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Unformatted text preview: Page 1 3 Cal. 4th 370, *; 834 P.2d 745, **; 11 Cal. Rptr. 2d 51, ***; 1992 Cal. LEXIS 3971 1 of 1 DOCUMENT ROBERT R. BILY, Plaintiff and Respondent, v. ARTHUR YOUNG & COMPANY, Defendant and Appellant. J. F. SHEA CO., INC., et al., Plaintiffs and Appellants, v. ARTHUR YOUNG & COMPANY, Defendant and Appellant. No. S017199 SUPREME COURT OF CALIFORNIA 3 Cal. 4th 370 ; 834 P.2d 745; 11 Cal. Rptr. 2d 51; 1992 Cal. LEXIS 3971; 48 A.L.R.5th 835; Fed. Sec. L. Rep. (CCH) P96,978; 92 Cal. Daily Op. Service 7371; 92 Daily Journal DAR 11971 August 27, 1992, Decided SUBSEQUENT HISTORY: As Modified November 12, 1992. PRIOR HISTORY: Superior Court of Santa Clara County, No. 536562, Eugene M. Premo, Judge. DISPOSITION: For the reasons stated above, the judgment of the Court of Appeal is reversed and this case is re- manded with instructions to: (1) direct judgment in favor of defendant Arthur Young and against plaintiff Bily; and (2) decide the cross-appeal of the Shea plaintiffs and then to direct judgment or further proceedings as appropriate, consist- ent with our opinion. CASE SUMMARY: PROCEDURAL POSTURE: Defendant accounting firm challenged a decision of the Court of Appeal (California), which affirmed the trial court's judgment of professional negligence against defendant in action brought by plaintiffs, an individual investor, a corporate investor, and associated individuals. OVERVIEW: Plaintiffs, an individual investor, a corporate investor, and associated individuals, invested in a computer company that went bankrupt. Plaintiffs brought an action against defendant accounting firm, alleging intentional fraud and negligent misrepresentation. Plaintiffs contended that their investments were made in reliance on defendant's un- qualified audit opinion on the company's financial statements. A jury found for plaintiffs on the professional negligence ground only. Defendants appealed, and the corporate investor cross-appealed on its misrepresentation claim, alleging that the trial court improperly instructed the jury. The appellate court, however, affirmed the trial court's judgment in fa- vor of plaintiffs. The court reversed the appellate court's judgment, holding that because plaintiffs were not clients of defendants, they were not entitled to recover on a general negligence theory. The court remanded the case to the appel- late court with instructions to enter judgment in favor of defendant against plaintiff individual investor, and to decide the corporate investor's cross-appeal and enter judgment or to conduct further proceedings consistent with the court's opinion. OUTCOME: The court reversed and remanded the judgment in favor of plaintiffs, an individual investor, a corporate investor, and associated individuals. Because plaintiffs were not defendant accounting firm's clients, they were not en- titled to recover on a general negligence theory. The appellate court was instructed to enter judgment in favor of defend- ant against plaintiff individual investor, and to decide plaintiff corporate investor's cross-appeal.ant against plaintiff individual investor, and to decide plaintiff corporate investor's cross-appeal....
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