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Comparative Fault in Audit Malpractice Cases
Like other tort actions, audit malpractice cases often involve assigning fault between the client-plaintiff and auditor-defendant. But assigning fault in these cases presents unique problems arising out of the collaborative nature of the audit process, where the client has a duty to provide accurate financial statements and the auditor has a duty to offer an opinion on the client’s financial statements, and the enhanced duty a professional CPA owes to the public.
Though the Tennessee Supreme Court decided McIntyre v. Ballentine more than 20 years ago, Tennessee courts have not addressed how fault in the audit malpractice case should be assigned under comparative fault. The trend in Tennessee is to limit the auditor’s use of the client’s negligence, just as Tennessee courts limit the use of the patient’s negligence in the medical malpractice action. Under limited comparative fault, the auditor does not enjoy the full use of the client’s negligence which caused the client’s injury. Rather, the trier of fact allocates fault to the client only to the extent the client’s negligence prevented the auditor from performing his professional duty.
To understand this trend, this article discusses (1) the development of traditional and limited contributory negligence in audit malpractice cases, (2) how comparative fault jurisdictions allocate fault between the negligent auditor and client, (3) Tennessee’s pre-McIntyre uniform application of traditional contributory negligence in professional malpractice cases, and (4) Tennessee’s move toward limited comparative fault in medical malpractice actions.
A.The Auditor and Client Both Have Responsibilities in the Audit Process
The auditor’s job is to express an opinion on whether the client’s financial statements fairly represent the client’s financial position. The auditor has a duty to plan and perform the audit so he can obtain reasonable assurance and express an opinion that the client’s financial statements are free of material misstatement due to error or fraud.
Because the auditor’s knowledge of the client’s financial condition is limited to what he acquires through the audit, the client has a duty to prepare its financial statements to accurately reflect its operations. The client’s duty includes complying with generally accepted accounting principles, maintaining internal controls that support assertions in the financial statements, and conducting its business activities in a reasonable and prudent manner.
Audit malpractice claims generally arise out of false or inaccurate information contained in the audited financial statements. The client asserts it was damaged because it detrimentally relied on the false or inaccurate information, or an employee’s defalcation was not discovered resulting in further harm to the client. The auditor invariably argues the client’s injury was caused by its own negligence in failing to provide accurate financial records, failing to discover its own employee’s misconduct, or its own negligent business practices.
B. Traditional Contributory Negligence and the Audit Interference Doctrine
Prior to comparative fault, courts applied either traditional contributory negligence principles or limited contributory negligence under the “audit interference” doctrine. These approaches originated from a pair of New York cases: Craig v. Anyon, applying traditional contributory negligence, and National Surety Corp. v. Lybrand, adopting the audit interference doctrine.
In Craig, a stock brokerage firm sued its auditor claiming the auditor failed to discover and report the malfeasance of the firm’s employee in charge of commodities resulting in a loss of almost $1.3 million. The auditor argued the firm was negligent and caused its own injury by failing to properly supervise the employee, failing to learn the true condition of its own business, and failing to detect the employees’ wrongdoing. The court agreed. Without weighing the relative fault of the auditor and the client, the court dismissed the firm’s case under traditional contributory negligence. The court reasoned that a “[p]laintiff should not be allowed to recover for losses which [it] could have avoided by the exercise of reasonable care.”
Fourteen years after the Craig decision, the National Surety carved out the client-friendly audit interference doctrine which limits the auditor’s ability to rely on the client’s negligence. In that case, the surety sued the assured’s auditors asserting the auditor failed to discover an employee’s nine-year embezzlement scheme. The surety argued that had the auditor discovered the embezzlement, the assured could have terminated the employee and reduced its losses.
