Because it believed that the financial information it was given was "false and misleading," Signature Bank sued the accounting firm that generated the reports. (Apparently, a $10 million credit line was extended to a client based on those financials. And, of course, that debtor eventually ended up defaulting on the loan and filing bankruptcy.)
After the Nassau County Supreme Court denied the accountants' request to have the case thrown out, an appeal soon followed. And the Appellate Division, Second Department, thought that in order for liability to attach, the relationship between the accounting firm and the bank needed to be more direct.
Since it wasn't clear that the accountants knew that Signature was relying on the reports, the AD2 concluded that the governing legal elements for a "negligent misrepresentation" claim hadn't been met and that the dispute needed to be dismissed.
Did that add up?
To view a copy of the Appellate Division's decision, please use this link: Signature Bank v. Holtz Rubenstein Reminick, LLP