Suit Alleging Mismanagement of Actor's Business by CohnReznick Properly Dismissed

[caption id="attachment_10538" align="alignnone" width="620"]

Accounting[/caption] A lawsuit brought against an accounting firm for allegedly mismanaging a well-known actor’s business was properly dismissed because the claims lacked specificity, even with the benefit of tens of thousands of documents handed over in discovery, an appeals court has ruled. But it appears there could be another take, so to speak. The second amended complaint, filed by the estate of the late actor Edward Herrmann and by his wife, Star Herrmann, was “not sufficient to apprise defendants of the ‘transactions, occurrences, or series of transactions and occurrences’ at issue, particularly in light of the 73,000 pages of pre-complaint discovery that plaintiffs received and their admission that they now have all of the relevant tax returns in their possession,” wrote a unanimous Appellate Division, First Department, panel, quoting CPLR 3013. The panel’s opinion in Herrmann v. CohnReznick, 653786/2014, affirmed the October 2016 decision of Manhattan Supreme Court Justice Charles Ramos, who had dismissed the suit with prejudice in regard to a claim brought on behalf of the Herrmanns' daughter, and dismissed the complaint without prejudice in regard to other claims. Herrmann, an actor noted for playing Franklin D. Roosevelt, narrating History Channel programs, and portraying Richard Gilmore in the “Gilmore Girls,” and his wife engaged an accounting firm to provide them and their company, Baloo Enterprises Ltd., with bookkeeping and related business management services, the panel wrote. Edward Herrmann had formed the company to lease out actor services, among other things, the panel said. The suit claimed defendant Frederic Kantor and Company P.C., a predecessor of current defendant and professional services firm CohnReznick LLP, had mismanaged their business from 2005 through 2014 by, among other things, failing to pay expenses in a timely manner; negligently preparing tax returns such that the Herrmanns failed to take the proper deductions and owed substantial back taxes, interest and penalties; and making poor investments that left them without money to pay for their daughter’s college tuition, the panel wrote. In the second amended complaint, the plaintiffs lodged claims for professional malpractice; professional negligence; breach of fiduciary duty; accounting, and breach of contract for excessive fees. In upholding Ramos’ decision to dismiss the complaint, the panel wrote that documents submitted by plaintiffs failed to specify the tax years and specific tax returns that were allegedly prepared improperly, and the specific deductions that weren’t taken. In addition, the plaintiffs did not identify the credit cards or accounts at issue, what the balances were, how many months the balances remained unpaid, or the amounts of penalties and interest that plaintiffs incurred, the panel said. Moreover, allegations supporting the breach of contract claim were insufficient because they failed to set forth the fees that were charged and when, which fees were excessive, and what the amounts should have been, according to the panel, which consisted of Justices Peter Tom, Dianne Renwick, Angela Mazzarelli, Jeffrey Oing and Anil Singh. The panel, in its Nov. 2 decision, noted that Ramos had dismissed nearly all of the claims without prejudice. Consequently, the Herrmanns and other plaintiffs will have the chance to replead those claims a third time. The original complaint was lodged in 2014. Timothy Kebbe of the White Plains-based Law Offices of Timothy Kebbe represented the plaintiffs. He didn't return a call seeking comment. Casey Laffey, a Manhattan-based partner at Reed Smith, counsel to defendants, said in a statement: “The Defendants have stated throughout this proceeding that the claims filed by Mr. and Mrs. Herrmann lack merit and would be dismissed by the Trial Court. The Appellate Division has confirmed that the Trial Court’s dismissal of the claims was proper, and the Defendants hope that this decision will mark the final conclusion of this dispute.”