Breach of Fiduciary Duty

§ 7:2.2 ACCOUNTANTS’ LIABILITY
accountant and, thus, had no relationship with him or her; 106 (2) that
the client relied upon his or her attorney or some other party for advice
in the matter; 107 (3) that the contract between the parties expressly
disclaims reliance by the client and makes clear that the parties are
dealing at arm’s length; for example, by warranting that a party
consulted and was guided by an investment advisor or attorney
specifically named in the document; 108 (4) that the acts of the
accountant were purely ministerial, with the decisions being made
by the client or a representative of the client without reliance upon
the advice of the accountant; or (5) that the client often did not follow
the advice of the accountant in matters of the type in question.
Where a claim is made that an accountant is an ERISA fiduciary,
the plaintiff must show that the accountant’s duties went beyond the
normal duties of an accountant and that those duties were not merely
ministerial in nature. In brief, the plaintiff must show that the
accountant performed management or administrative functions involving
discretionary authority for the pension plan or that the
accountant rendered investment advice to the plan. The accountant,
on the other hand, will want to show that he or she merely performed
professional functions normally associated with the accounting profession
or that his or her actions on behalf of the plan were merely
ministerial and did not involve discretionary authority.
§ 7:2.2 Breach of a Fiduciary Duty
Generally, the party alleging that an accountant breached a fiduciary
duty owed to that party must prove that the accountant breached
a fiduciary duty. This may be shown by evidence that the accountant
(1) failed to act solely for the benefit of the party as to a matter within
the scope of the fiduciary relationship; (2) failed to disclose all relevant
facts as to a matter within the scope of the fiduciary relationship;
(3) failed to exercise the required level of care as to a matter within
the scope of the relationship; 109 or (4) failed to maintain client
confidences.
Where it is shown that the accountant-fiduciary entered into a
transaction with the client that falls within the duty of loyalty, the
accountant has the burden of showing the fairness of the transaction
106. See Shofstall v. Allied Van Lines, 455 F. Supp. 351, 360 (N.D. Ill. 1978);
Blue Bell, Inc. v. Peat, Marwick, Mitchell & Co., 715 S.W.2d 408, 416 (Tex.
Ct. App. 1986) (no relationship at all existed between plaintiff and
defendant-accountants), writ of error refused.
107. See, e.g., Midland Nat’l Bank of Minneapolis v. Perranoski, 299 N.W.2d
404, 413 (Minn. 1980).
108. See, e.g., Gutfreund v. Christoph, 658 F. Supp. 1378, 1395 (N.D. Ill. 1987).
109. See generally chapter 4 on negligence liability.
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