Opinion
01-05-2017
GSP FINANCE LLC, Plaintiff–Appellant, v. KPMG LLP, Defendant–Respondent.
Constantine Cannon LLP, New York (Jean Kim of counsel), for appellant. Wilkie Farr & Gallagher LLP, New York (Michael R. Young of counsel), for respondent.
Constantine Cannon LLP, New York (Jean Kim of counsel), for appellant.
Wilkie Farr & Gallagher LLP, New York (Michael R. Young of counsel), for respondent.
Judgment, Supreme Court, New York County (Saliann Scarpulla, J., and a jury), entered November 13, 2015, in defendant's favor, unanimously affirmed, with costs.
The court (Barbara R. Kapnick, J.) correctly granted defendant's motion to dismiss the negligent misrepresentation claim, because, even if plaintiff was a "known party" to defendant (Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536, 551, 493 N.Y.S.2d 435, 483 N.E.2d 110 [1985] ), the complaint contained no allegation of conduct on defendant's part linking it to plaintiff (see id.; see also Securities Inv. Protection Corp. v. BDO Seidman, 95 N.Y.2d 702, 711–712, 723 N.Y.S.2d 750, 746 N.E.2d 1042 [2001] ).
The court (Saliann Scarpulla, J.) providently exercised its discretion in denying plaintiff's motion for leave to file an amended complaint, since the amended negligent misrepresentation claim still failed to allege linking conduct. To the extent Health Acquisition Corp. v. Program Risk Mgt., Inc., 105 A.D.3d 1001, 964 N.Y.S.2d 554 (2d Dept.2013) found that the defendants' knowledge of the plaintiffs' needs constituted linking conduct, it is contrary to this Court's decision in LaSalle Natl. Bank v. Ernst & Young, 285 A.D.2d 101, 107, 729 N.Y.S.2d 671 (1st Dept.2001). We note that Health Acquisition Corp. relied on White v. Guarente, 43 N.Y.2d 356, 401 N.Y.S.2d 474, 372 N.E.2d 315 (1977) (see 105 A.D.3d at 1004, 964 N.Y.S.2d 554 ), which was "supersed[ed]" by Credit Alliance (Parrott v. Coopers & Lybrand, 263 A.D.2d 316, 324, 702 N.Y.S.2d 40 [1st Dept.2000], affd. 95 N.Y.2d 479, 718 N.Y.S.2d 709, 741 N.E.2d 506 [2000] ). The fact that defendant's Debt Compliance Letters, which were addressed to Hicks Sports Group LLC, were intended for the use of plaintiff (among others) does not constitute linking conduct (see e.g. CRT Invs., Ltd. v. BDO Seidman, LLP, 85 A.D.3d 470, 472, 925 N.Y.S.2d 439 [1st Dept. 2011]. Rodin Props.-Shore Mall v. Ullman, 264 A.D.2d 367, 694 N.Y.S.2d 374 [1st Dept.1999] ), which plaintiff cites in reply, dealt with whether tort claims were duplicative of contract claims (see id. at 368, 694 N.Y.S.2d 374 ). It did not specifically discuss the Credit Alliance test, let alone linking conduct.
The trial court's exclusion of defendant's audit manual from evidence does not warrant reversal and a new trial. Although the manual was relevant (see Sabratek Liquidating LLC v. KPMG LLP, 2003 WL 22715820, *6, 2003 U.S. Dist. LEXIS 20687, *16–17 [N.D.Ill., Nov. 18, 2003, No. 01 C 9582] ), the court had the discretion to exclude it if its probative value was outweighed by the prospect of juror confusion (see People v. Primo, 96 N.Y.2d 351, 355, 728 N.Y.S.2d 735, 753 N.E.2d 164 [2001] ). The court could have admitted the manual with a limiting instruction (see Hyde v. County of Rensselaer, 51 N.Y.2d 927, 929, 434 N.Y.S.2d 984, 415 N.E.2d 972 [1980] ), but it was not obliged to do so (see generally People v. Genao, 184 A.D.2d 285, 584 N.Y.S.2d 314 [1st Dept.1992], lv. denied 80 N.Y.2d 903, 588 N.Y.S.2d 829, 602 N.E.2d 237 [1992] ). In light of the facts that the "going concern" issue to which the manual related was only part of plaintiff's fraud claim and that plaintiff was able to introduce testimony about defendant's audit program, which also dealt with the going concern issue, there was not such prejudice as to call for reversal (see Hyde, 51 N.Y.2d at 929, 434 N.Y.S.2d 984, 415 N.E.2d 972 ).
ACOSTA, J.P., MAZZARELLI, ANDRIAS, FEINMAN, WEBBER, JJ., concur.