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Accountant Liability Ruling-No Justifiable Reliance A Michigan Court of Appeals ruling has been issued that is likely to have a significant impact on the liability of accountants and other professionals facing misrepresentation claims. In Fejedelem v Richard Dimmer d/b/a R.D. Dimmer & Assoc, 269 Mich App 499 (2006), lv den 475 Mich 872 (2006), the court ruled on what is “justifiable reliance” in a claim of negligent misrepresentation against an accountant. In affirming summary disposition for the accountant, the court held that while reliance on unaudited financial statements alone did not automatically render the reliance unjustified, when it was combined with other evidence such as knowledge by the claimant that the statements were unaudited and just estimates, and that the claimant was advised by his own consultant that more information was needed, the reliance was, unjustified as a matter of law, supporting summary disposition. For accountants, this ruling will set a clear standard for reliance that can be used to obtain summary dismissal of claims. The ruling may also be beneficial to other professionals who are sued for misrepresentation to third parties, such as lawyers, real estate and insurance agents and brokers in arguing that reliance questions can be summarily dismissed. As this ruling has been published, it will be binding on all Michigan trial courts and other Court of Appeals panels, unless overturned by the Michigan Supreme Court. If you have any questions about this decision
or other professional liability issues, please do not hesitate
to call or email Randall E. Phillips at (248) 642-0444; rphillips@p-ppc.com |
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