ROMINGER LEGAL
Fifth Circuit Court of Appeals Opinions - 5th Circuit
Need Legal Help?
LEGAL RESEARCH CENTER
LEGAL HEADLINES - CASE LAW - LEGAL FORMS
NOT FINDING WHAT YOU NEED? -CLICK HERE
This opinion or court case is from the Fifth Circuit Court or Appeals. Search our site for more cases - CLICK HERE

LEGAL RESEARCH
COURT REPORTERS
PRIVATE INVESTIGATORS
PROCESS SERVERS
DOCUMENT RETRIEVERS
EXPERT WITNESSES

 

Find a Private Investigator

Find an Expert Witness

Find a Process Server

Case Law - save on Lexis / WestLaw.

 
Web Rominger Legal

Legal News - Legal Headlines

 

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED OCTOBER 21, 2004
October 18, 2004
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT
Clerk
__________________________
No. 03-11234
__________________________

COMPASS BANK,
Plaintiff - Appellant,
versus

KING, GRIFFIN & ADAMSON P.C.;
LAWRENCE D. KING,
Defendants - Appellees,
___________________________________________________
Appeal from the United States District Court
For the Northen District of Texas
(No. 3-01-CV-2028-N)
___________________________________________________
Before DeMOSS, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:
Compass Bank appeals the dismissal of its complaint against King, Griffin & Adamson, P.C.
and Lawrence King. It also moves this Court to certify the following question to the Texas Supreme
Court: whether Texas uses an actual knowledge test or a foreseeability requirement for negligent
misrepresentation claims against accountants. Compare RESTATEMENT (SECOND) OF TORTS § 522
(1977) (requiring actual knowledge), with Blue Bell v. Peat, Marwick, Mitchell & Co., 715 S.W.2d

408 (Tex. App.--Dallas 1986, writ ref'd n.r.e.) (requiring foreseeability). While certifying the
question would be "determinative" in the sense that it would resolve the case, "we do not use
certification as a panacea for resolution of those complex or difficult state law questions which have
not been answered by the highest court of the state." Patterson v. Mobil Oil Corp., 335 F.3d 476,
487 (5th Cir. 2003) (quoting Free v. Abbott Labs, Inc., 164 F.3d 270, 274 (5th Cir. 1999)). In light
of the recent decision in Tara Capital Partners I, L.P. v. Deloitte & Touche, L.L.P., No. 05-03-
00746-CV, 2004 WL 1119947 (Tex. App.--Dallas May 20, 2004), and the cogent and sound
arguments of the district court, Compass Bank v. King Griffin & Adamson P.C., 2003 WL 22077721,
at *2­4 (N.D. Tex. 2003), we are persuaded that the Restatement's actual knowledge standard
applies to accountants in Texas. As a consequence, we deny the motion for certification.1
For those same reasons, the decision of the district court is AFFIRMED.
1 The dissent argues that this question should be certified to the Supreme Court because
there is not "sufficient controlling guidance from the Texas Supreme Court in McCamish." __
F.3d __ (5th Cir. 2004) (DeMoss, J., dissenting). However, the Texas Supreme Court has
adopted the Restatement for torts of negligent misrepresentation in toto. See Fed. Land Bank
Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). If that court had fashioned
exceptions to the Restatement for different professions, we might be persuaded that there is an
open question in this case. It has not done so. Without a clear line of Texas appellate court
holdings to the contrary, there is no reason to think that the Texas Supreme Court would deviate
from its well-established rule and therefore no reason to certify the question to that court.

DeMOSS, Circuit Judge, dissenting:
I respectfully dissent from the denial of Compass Bank's
motion to certify the question of whether Texas uses an actual
knowledge test or a foreseeability test for negligent
misrepresentation claims against accountants. The Texas Supreme
Court in McCamish, Martin, Brown & Loeffler v. F.E. Appling
Interests, 991 S.W.2d 787 (Tex. 1999), held that attorneys could be
subject to a negligent misrepresentation claim under Section 552 of
the Restatement (Second) of Torts with no requirement of privity.
Id. at 795. The court stated that "a section 552 cause of action
is available only when information is transferred by an attorney to
a known party for a known purpose." Id. at 794. Thus, the court
applied the actual knowledge test to attorney negligent
misrepresentation cases.
The main case which Compass Bank relies on for its assertion
that foreseeability is the proper standard to use for accountant
negligent misrepresentation cases, Blue Bell v. Peat, Marwick,
Mitchell & Co., 715 S.W.2d 408, 412 (Tex. App.­Dallas 1986, writ
ref'd n.r.e.), strongly approved of a limited foreseeability test
for accountants:
To allow liability to turn on the fortuitous occurrence
that the accountant's client specifically mentions a
person or class of persons who are to receive the
reports, when the accountant may have that same knowledge

