Seventh Circuit Rejects Bank's Efforts To Sue Accountants

Bank of America, NA v. Knight, Court of Appeals, 7th Circuit 2013 - Google Scholar:

The Seventh Circuit has affirmed the dismissal of a complaint against an accounting firm employed by Knight Industries. In Illinois, there is a statute that governs accountant liability to third parties. The Bank is considered a third party because it did not hire the accounting firm directly. Instead, Knight Industries hired the accountants. The accountants "invoked the protection of 225 ILCS 450/30.1, which provides that an accountant is liable only to its clients unless the accountant itself committed fraud (which no one alleges here) or "was aware that a primary intent of the client was for the professional services to benefit or influence the particular person bringing the action" (§450/30.1(2))." The statute does not apply to a claim by the accountant's client against the accounting firm. Thus, had the bankruptcy trustee for Knight Industries brought the claim, the claim might have been successful.


The Seventh Circuit held that the complaint did not state a claim for fraud because the allegations in the complaint were vague and imprecise. The complaint did not set out specifically which parties were responsible for the wrongful conduct. The Bank was allowed to amend the complaint twice, but the complaint did not state a claim. The Seventh Circuit noted that "in court, as in baseball, three strikes and you're out."


Edward X. Clinton, Jr.

'via Blog this'