The defendants brought a motion for summary judgment seeking dismissal of an action alleging professional negligence, breach of contract, and misrepresentation arising from accounting advice regarding a corporate “butterfly transaction.” The defendants argued that a broadly worded mutual release executed during settlement of a prior fee dispute barred the action under the doctrine of res judicata.
The court held that the release applied only to claims existing at the time of settlement and did not bar claims based on negligence that the plaintiffs discovered years later.
The court further held that the action raised multiple triable issues, including when the accountant became aware of the alleged error and whether the plaintiffs incurred significant tax exposure as a result of the advice.
Summary judgment was therefore inappropriate and the action was permitted to proceed to trial.