Like the auditor in Craig, the auditor in National Surety argued the assured knew or should have known of the employee’s misconduct and the surety’s claim should be dismissed under traditional contributory negligence principles. Rather than dismiss the claim, however, National Surety held the client’s contributory negligence is a complete defense only when it contributes to the auditor’s failure to perform his duty. The court reasoned:
Accountants, as we know are commonly employed for the very purpose of detecting defalcations which the employer’s negligence has made possible. Accordingly, we see no reason to hold that the accountant is not liable to his employer in such cases. Negligence of the employer is a defense only when it has contributed to the accountant’s failure to perform his contract and report the truth.
By way of illustration, the National Surety court explained its holding:
If it were found that the members of the firm … had been negligent in connection with the transfer of funds which occurred at or about the time of each audit and that such negligence contributed to the defendants’ false reports, it would be a defense to the action, for it could then be said that the defendants’ failure to perform their contracts was attributable, in part, at least, to the negligent conduct of the firm.
National Surety did not abandon Craig’s application of traditional contributory negligence, but distinguished its holding based on the employees’ position within each company. In National Surety, the employee was merely a cashier, but in Craig the employee was the head of a department and “negligently represented to the accountants as a person to be trusted.” Over the years, this distinction has faded and courts view Craig and National Surety as alternative applications of contributory negligence in audit malpractice cases.[21, 22]
C. Traditional and Limited Comparative Fault in Audit Malpractice Actions
Like contributory fault jurisdictions, jurisdictions applying comparative fault in audit malpractice actions differ on allowing the unrestricted use of the client’s negligence, or limiting use of the client’s negligence under the audit interference doctrine. This issue remains unresolved in Tennessee.
Comparative fault jurisdictions that reject the audit interference doctrine reason the exception was necessary only to mitigate the harsh consequences of contributory negligence; when the client’s negligence, no matter how slight, bars an action for audit malpractice. Because comparative fault reduces the client’s recovery without barring its claim, the relief provided by the audit interference doctrine is unnecessary. As the court in Capital Mortg. Corp. v. Coopers & Lybrand explained, under comparative fault, the result is not so harsh and the policy considerations that accountants should not be allowed to avoid all liability due to some negligence on the part of the client are not present. We find the application of comparative negligence to be proper as neither party is absolved of fault due to the other’s negligence. Comparative negligence creates an incentive for both parties to use due care.
On the other hand, comparative fault jurisdictions that have adopted the audit interference doctrine reason the exception is consistent with general tort principles applicable to service providers. As explained by the 10th Circuit Court of Appeals, applying Utah law in Fullmer v. Wohlfeiler & Beck,
We agree with the view of the National Surety … that accountants are not to be rendered immune from the consequences of their own negligence merely because those who employ them may have conducted their own business negligently. Allowing such a defense would render illusory the notion that an accountant is liable for the negligent performance of his duties.
For these courts, the audit interference doctrine embodies the principle that a professional holding himself out to serve clients or patients is liable for his negligent performance of duties undertaken and may not be relieved of such liability by his clients’ or patients’ actions in causing or getting involved in the very conditions which the professional was employed and undertook to treat or remedy. Otherwise the professional would not be held responsible for performing the very duties he assumed.
This principle also has been applied in medical malpractice actions and legal malpractice actions.
The adoption of the audit interference doctrine may be influenced, in part, by whether the jurisdiction applies pure comparative fault or modified comparative fault. Modified comparative fault has been criticized as merely raising the bar for the all-or-nothing result of contributory negligence. Hence, under modified comparative fault, a client’s claim will be completely barred if its own negligence (1) exceeds the auditor’s negligence (“50 percent” jurisdictions) or (2) is equal to the auditor’s negligence (“49 percent” jurisdictions). The audit interference doctrine can serve to ameliorate the harsh result of modified comparative fault by limiting the auditor’s use of the client’s negligence, as in Oklahoma, a 50-percent jurisdiction, and Utah, a 49-percent jurisdiction.
D. Tennessee’s Adoption of Craig’s Traditional Contributory Negligence
Tennessee has not addressed how comparative fault should be applied in an audit malpractice case. Rather, the last reported Tennessee decision addressing the client’s negligence in an audit malpractice case pre-dates McIntyre by 20 years and adopted traditional contributory negligence principles.
