Gordon Rees Scully Mansukhani Denver partners Franz Hardy, Greg Hearing, and associate Stephanie Brizel recently obtained a defense verdict after an eight-day jury trial in Denver District Court. The trial involved allegations of professional negligence against an accountant and accounting firm. The plaintiffs, a business owner and his closely held business, sought $2 million in damages.
The dispute arose out of an underlying lawsuit wherein the plaintiff’s business partners accused him of breach of fiduciary duty and civil theft based upon his alleged mismanagement of the business over the course of more than a decade. In defense of those claims, plaintiffs retained the accountant as an expert witness. However, during the underlying trial, the court prevented the accountant from testifying based upon its misimpression that she had improperly changed the accounting records of the business. Although this was inaccurate, the court excluded her testimony. The plaintiffs thereafter lost the underlying trial, which was affirmed on appeal in a published opinion.
The plaintiffs then filed a lawsuit against the accountant and her firm alleging that, if she would have testified, they would have succeeded in the underlying trial. They claimed that her improper changes to the accounting records not only led to her exclusion, but also left the underlying jury and judge with the impression that they could not rely upon the accuracy of the plaintiffs’ accounting records.
In defense, the Gordon & Rees team essentially retried the underlying case, which contained various evidence that the plaintiffs had mismanaged the business over many years and this resulted in the underlying jury’s verdict. Also, the accountant’s correspondence, reports, and notes during the underlying case established that she had a limited role and was not to address all issues raised by the plaintiffs’ business partners in stark contrast to the plaintiffs’ current contentions that she was the key expert witness. As to her exclusion during the original trial, Gordon & Rees established that the plaintiffs’ trial counsel failed to take a myriad of steps to prevent her disqualification. The evidence showed the accountant made no improper changes to the accounting records.
The jury returned a verdict in favor of the accountant and her firm. Accordingly, the Denver District Court entered judgment. After trial, the Gordon & Rees team secured a recovery of costs from the plaintiffs and the case was dismissed.