write out the FACTS/ISSUE/RULING and REASONINGof the case

Page of 2 ZOOM + GAS First Florida Bank v. Max Mitchell and Company Supreme Court of Florida 558 So.2d 9 (1990)laintiff First Florida Bank sued defendant accounting In the more than fifty years which have elapsed sina firm Max Mitchell for preparing inaccurate financial Ultramares, the question of an accountant's liability fo statements that plaintiff had relied on when it decided negligence where no privity exists has been addressed b to make a loan to Max Mitchell's client. The statements many courts. There are now essentially four lines o were prepared by Max Mitchell and Company with authority with respect to this issue. knowledge that they were to be used by the plaintiff in its loan decision and were in fact delivered to the plain- 1. Except in cases of fraud, an accountant is only liable tiff bank by the defendant. The trial court decided in to one with whom he is in privity or near privity. favor of the plaintiff bank, and the defendant accounting 2. An accountant is liable to third parties in the absence firm appealed. of privity under the circumstances described in sec tion 552, Restatement (Second) of Torts (1976) Justice Crimes which reads in pertinent part: When an accountant fails to exercise reasonable and ordi- nary care in preparing the financial statements of his "1552. Information Negligently Supplied for the clients and where that accountant personally delivers and Guidance of Others (1) One who, in the course presents the statements to a third party to induce that bis business, profession or employment; or in an third party to loan to or invest in the clients, knowing that other transaction in which be has a pecuniar the statements will be relied upon by the third party in interest, supplies false information for the guidano loaning to or investing in the client, is the accountant of others in their business transactions, is subject to liability for pecuniary loss caused to them by thei liable to the third party in negligence for the damages the third party suffers as a result of the accountant's failure to justifiable reliance on the information, if be fails to use reasonable and ordinary care in preparing the finan- exercise reasonable care or competence in obtain cial statements, despite a lack of privity between the ing or communicating the information. (2) Except accountant and the third party? as stated in Subsection (3), the liability stated in The seminal case on this subject is Ultramares Corp. u. Subsection (1) is limited to loss suffered (a) by th. Touche. In that case the court held that a tender which person or one of a limited group of persons fo had relied upon inaccurate financial statements to its whose benefit and guidance be intends to supply detriment had no cause of action against the public the information or know that the recipient intend accounting firm which had prepared them because of the to supply it: and (b) through reliance upon it in lack of privity between the parties. In declining to relax transaction that be intends the information to influ the requirement of privity, the court observed: "If liability ence or knows that the recipient so intends or in substantially similar transaction." for negligence exists, a thoughtless slip or blunder, the fail- ure to detect a theft or forgery beneath the cover of 3. An accountant is liable to all persons who might re: deceptive entries, may expose accountants to a liability in sonably be foreseen as relying upon his work product an indeterminate amount for an indeterminate time to an indeterminate class. The hazards of a business conducted 4. An accountant's liability to third persons shall be on these terms are so extreme as to kindle doubt whether determined by the balancing of various factors a flaw may not exist in the implication of a duty that among which are the extent to which the transaction exposes one to these consequences." was intended to affect the plaintiff, the foreseeabilit The doctrine of privity has undergone substantial ero- of harm to him, the degree of certainty that the plain sion in Florida. Indeed, in cases involving injuries caused tiff suffered injury, the closeness of the connection by negligently manufactured products the requirement between the defendant's conduct and the injury su that there be privity between the plaintiff and the manu fered, the moral blame attached to the defendant' facturer has been abolished. Further, this Court held that a conduct, and the policy of preventing future harm. general contractor could sue an architect or engineer for We are persuaded by the wisdom of the rule which limit damages proximately caused by their negligence on a liability to those persons or classes of persons whom a: building project despite the absence of privity of contract accountant "knows" will rely on his opinion rather tha between the parties. those he "should have known" would- do so because