NEW BRITAIN, Conn.—A Connecticut trial court judge has ruled that Whittlesey PC—the state’s largest accounting firm—must face a lawsuit brought by the former CEO of Sound Federal Credit Union, who claims he was fired for following the firm’s accounting advice regarding a $1.2 million property sale, Law360 reported.
In a ruling issued, New Britain Superior Court Judge Jason C. Welch denied Whittlesey’s attempt to dismiss Edward Fox’s negligence claim on jurisdictional grounds. Although Fox was not a direct client of the firm, the judge found he had legal standing to sue, Law360 said.
Fox sufficiently alleged that Whittlesey “had a duty specifically to the plaintiff and co-defendant, Sound Federal Credit Union, to provide sound accounting advice,” Judge Welch wrote.
"Though the plaintiff was not a client of Whittlesey, in certain instances, Connecticut courts have recognized third-party claims against accountants," the judge continued.
Judge Welch declined to dismiss the case, finding that Fox had sufficiently linked his alleged harm to Whittlesey’s duty to provide accurate accounting advice. Whittlesey had argued it owed no duty to Fox because he wasn’t a direct client and therefore lacked standing to sue, Law360 said.
In its Feb. 28 motion to dismiss, the accounting firm contended it never advised Fox directly, instead communicating with co-defendant Faith Fuller-Hayden, Sound Federal Credit Union’s CFO. Whittlesey further asserted that another co-defendant, comptroller Rosa Campo, served as an additional buffer between its guidance and Fox, Law360 said.
The firm also claimed its advice had no role in Fox’s termination. However, Judge Welch ruled that several of Whittlesey’s arguments would need to be addressed later in the proceedings, Law360 noted.
"Whether or not the particular allegations and facts articulate the duty and claim in such a manner that relief can be granted is a question for another day," he said.