as a matter of business practice, is too tenuous a
distinction for us to adopt as a rule of law. Instead,
we hold that if . . . an accountant preparing audited
financial statements knows or should know that such
statements will be relied upon by a limited class of
persons, the accountant may be liable for injuries to
members of that class relying on his certification of the
audited reports.
Id. at 412. This Court has also previously acknowledged that Blue
Bell's holding indicates that "Texas law is indeed less restrictive
than the Restatement." Scottish Heritable Trust, PLC v. Peat
Marwick Main & Co., 81 F.3d 606, 614 (5th Cir. 1996) (noting
"actual knowledge of a particular plaintiff . . . is not necessary
if the defendant [accountant] should have had this knowledge"). 2
However, as sure as the majority feels the Texas Supreme Court
would apply the more restrictive actual knowledge standard to
accountants, I note that at least one federal district court has
gone the other way. In re Enron Corp. Sec., Derivative & ERISA
Litig., 284 F. Supp. 2d 511, 646 (S.D. Tex. 2003) ("Texas courts
2I acknowledge that in an unpublished opinion, the same appeals court that decided Blue
Bell has now cited McCamish and applied an actual knowledge standard in the context of a
negligent misrepresentation claim against accountants. Tara Capital Partners I, L.P. v. Deloitte
& Touche, L.L.P., No. 05-03-00746-CV, 2004 WL 1119947, at *2-3 (Tex. App.­Dallas May
20, 2004) (unpublished). I think Tara Capital is a very weak reed for the majority to rely upon.
4

have expanded the parameters of the tort of negligent
misrepresentation in § 552 to include not only those that the
defendant actually knows will receive the misrepresentation, but to
those the accountant should know will receive it.") (citing Blue
Bell, 715 S.W.2d at 411-13).
Because this Court has the sound discretion to certify
questions, Patterson v. Mobil Oil Corp., 335 F.3d 476, 487 (5th
Cir. 2003), and in my judgment there is not sufficient controlling
guidance from the Texas Supreme Court in McCamish, I would certify
this question. In my view, certifying the question to a state
supreme court is a preferable course of action to our trying to
make an Erie guess as to the question of state law involved.
5

Ask a Lawyer

 

 

FREE CASE REVIEW BY A LOCAL LAWYER!
|
|
\/

Personal Injury Law
Accidents
Dog Bite
Legal Malpractice
Medical Malpractice
Other Professional Malpractice
Libel & Slander
Product Liability
Slip & Fall
Torts
Workplace Injury
Wrongful Death
Auto Accidents
Motorcycle Accidents
Bankruptcy
Chapter 7
Chapter 11
Business/Corporate Law
Business Formation
Business Planning
Franchising
Tax Planning
Traffic/Transportation Law
Moving Violations
Routine Infractions
Lemon Law
Manufacturer Defects
Securities Law
Securities Litigation
Shareholder Disputes
Insider Trading
Foreign Investment
Wills & Estates

Wills

Trusts
Estate Planning
Family Law
Adoption
Child Abuse
Child Custody
Child Support
Divorce - Contested
Divorce - Uncontested
Juvenile Criminal Law
Premarital Agreements
Spousal Support
Labor/Employment Law
Wrongful Termination
Sexual Harassment
Age Discrimination
Workers Compensation
Real Estate/Property Law
Condemnation / Eminent Domain
Broker Litigation
Title Litigation
Landlord/Tenant
Buying/Selling/Leasing
Foreclosures
Residential Real Estate Litigation
Commercial Real Estate Litigation
Construction Litigation
Banking/Finance Law
Debtor/Creditor
Consumer Protection
Venture Capital
Constitutional Law
Discrimination
Police Misconduct
Sexual Harassment
Privacy Rights
Criminal Law
DUI / DWI / DOI
Assault & Battery
White Collar Crimes
Sex Crimes
Homocide Defense
Civil Law
Insurance Bad Faith
Civil Rights
Contracts
Estate Planning, Wills & Trusts
Litigation/Trials
Social Security
Worker's Compensation
Probate, Will & Trusts
Intellectual Property
Patents
Trademarks
Copyrights
Tax Law
IRS Disputes
Filing/Compliance
Tax Planning
Tax Power of Attorney
Health Care Law
Disability
Elder Law
Government/Specialty Law
Immigration
Education
Trade Law
Agricultural/Environmental
IRS Issues

 


Google
Search Rominger Legal


 


LEGAL HELP FORUM - Potential Client ? Post your question.
LEGAL HELP FORUM - Attorney? Answer Questions, Maybe get hired!

NOW - CASE LAW - All 50 States - Federal Courts - Try it for FREE


 


Get Legal News
Enter your Email


Preview

We now have full text legal news
drawn from all the major sources!!

ADD A SEARCH ENGINE TO YOUR PAGE!!!

TELL A FRIEND ABOUT ROMINGER LEGAL

Ask Your Legal Question Now.

Pennsylvania Lawyer Help Board

Find An Attorney

TERMS OF USE - DISCLAIMER - LINKING POLICIES

Created and Developed by
Rominger Legal
Copyright 1997 - 2010.

A Division of
ROMINGER, INC.