In Delmar Vineyard v. Timmons, the client alleged that as a result of the auditor’s negligence, including understating accounts payable and overstating the cost value of inventory, the client continued to operate with the same management and policies to its detriment. The auditor asserted any damage suffered by the client was the result of its own negligence including its choice of management, supervision of the business, untimely and wasteful liquidation of inventory, and failure to advise the auditors of all accounts payable and the true value of inventory.
Delmar held that although the auditor was negligent, the client’s own negligence caused its injuries barring it from recovery under contributory negligence. In reaching its decision, the Delmar Court discussed the alternative applications of contributory negligence under Craig and National Surety and explicitly adopted Craig’s traditional contributory negligence.
The Tennessee Court of Appeals affirmed Delmar in an unreported decision less than one year after Tennessee adopted modified comparative fault under McIntyre. In McCaslin v. Wood, the client alleged its auditor failed to discover a long-time trusted employee embezzled almost $250,000 over a six-year period. At trial, the auditor introduced evidence of the client’s absentee management and sexual misconduct as grounds for contributory negligence.
Without addressing comparative fault under McIntyre, McCaslin affirmed Delmar’s adoption of traditional contributory negligence under Craig. McCaslin’s holding was influenced not only by the Delmar precedent, but by a desire for the uniform application of contributory negligence in professional malpractice cases, including medical, legal, and accounting malpractice. McCaslin reasoned:
The National Surety court fashioned a type of contributory negligence that limits the use of contributory negligence as a defense in accountant malpractice cases. That court set forth a rule under which contributory negligence constitutes an affirmative defense for accountants only if the client’s negligence contributed to the accountant’s failure to perform his contract and to accurately report his findings. Conversely, these same New York courts, and as far as we can determine, most other jurisdictions (including Tennessee) that follow National Surety, allow the unrestricted contributory negligence defense in malpractice actions brought against other professionals, such as doctors and lawyers.
As we have already noted, the Eastern Section of this Court in Delmar Vineyard, rejected the restricted contributory negligence concept of National Surety and instead adopted the standard definition of contributory negligence that allows accountants, as well as doctors and lawyers, the unrestricted use of the defense in malpractice cases. The trial court was correct in following the holding in Delmar Vineyard.
E. Tennessee’s Limited Comparative Fault in Medical Malpractice Actions
The desire for a uniform application of contributory negligence in professional malpractice cases led McCaslin to affirm Delmar and traditional contributory negligence in audit malpractice cases. After Tennessee adopted comparative fault, doctors continued to enjoy the unrestricted use of the patient’s negligence in the comparative fault analysis. In Mercer v. Vanderbilt Univ. Inc., however, the Tennessee Supreme Court abandoned that rule, and doctors can no longer rely on the patient’s negligence, which necessitated medical treatment.
In Mercer, the patient was seriously injured in a single-vehicle accident. When he arrived at Vanderbilt’s trauma center, he had a blood alcohol level of 0.13, percent which extrapolated to approximately 0.20 percent at the time of the accident. While undergoing a CT scan, Vanderbilt nursing staff connected the plaintiff to a portable ventilator, but failed to record the ventilator’s settings, alarm parameters and oxygen levels. As a result, the patient suffered cardiac arrest. Though successfully resuscitated, the patient sustained severe and permanent brain damage.
At trial, Vanderbilt admitted the nurse’s conduct violated the applicable standard of care, but asserted the violation did not cause the patient’s brain injury. Rather, Vanderbilt argued the patient suffered a catastrophic event, such as a seizure or a malignant heart arrhythmia, caused by his alcohol withdrawal.
The jury returned a verdict for the patient, but apportioned 70 percent of the fault to Vanderbilt and 30 percent to the plaintiff under Tennessee’s modified comparative fault rule. The trial court granted the patient’s Rule 50.02 motion finding Vanderbilt was 100 percent at fault.
