Author archive: proliability13

In Pari Delicto (“In Equal Fault”), or Not? Accounting Firm’s Assertion of Client’s Wrongdoing Not a Defense to Malpractice Claim

An accounting firm does auditing work for a public company. The sole shareholder and president of the public company commits fraud, but the accounting firm allegedly should have caught it. Nicholson v. Shapiro & Associates, LLC Can the accounting firm successfully assert the in pari delicto (“in equal fault”) defense, which blocks a wrongdoer-plaintiff from…

Advertisement of Services Is Not “Rendering” of Services, Says the Illinois Appellate Court

What does it mean to “render” services if (1) you are an insurance agent or brokerage conducting your day-to-day business operations; and (2) you have purchased a professional liability policy to cover errors or omissions you make (or are accused of making) in your business? According to the Illinois Appellate Court in Margulis v. BCS…

Piercing the Corporate Veil in Illinois: For the First Time, the Jury Can Decide

Companies, professional corporations, and insurance carriers doing business in Illinois need to know about a trailblazing new case likely to impact their defense against veil-piercing claims. Traditionally, the question of whether a corporate veil can be pierced to reach the shareholders or owners behind a corporate entity has been for the trial court to determine….

Insurer May Be Liable to Policyholder for Agent’s Failure to Explain Coinsurance Provision Reducing Coverage to Less Than Amount Requested

Insurance agents are wise to mention and explain policy provisions that may cause a reduction in coverage below what the customer wants to have. And in Florida and other states that attribute an insurance agent’s negligence to the insurance company (enabling a direct action against the company), insurers are wise to devise processes that ensure…

A Clean Break Nixed: Virginia’s Continuous Representation Rule Resurrects Legal Malpractice Claim Against Attorney

Attorneys who have withdrawn from representing a client, either at the client’s request or for other reasons, may experience a lingering fear of later being the subject of a legal malpractice claim In some states like Virginia, such a fear may be heightened if the “continuous representation rule” is found to apply. The recent case…

When Things Go South: A Corporate Director’s or Officer’s Personal Liability to Third Parties for Corporate Misdeeds

Generally, corporate officers and directors do not have a special relationship of trust (i.e., a fiduciary relationship) with third persons or creditors transacting business with the corporation. Moreover, unless they sign in an individual capacity, corporate officers and directors who negotiate and execute a contract on behalf of the corporation are not personally accountable on…

Corporate Directors Beware: A Shareholder Direct or Derivative Suit Might Be Around the Corner

Every corporate director needs to be aware of the potential for a shareholder derivative lawsuit or a shareholder direct lawsuit. In Missouri, a derivative action is a suit by the corporation conducted by shareholders as the corporation’s representatives. Nickell v. Shanahan, 439 S.W.3d 223, 227 (Mo. banc 2014). Derivative actions are aimed at rectifying injuries…

Despite Agreement, Staffing Agency’s Nurse Was Hospital’s Employee

Firms, hospitals, and professional companies across the country have insurance policies in place to protect them when their professionals are accused of malpractice. But who qualifies as “their” professionals? In Interstate Fire & Casualty Company v. Dimensions Assurance Ltd., 843 F.3d 133 (4th Cir. 2016), the Fourth Circuit was tasked with determining whether a nurse…

Auditing Statements: The Critical Distinction Between Fact and Opinion

Often times, there is a very fine and sometimes even blurred line between fact and opinion. As the Second Circuit recently indicated in the case of In re Puda Coal Securities Inc., an accountant’s potential liability for its audit statements can largely come down to the fact that such statements … are nothing more than…

Corporate Boards Need to Think About Cybersecurity

It seems like we can’t go a week without hearing about a cybersecurity breach at a major US corporation. Corporate boards need to be aware that improper oversight of cybersecurity issues could lead to a shareholder derivative lawsuit. One such example from within the last couple of years is Palkon v. Holmes, 2014 WL 5341880,…

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