NYCAL CORPORATION V. KPMG PEAT MARWICK LLP
688 N.E. 2d 1368 (1998)
NATURE OF THE CASE: This was a suit for negligent misrepresentation. Nycal (P) challenged
a decision, which granted summary judgment in favor of KPMG (D), accountants, in P's action
for alleged material misrepresentations of the financial condition of a company in which P
had a stock purchase agreement.
FACTS: P was interested in taking a position in Gulf. Gulf provided P with a copy of its
1990 annual report that was prepared by D. Gulf was a public company. P relied on D's report
of the financial condition of Gulf and as such then entered into a stock purchase agreement
with the controlling shareholders of Gulf. The sale was completed and less than two years
later Gulf declared bankruptcy rendering P's investment worthless. D first learned of the
P-Gulf transaction a few days prior to the July 12, 1991 closing. Until that time, D had no
knowledge of what had been agreed upon or even contemplated. P sued D seeking damages and
costs incurred as a result of its alleged reliance on D's audit report. P claimed that the
report materially misrepresented the financial condition of Gulf. The trial judge applied
the liability standard under 552 Restatement of Torts and granted summary judgment to D. P
appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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