On appeal, the Mercer Court adopted a limited comparative fault analysis that prohibited Vanderbilt from relying on the patient’s conduct requiring medical care. The court reasoned that
‘[p]atients who may have negligently injured themselves are nevertheless entitled to subsequent non-negligent medical treatment and to an undiminished recovery if such subsequent non-negligent treatment is not afforded.’
[The patient’s] negligence merely provided the occasion for the medical care, attention, and treatment that gave rise to this medical malpractice action. We therefore hold that the principles of comparative fault do not apply so as to allow fault to be assessed to [the patient]. We recognize that [the patient’s] medical treatment was complicated by his alcohol withdrawal and that evidence concerning his alcohol consumption was clearly relevant to his treatment and to Vanderbilt’s theory of causation. We hold, however, that [the plaintiff’s] antecedent negligence should not have been considered by the jury in assessing fault.
Mercer further explained,
it would be anomalous to posit, on the one hand, that a health care provider is required to meet a uniform standard of care in its delivery of medical services to all patients, but permit, on the other hand, the conclusion that, where a breach of that duty is established, no liability may exist if the patient’s own preinjury conduct caused the illness or injury which necessitated the medical care.
After Mercer, doctors may not rely on the patient’s antecedent negligence to shield them from liability in a medical malpractice case. As Mercer observed, this holding is consistent with Restatement (Third) of Torts: Apportionment of Liability § 7 cmt. m (2000) (“Comment m”). Comment m limits a defendant’s use of a plaintiff’s negligence in professional malpractice cases involving personal injury, such as medical malpractice. Mercer stated,
[T]he Restatement of Torts reiterates this view. According to the Restatement, “in a case involving negligent rendition of a service, including medical services, a factfinder does not consider any plaintiff’s conduct that created the condition the service was employed to remedy.” Restatement (Third) of Torts: Apportionment of Liability § 7 cmt. m (2000). The reporter’s note to this comment explains that it would be unfair to allow a defendant doctor to complain about the patient’s negligence because this negligence caused the very condition the doctor undertook to treat. Restatement (Third) of Torts: Apportionment of Liability § 7 reporter’s note to cmt. m (2000).
F. Tennessee’s Trend Toward Limited Comparative Fault in Audit Malpractice
How Tennessee courts will apply comparative fault in audit malpractice actions remains to be seen. As McCaslin shows, Tennessee courts prefer a uniform approach to assigning fault in professional malpractice claims. When McCaslin was decided, the patient/client’s negligent conduct, which the professional was employed to remedy, barred a claim for malpractice under contributory negligence. The unrestricted use of the patient’s negligence in medical malpractice actions continued after McIntyre until Mercer.
In Mercer, the Tennessee Supreme Court retreated from the rule allocating fault to the patient under comparative fault for the very conduct necessitating medical treatment. If the courts are to maintain a uniform approach to allocating fault in professional malpractice actions, they will likely adopt limited comparative fault, or the audit interference doctrine, in audit malpractice actions.
Expanding Mercer’s reasoning to audit malpractice actions is not without precedent. The medical malpractice analogy has been employed by other comparative fault jurisdictions adopting the audit interference doctrine. The court in Stroud v. Arthur Andersen & Co. observed:
Andersen sought to have the trial court instruct the jury that it could excuse its own conduct as an auditor if the plaintiff’s conduct [i.e., negligently keeping the books which Andersen was auditing] caused injury to itself. This is akin to the doctor attempting to excuse the negligent provision of medical services in the emergency room to the accident victim by asserting that it was the plaintiff’s own negligence that caused the accident in the first place. Andersen was engaged to audit the plaintiffs’ books to find the mistakes and errors in the same.
Drawing on the same analogy, the court in Bd. of Tr. of Comty. Coll. Dist. No. 508 v. Coopers & Lybrand adopted the audit interference doctrine in the comparative fault analysis. That court reasoned, “[J]ust as the patient’s poor dental hygiene could not be asserted as a defense to the negligent infliction of a surgical injury, a client’s poor business practices cannot be asserted as a defense to the auditor’s negligent failure to discover and report the client’s noncompliance with investment policy and legal requirements.”
