$________ Accounting Malpractice – Negligence of CPA firm, and its shareholder, in determining value of minority stockholder interest in construction company.

Broward County, FL

The plaintiffs, an incorporated construction company and its president, brought this professional malpractice action against the defendant, CPA firm, and one of its shareholders. The plaintiffs alleged that the defendants negligently determined the business valuation of a minority stockholder in the plaintiff corporation. The plaintiffs contended that the valuation was excessively high and caused damages to the plaintiffs. The defendants denied negligence and asserted a statute of limitations defense.

The president of the plaintiff corporation owned 75% of the shares. The corporation retained the defendant CPA firm to obtain a valuation of the remaining minority stockholder interest for the purpose of buying out those shares. They alleged that the defendants failed to perform a proper business valuation and negligently valued the minority shareholder’s interest. The plaintiffs contended that the actual present value of the shares at issue was $________, whereas the sale price was $________ (based on the defendants’ valuation).

The plaintiffs contended that too much was paid to buy out the minority interest and, as a result, the plaintiff company was unable to properly fund future work and sustained a loss of anticipated profits. The plaintiffs sought the difference between the actual value of the minority shares and the amount paid for the buyout plus the consequential damages.

The defendants argued that there was no malpractice, and that the plaintiffs knew or should have known of their alleged malpractice claim for more than two years before suit was filed and, therefore, the plaintiffs’ case was barred by the statute of limitations. The defense also contended that the plaintiffs were comparatively negligent in that the vice president (the minority shareholder) was complacent and did nothing to correct the alleged over-valuation.The jury found the defendants 85% negligent and the plaintiff corporation 15% comparatively negligent with regard to the claims made by the plaintiff corporation. As to the claims made by the individual plaintiff (corporate president), the jury found the defendant 90% negligent and the individual plaintiff 10% comparatively negligent. The plaintiffs were awarded $________ in damages, to be reduced accordingly. The case was resolved post-verdict for a confidential sum.