeals recently reversed a trial court’s dismissal of claims against an accounting firm (Commscope Credit Union v. Butler & Burke, LLP).  The plaintiff, a credit union, was assessed a significant penalty by the IRS based on the failure by the credit union’s general manager to file necessary tax forms for years.  The credit union sued its accounting firm, claiming that the auditors breached their duties in failing to discover the problem earlier.

Describing the auditing services at issue as “technical” and the accountants who performed them as “specially trained professionals,” the Court of Appeals found that the accountants could be sued for breach of fiduciary duty, as well as breach of contract, negligence and professional malpractice.  The accounting firm also argued that the credit union’s claims should be barred because of the failure by its own employee to file the forms in the first place, but the Court of Appeals held that defense should not keep the case from proceeding toward a trial.  The Court also found the disclaimers of liability in the accounting firm’s engagement letter to be ambiguous, “if not conflicting,” and therefore not a bar to the credit union’s claims.

At Parry & Tyndall, we have significant experience representing individuals and small businesses in all types of commercial litigation, including claims for breach of contract, breach of fiduciary duty and professional malpractice by accountants and other consultants and advisors.  If you or your business have questions about these types of claims, or if you need representation in connection with a potential dispute, please give us a call at 919.967.0504 to set up a free initial consultation.