Like Mercer, Community College noted its holding was consistent with Comment m and “consonant with the general tort principles applicable to actions against service providers ….” Indeed, the Reporter’s Note to Comment m draws the same analogy between the medical malpractice and audit malpractice actions:
The consequences of the plaintiff’s negligence are sometimes the very conditions a doctor or other service provider agrees to treat… . This problem can also arise with respect to other services, such as when … a client negligently causes a financial problem it takes to an accountant.
Because of the relative responsibilities in the audit process, audit malpractice actions will almost always require the trier of fact to assign fault between the client and auditor. Though Tennessee courts have not addressed how comparative fault will be applied in audit malpractice actions, the Tennessee Supreme Court in Mercer limited a medical provider’s use of the patient’s antecedent negligence in medical malpractice actions. To maintain a consistent approach to assigning fault in professional malpractice actions, Tennessee courts should adopt limited comparative fault, or the audit malpractice doctrine, in the audit malpractice action. As a result, fault will be allocated to the client only to the extent the client’s negligence prevented the auditor from performing his professional duty.
- See generally Codification of Accounting Standards and Procedures, Statement of Auditing Standards No.1 § 110 (Am. Inst. Of Certified Pub. Accountants 1972) (discussing the role of the client and auditor in the audit process).
- See Stroud v. Arthur Andersen & Co., 37 P.3d 783, 789 (Ok. 2001) (“A certified public accountant … owes a different duty of care to his/her client when rendering professional services than the duty of ordinary care which members of society owe to each other. … The Court is mindful of the enhanced obligations and responsibilities owed to the public by a person who dons the mantle of a professional.”).
- McIntyre v. Ballentine, 833 S.W.2d 52 (Tenn. 1992). On April 29, 2013, Governor Haslam signed into law Tenn. Code Ann. § 29-11-107. Effective July 1, 2013, this new law codifies the abolishment of joint and several liability in cases governed by comparative fault, except in civil conspiracy and among manufacturers in a product liability action based upon a theory of strict liability or breach of warranty.
- This article does not address the equitable defense of in pari delicto. In pari delicto applies in cases involving criminal conduct, not mere negligence. Ameriwood Indus. Intern. Corp. v. Arthur Anderson & Co., 961 F.Supp. 1078, 1085 (W.D. Mich. 1997). “The equitable defense of in pari delicto, which literally means ‘in equal fault,’ is rooted in the common-law notion that a plaintiff’s recovery may be barred by his own wrongful conduct.” Pinter v. Dahl, 486 U.S. 622, 632 (1988). In pari delicto is generally “limited to situations where the plaintiff bore ‘at least substantially equal responsibility for his injury  and where the parties’ culpability arose out of the same illegal act.’” Id. “In order to assert the defense it must be shown that the fault of the parties is ‘clearly mutual, simultaneous, and relatively equal’ and that the plaintiff was an active, essential, and knowing participant in the unlawful activity.” Palmer v. Thomson & McKinnon Auchincloss Inc., 474 F.Supp. 286, 289-90 (D.C. Conn. 1979).
Comparative fault does not do away with defenses based on intentional conduct, such as in pari delicto. Kirschner v. KPMG LLP, 938 N.E.2d 941, 957 (N.Y. 2010). “The doctrine of in pari delicto bars a party that has been injured as a result of its own intentional wrongdoing from recovering for those injuries from another party whose equal or lesser fault contributed to the loss.” Rosenbach v. Diversified Group Inc., 85 A.D.3d 569, 570 (N.Y. 2011).
- See Codification of Accounting Standards and Procedures, Statement of Auditing Standards No.1 § 110.01 (Am. Inst. Of Certified Pub. Accountants 1972); Stroud, 37 P.3d at 789; Kemin Indust. Inc. v. KPMG Peat Marwick LLP, 578 N.W.2d 212, 217 (Iowa 1998).
