Ultramares is still the law in New York: Credit Alliance Corporation v. Arthur Andersen & Co. 483 N.E. Thereafter, in 1979, as a precondition to continued financing, plaintiffs requested and received from Smith the consolidated financial statements "For The Years Ended February 28, 1979 and December 31, 1977" (the "1979 statements"). John C. Grosz, Dan L. Goldwasser, Bernard Persky and Jehv A. This case requires us to examine, once again, the tripartite standard, set forth by this Court in Credit Alliance Corp. v Arthur Andersen & Co. (65 2 536), for the functional equivalent of privity in a cause of action for negligent misrepresentation. Under common law, the CPAs who were negligent may mitigate some damages to a client by proving: Contributory negligence. 2d 138 (1983); Citizens State Bank v. … In making such a loan to a borrower that later went bankrupt, Credit Alliance had relied on financial statements prepared by Arthur Andersen … 5936, 2007 WL 4267190, at *4-*5 (S.D.N.Y. v Berman (423 F.Supp. The doctrine of privity is said to have had its source in the classic enunciation of its rationale in Winterbottom v Wright (10 M & W 109, 152 Eng Rep 402).8 In that case, decided in 1842, the Court of Exchequer held that the defendant, who had failed to keep a mail coach in repair in violation of an agreement made with the purchaser, was not liable to another who suffered injuries while riding in the coach when it collapsed as a result of latent defects. TABLE OF AUTHORITIES CASES PAGE Buy v, Arthur Young & C’o., 3 Cal. (See, Note, Auditor's Liability, 48 Alb L Rev 876, 880-885; Prosser and Keeton, Torts, at 668 [5th ed]; Bohlen, Fifty Years of Torts, 50 Harv L Rev 1225, 1232.). The holdings of the two cases differ: * In Credit Alliance, the court held that there was no privity and that Defendant could not have known that a form report, which it presented to its client would eventually be relied upon by Plaintiff. 683 F. Supp. Because EAB's complaint and affidavit posit a direct nexus between the parties, to wit: the direct communications between them concerning EAB's intended reliance upon S & K's financial evaluation of Majestic Electro, the causes of action for negligence and for gross negligence or reckless indifference are adequately alleged. (Ultramares Corp. v Touche, supra, at p 183.)9. VLEX-625122859 The "near privity" approach was established in Credit Alliance Corp. v. Arthur Andersen & Company. Two Justices dissented on the ground that the rule requiring privity has been repeatedly reaffirmed by this court and mandates dismissal of the action for negligence. CREDIT ALLIANCE CORP. V. ARTHUR ANDERSEN & CO. Accountants generally have been insulated from liability to third parties for negligent misrepresentation absent proof of con-tractual privity between the injured party and the accountant. In the appeals we decide today, application of the foregoing principles presents little difficulty. The prerequisites for the cause of action in negligence, as well as in gross negligence, are fully satisfied. Principles of Auditing The Credit Alliance Corp. case embraced the landmark Ultramares v. Touche & Co. precedent. Bank v Swartz, Bresenoff, Yavner & Jacobs (455 F.2d 847 [4th Cir]); Shatterproof Glass Corp. v James (466 S.W.2d 873 [Tex Civ App]); Ryan v Kanne (170 N.W.2d 395 [Iowa]); Rusch Factors v Levin (284 F.Supp. To the extent, however, that those cases were decided upon the ground that Ultramares should not be followed and, instead, a rule permitting recovery by any foreseeable plaintiff should be adopted,11 the law in this State, as reiterated today, is clearly distinguishable. There, it was observed, the accountant's own notes to the financial statements specifically identified plaintiff, recognizing it as a party in privy with the accountant's client, a principal creditor thereto, and responsible for the client's incorporation in the State. Credit Alliance Corp. v. Arthur Andersen & Co. Arthur Andersen prepared financial statements for L.B. (Id., at p 184.). Co., 538 S.W.2d 80 (Tex.1976); and Winograd v. Credit Alliance Corp. alleged that it relied on the audited financial statements of the borrower, who was in default, in granting the loan. MacPherson v. Buick Motor Co., 217 N.Y. 382, 390)." Citation: 122 Misc.2d 1045, 471 N.Y.S.2d 938. [2] DED's complaint named as defendants Arthur Andersen & Co. (USA), Arthur Andersen & Co. (Republic of Ireland), and Arthur Andersen & Co. (United Kingdom). Read Case 51.1, Credit Alliance Corporation v. Arthur Andersen & Co., and answer the question about the case on p. 807 in Business Law: Legal Environment, Online Commerce, Business Ethics, Read Case 51.1, Credit Alliance Corporation v. Arthur Andersen & Co., and answer the question about the case on p. 807 in Business Law: Legal Environment, Online Commerce, Business Ethics, The rule set forth in Ultramares is still the law in New York: Credit Alliance Corporation v. Arthur Andersen & Co. 483 N.E. In such circumstances, assumption of the task of weighing was the assumption of a duty to weigh carefully for the benefit of all whose conduct was to be governed. (43 NY2d, at p 363 [emphasis added].) VLEX-625122859 A brief examination of some decisions of those courts is instructive. Alabama law as to the professional liability of accountants was first set forth in Colonial Bank, supra, in which we adopted the standards set forth in Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536, 483 N.E.2d 110, 493 N.Y.S.2d 435, order amended … McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. Although accountants might be held liable in fraud to nonprivy parties who were intended to rely upon the accountants' misrepresentations, we noted that "[a] different question develops when we ask whether they owed a duty to these to make [their reports] without negligence." (Id., at p 181.) After outlining the principles articulated in Ultramares and Glanzer, this court observed that: "[T]his plaintiff seeks redress, not as a mere member of the public, but as one of a settled and particularized class among the members of which the report would be circulated for the specific purpose of fulfilling the limited partnership agreed upon arrangement." 2. There, a seller of beans employed the defendants who were engaged in business as public weighers. Smith, Inc., for the years 1977 to 1979. Robert L. King, John S. Kiernan and Charles W. Boand for appellant in the first above-entitled action. The court ruled that no action could be maintained on defendant's contract because the plaintiff was not a privy thereto. Read Case 51.1, Credit Alliance Corporation v. Arthur Andersen & Co., and answer the question about the case on p. 807 in Business Law: Legal Environment, Online Commerce, Business Ethics, and International. 441, 444-48 (1931). In Credit Alliance Corp. v. 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