Empire of America, Federal Savings Bank v. Arthur Andersen & Co.

Boomer, J. (dissenting).

Respectfully, I dissent. Plaintiff has not alleged facts sufficient to establish a relationship approaching privity. Privity is a mutual relationship; it cannot be thrust upon the party to be charged. In European Am. Bank & Trust Co. v Strauhs & Kaye (65 NY2d 536, 554), the Court of Appeals, in finding that plaintiff lender had stated a cause of action against the borrower’s accountant, relied upon plaintiff’s allegation not only "that the parties remained in direct communication, both orally and in writing,” but, most important, that defendant "made repeated representations personally to representatives of [plaintiff], on these occasions, concerning the value of Majestic Electro’s assets.” Noting that a great many States have adopted the rule requiring that the lender be known or actually foreseen by the accountant, the court wrote: "Inasmuch as this latter rule, deriving from the Restatement (Second) of Torts § 552, does not include an additional requirement for conduct on the part of the accountants linking them to the noncontractual party or parties, we decline to adopt it” (supra, at 553, n 11).

Here, as in Credit Alliance Corp. v Andersen & Co. (65 NY2d 536, 553), there are no allegations of any "prerequisite conduct” on the part of the accountant. All that is alleged is that because of "direct oral and written communication with the plaintiff”, defendant knew that plaintiff was relying upon the financial statements. All that can be inferred by this is that plaintiff, orally and in writing, informed defendant that it was relying upon the statements prepared by defendant. Lacking is any conduct by defendant linking it to plaintiff.

Accordingly, I vote to affirm. (Appeal from order of Supreme *992Court, Erie County, Sedita, J.—dismiss causes of action.) Present—Dillon, P. J., Boomer, Green, Balio and Lawton, JJ.