- Codification of Accounting Standards and Procedures, Statement of Auditing Standards No.1 § 110.02 (Am. Inst. Of Certified Pub. Accountants 1997); and Codification of Accounting Standards and Procedures, Statement of Auditing Standards No.1 § 110.03 (Am. Inst. Of Certified Pub. Accountants 2002).
- SAS 110.03.
- Halla Nursery Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 909 (Minn. 1990) (“By the same token, the persons who hire accountants, usually businesspersons, should also be required to conduct their business activities in a reasonable and prudent manner.”).
- Russell L. Wald, Annotation, Accountant’s Malpractice Liability to Client, 92 A.L.R.3d 396 (2013).
- See Children’s Wish Foundation Int’l Inc. v. Mayer Hoffman McCann PC, 331 S.W.3d 648 (Mo. 2011) (Charitable organization sued its auditor for failing to discover its financial statements overstated gifts-in-kind by $1.31 million. The auditor argued the charitable organization failed to provide accurate records because of its method for calculating the quantity of each gift-in-kind.).
- See Bd. Of Tr. Of Comty. Coll. Dist. No. 508, Cty. Of Cook v. Coopers & Lybrand, 803 N.E.2d 460 (Ill. 2003) (College sued its auditor for failing to discover and report improper investments that violated investment policies. The college claimed that because the malfeasance of its investor was not reported, the college was prevented from taking steps to avoid a $50 million decline in its investment portfolio. The auditor asserted the college was negligent because it had extensive oversight of the inappropriate investments and it knew of the investor’s possible violations of investment policies.).
See also Halla Nursery, 454 N.W.2d 905 (Minn. 1990) (Nursery accused its auditor of failing to discover and report that one of its employees embezzled $135,000 from the company. The auditor claimed the nursery’s failure to establish internal financial controls to protect the company from embezzlement allowed the employee to commit the theft.).
- See Stroud v. Arthur Anderson & Co., 37 P.3d 783 (Ok. 2001) (Crop insurer sued its auditor for failing to detect liabilities in excess of $3 million and failing to advise the insurer of material weaknesses in its internal-accounting mechanisms. The auditor asserted the crop insurer’s own bad management decisions and flawed internal accounting practices resulted in its inability to sustain economic viability.).
See also Delmar Vineyard v. Timmons, 486 S.W.2d 914 (Tenn. App. 1972) (Retail store accused its auditors of overstating its inventory cost value. As a result, the store continued to operate with the same management and policies which eventually led to its closure. The auditor argued the store’s own choice of management, supervision of its business, untimely and wasteful liquidation of inventory, and its failure to advise the auditors of all accounts payable and the true value of its inventory caused the store’s failure.).
- Craig v. Anyon, 212 A.D. 55 (N.Y.A.D. 1925).
- Nat’l Surety Corp. v. Lybrand, 256 A.D. 226 (N.Y.A.D. 1939).
- See Halla Nursery, 454 N.W.2d at 907 (Minn. 1990) (“Craig and National Surety were the seminal cases in the developing discussion, by the courts and commentators, of the question of contributory negligence as an affirmative defense to an accountant malpractice action.”).
- Id. at 66. Maryland still applies traditional contributory negligence in audit malpractice actions. See Wegad v. Howard Street Jewelers Inc., 605 A.2d 123 (Md. 1992); and Stratton v. Sacks, 99 B.R. 686 (D. Md. 1989).
- National Surety, 256 A.D. at 236.
- The Tennessee Court of Appeals observed in McCaslin v. Wood, 1993 WL 8015 (Tenn. App. Jan. 19, 1993) that Craig applied the standard definition of contributory negligence, which allows the unrestricted use of the client’s negligence. But, “[t]he National Surety court fashioned a type of contributory negligence that limits the use of contributory negligence … contributory negligence constitutes an affirmative defense for accountants only if the client’s negligence contributed to the accountant’s failure to perform his contract and to accurately report his findings.” Id.at *7.
- The client-friendly audit interference doctrine is applied in other contributory negligence jurisdictions including Kansas (see Comeau v. Rupp, 810 F.Supp. 1172, 1182-83 (D. Kan. 1999)); and Pennsylvania (see Jewelcor Jewelers & Distribs. Inc. v. Corr, 542 A.2d 72 (Pa. Super. 1988). Prior to adopting comparative fault, Texas also applied the audit interference doctrine. (See Greenstein, Logan & Co. v. Burgess Mktg. Inc., 744 S.W.2d 170, 190 (Tex. App. 1987) (applying the audit interference doctrine); and Richardson v. Chesheir & Fuller LLP, 2008 WL 5122122, at *2 (E.D. Tex. Dec. 3, 2008) (abandoning the audit interference doctrine as obsolete under comparative fault)).
- See Fullmer v. Wohlfeiler & Beck, 905 F.2d 1394, 1398 (10th Cir. 1990) (“Of course, there is a fundamental difference between the contributory negligence and comparative negligence doctrines, with the latter avoiding harshness of the absolute bar of contributory negligence.)
- Capital Mortg. Corp. v. Coopers & Lybrand, 369 N.W.2d 922, 925 (Mich. App. 1985).
- Id. at 925. Other jurisdictions that have rejected the audit interference doctrine and allow auditors the unrestricted use of the client’s negligence include Indiana (see Paul Harris Stores Inc. v. PricewaterhouseCoopers LLP, 2006 WL 2859425, at *7 (S.D. Ind. Oct. 4, 2006)); Arizona (see Standard Chartered PLC v. Price Waterhouse, 945 P.2d 317, 352 (Ariz. Ct. App. 1996)); Ohio (see Scioto Mem’l Hosp. Ass’n v. Price Waterhouse, 659 N.E.2d 1268, 1272 (Ohio 1996)); Arkansas (see Resolution Trust Corp. v. Deloitte & Touche, 818 F.Supp. 1406, 1408 (D. Colo. 1993); FDIC v. Deloitte & Touche, 834 F.Supp. 1129, 1145-46 (E.D. Ark. 1992)); Louisiana (see Nat’l Credit Union Admin. Bd. v. Aho, Henshue & Hall, 1991 WL 174671 (E.D. La. Aug. 30, 1991)); Florida (see Devco Premium Fin. Co. v. N. River Ins. Co., 450 So.2d 1216, 1220 (Fla. Dist. App. 1984)); Michigan (see Capital Mortg. Corp. v. Coopers & Lybrand, 369 N.W.2d 922, 925 (Mich. App. 1985)); Colorado (see Resolution Trust Corp. v. Deloitte & Touche, 818 F.Supp. 1406, 1408 (D. Colo. 1993)); and Minnesota (see Halla Nursery Inc. v. Baumann-Furrie & Co., 454 N.W.2d 905, 909 (Minn. 1990)).
- See Bd. Of Tr. Of Comty. Coll. Dist. No. 508 v. Coopers & Lybrand, 803 N.E.2d at 467 (Ill. 2003).
- Fullmer, 905 F.2d 1394 (10th Cir. 1990).
- Id. at 1398 (quoting Lincoln Grain Inc. v. Coopers & Lybrand, 345 N.W.2d 300, 307 (Neb. 1984)). The Fullmer Court goes on to explain that while Lincoln Grain talks about contributory negligence, its adoption of the audit interference doctrine was in the context of a challenge to a comparative fault jury instruction. Fullmer, 905 F.2d at 1398.
- Steiner Corp. v. Johnson & Higgins of California, 135 F.3d 684, 688 (10th Cir. 1998).
- See Mercer v. Vanderbilt Univ. Inc., 134 S.W.3d 121, 129-30 (Tenn. 2004); Jensen v. Archbishop Bergan Mercy Hospital, 459 N.W.2d 178, 184 (Neb. 1990); Cheek v. Domingo, 628 F.Supp. 149, 151-52 (DVI 1986); Ostrowski v. Azzara, 545 A.2d 148, 155-56 (N.J. 1988); and Sendejar v. Alice Physicians & Surgeons Hospital, 555 S.W.2d 879, 885 (Tex.Civ.App. 1977).
- See Conklin v. Hannoch Weisman, 678 A.2d 1060, 1068-69 (N.J. 1996); McLister v. Epstein & Lawrence PC, 934 P.2d 844, 846 (Colo.App. 1996); and Theobald v. Byers, 13 Cal. Rptr. 864, 866 (Cal.App. 1961).
- See McIntyre v. Ballentine, 833 S.W.2d 52, 57 (Tenn. 1992) (“We recognize that modified comparative fault systems have been criticized as merely shifting the arbitrary contributory negligence bar to a new ground.”) See also Li v. Yellow Cab Co., 532 P.2d 1226, 1242 (Cal. 1975) (“In our view, the ’50 percent’ system simply shifts the lottery aspect of the contributory negligence rule to a different ground”).
- The court in McIntyre explained:
Two basic forms of comparative fault are utilized … , these variants being commonly referred to as either “pure” or “modified.” In the “pure” form, a plaintiff’s damages are reduced in proportion to the percentage negligence attributed to him; for example, a plaintiff responsible for 90 percent of the negligence that caused his injuries nevertheless may recover 10 percent of his damages. In the “modified” form, plaintiffs recover as in pure jurisdictions, but only if the plaintiff’s negligence either (1) does not exceed (“50 percent” jurisdictions) or (2) is less than (“49 percent” jurisdictions) the defendant’s negligence.
833 S.W.2d at 57.
- See Stroud v. Arthur Andersen, 37 P.3d 783, 790 (Ok. 2001).
- See Okla. Stat. Ann. Tit. 23, § 13.
- Fullmer v. Wohlfeiler & Beck, 905 F.2d 1394, 1399 (10th Cir. 1990); Steiner Corp. v. Johnson & Higgins of California, 135 F.3d 684, 689 (10th Cir. 1998).
- See U.C.A. §§ 78B-5-818.
- 486 S.W.2d 914 (Tenn. Ct. App. 1972).
- Id. at 915-16.
- Id. at 919 and 921.
- Id. at 920.
- McCaslin v. Wood, 1993 WL 8015 (Tenn. App. Jan. 19, 1993).
- Id. at *3.
- Id. at *7.
- See Gray v. Ford Motor Co., 914 S.W.2d 464 (Tenn. 1996); and Volz v. Ledes, 895 S.W.2d 677 (Tenn. 1995).
- Mercer v. Vanderbilt Univ. Inc., 134 S.W.3d 121 (Tenn. 2004).
- Id. at 125-26.
- Id. at 126.
- Id. at 126-27. In addition to finding Vanderbilt was 100 percent at fault, the trial court found the patient’s injury was a separate and distinct injury under the indivisible/separate injury analysis applied to medical malpractice actions under Gray, 914 S.W.2d 464. The indivisible/separate injury analysis was abandoned by Mercer.
- Mercer, 134 S.W.3d at 130. The Mercer Court also abandoned the indivisible/separate injury analysis.
- Id. at 129-30 (quoting Harvey ex rel. Harvey v. Mid-Coast Hosp., 36 F.Supp.2d 32, 38 (D. Me. 1999)).
- Id. at 129.
- Stroud v. Arthur Anderson & Co., 37 P.3d 783 (Ok. 2001).
- Id. at 789.
- Bd. Of Tr. Of Comty. Coll. Dist. No. 508 v. Coopers & Lybrand, 803 N.E.2d 460 (Ill. 2003).
- Id. at 467-68.
- Id. at 467.
- Restatement (Third) of Torts: Apportionment of Liability § 7, Reporters note to cmt. m (2000).
JOHN PAUL NEFFLEN is an associate in Burr & Forman LLP’s Nashville office where he practices in the area of commercial litigation. He earned his law degree from the University of Tennessee.