*1 $1,979.36, THE OF AMOUNT WHICH BE NOT LATER THAN
SHALL DUE
NINETY AFTER THIS DAYS OPINON FINAL.
BECOMES
1 61 ALL CONCUR. JUSTICES
Steve Stroud Inc.,
Crop, corporation, an Oklahoma
Appellees/Counter-appellants, CO.,
ARTHUR ANDERSEN &
partnership, Appellant/Counter-
appellee. 92,033.
No.
Supreme Court of Oklahoma.
Sept.
Supplemental Opinion on Denial Rehearing Dec. *3 Klingenberg George
Kenneth W. H. Associates, Klingenberg Brown of & Okla- OK; Coffin, City, Dallas, homa David B. Texas; Roberts, Barry Norman, OK; K. Ward, Norman, OK, Stanley ap- M. for the pellees/counter-appellants. McKinney,
Kenneth N. D. Robert Tomlin- Campney McKinney son A. and Michele & Stringer, OK; City, Philip Oklahoma Allen Lacovara and Joanne E. Benisch of Platt, Mayer, York, NY, Brown & New appellants/counter-appellees. Looney, Edwin F. Garrison of Nichols & Johnson, OK; City, Oklahoma Louis A. Cra- co and Richard L. Klein Farr of Wilkie & York, NY; Gallagher, New and Richard I. Miller, General Counsel of the American In- CPA's, York, NY, New stitute for amicus curiae American Institute of Certified Public Accountants. Ables, Angela
J. James W. Rhodes and Kerr, Irvine, Kevin R. Wisner of Rhodes & Ables, OK, City, Oklahoma for amicus curiae Society Oklahoma of Certified Accountants. LAVENDER, audited. It J. balance sheet December perform required hired the defendant requires today's cause T1 Resolution generally ac accounting in accordance comparative- to ascertain
the Court standards [GAAS].3 cepted auditing Stroud/ plain of a the relevance negligence purposes and later that the audits for 1987 SCI assert perf professional's1 negligence when tiff's negligently prepared by Ander years were negligence action in a faulted ormance a substantial misstatement sen because competent there is whether to decide (in three million liabilities excess of SCI's which would sustain record dollars) in them and went undetected jury's verdict. identify and communicate Andersen failed to internal-accounting
I. that certain of its to SCI (as mechanisms were "material weaknesses" PROCEDURAL HISTORY FACTS AND *4 5). under GAAS that term is understood [ Stroud, individually, and [Stroud] 2 Steve Next, plaintiffs assert that it relied T4 brought an action Crop, Inc. [SCI] Stroud upon audited statements of SCI's the flawed or [Andersen & Co. against Arthur Andersen business condition to make certain financial firm, accounting defendant], a ultimately rendered which decisions SCI/ injuries alleg seeking damages for economic viability unable to sustain economic ICOPS emanating flawed audits of SCI edly from allege Lastly, during the 1990's. Stroud/SCI Company of the Prairie and Insurance becoming aware of that Andersen-after statements2 The financial [ICOPS] States' labilities-failed understatement of SCT's by Andersen. Stroud prepared audits were (SCI/ICOPS) of extend to its clients years had built ICOPS into period over by Professional required the Code of care crop larger providers of insurance one Conduct for accountants. general was the SCI United States. operator of ICOPS.
managing agent and (1) by asserting 5 Andersen defends by primarily owned companies Both were by prove sufficient evi plaintiffs failed was collateral- and their indebtedness Stroud and ICOPS were dence that its audits SCI per among things land and other ized with suf the economic losses flawed and in an sonalty by individual owned Stroud (a) solely resulted from bad fered SCI capacity. management decisions made Stroud/SCI (b) accounting procedures.6 and flawed internal SCT's part of 1987 SCI-at one In the latter insistence-sought Andersen also contests Stroud's to have its
of its lenders' engaged "professionalism", Andersen to audit SCI's 1987 its ori- Stroud For discussion today's society, and the financial statements of gins see Michael J. balance sheet and role in First, Polelle, years ending Crop, A December and What's Stroud Inc. for the Who's On Profession- 1999). (Winter through including December al, 33 U.S.F. L.Rev.205 years ending Decem- ICOPS for the 0.$.1991 define 15.1A The terms of 59 through ber December as follows: "financial statements" applicable a "material 5. Under GAAS standards a written state- 'Financial statements" means purporting weakness" is defined as follows: to show and related footnotes ment position, anticipated actual or financial reportable "A material weakness is a condition flow, changes operations, or cash results design operation or or of one in which specific position relate to a financial which components does not more internal control time, generally period ac- on the basis relatively to a low level the risk reduce accounting principles. "fi- cepted The term irregularities that would or in amounts errors specific ele- nancial statements" also includes to the financial state- be material in relation statements, ments, accounts, or items of such may being and not be ments audited occur data incidental financial but does not include timely by employees period detected within a services, advisory management re- included in performing their as- in the normal course ports support to a client recommendations signed functions." supporting nor does it include tax returns schedules.... of SCI of the various audits 6. At the conclusion Andersen, prepared by the defendant recom- 1987 en-
3. See Pl. Exh. no. 149-December improvements need- mended to gagement to SCI. letter from Andersen eleven-dayjury T7 At the conclusionof damages for to seek
right as an individual was awarded to the injuries. It is Andersen's
any audit-related compensatory verdict. Both inju on alleged that if the economic contention punitive were awarded. Andersen all, they would be compensable ries were appealed. Appeals of Civil Court (SCT) entity corporate and not only to the so Jury [COCA] held Instruction No.16 (Stroud). to its shareholder adopted the audit interference rule beginning deliberations the 16 Before represented requir- a fundamental-law error judge on
jury was instructed ing judgment's reversal. The case conduct, and negligence, wanton and reckless trial. remanded for new Jury damages among other issues. punitive Appellees sought certiorari which was given at this time Instruction No. 167 was granted. is com which in substance combined what monly to as the "audit interference referred concepts comparative-negligence
rule" with II In identified Oklahoma Uniform (second)] Instruction [OUJI-CIV
struction OF REVIEW STANDARD objects to the trial No. 9.18. adoption of the audit interference rule
court's 19 When the Court is called *5 law,
asserting jury's the scheme of that it contravenes verdict in an action at review disputed
comparative-negligence enacted in Oklah that verdict conclusive as to all is (1)
oma.9 conflicting facts and statements.10 Where compare negligence way intra-company the of the Plaintiffs to the ed made in the the to be negligence of the Defendant. ICOPS) (between accounts SCI and were main- (0%-100%) negligence you attempted percentage The of The record reflects that SCI tained. changes but to make some of the recommended the find for each under circumstances party, above, appro- described be stated in the that should not all. The record also reflects Andersen priate verdict forms have been verdict form. The deficiencies in SCI's did not label the identified you." color-coded to assist accounting system as ""material as weaknesses" phrase under that is understood GAAS/GAAP today is the "audit interference 8. What called principles. genesis in case of rule" found its the National ' al., Surety Corp. Lybrand et 256 A.D. text Instruction No. 16 is as fol-
7. The of held, (1939). There the court when N.Y.S.2d , lows: considering premised an accoun- a case defense, negligence, "Inlegligence that of the em- part tant's "As a of its Defendant first denies only ployer when it part is a defense has any negligence contributed that on its was the direct perform to the accountant's failure to his con- in this lawsuit cause of the occurrence involved injuries any resulting Defen- the truth." 256 A.D. at to Plaintiffs. tract and to report however, if, at 563. N.Y.S.2d dant further contends that the negligent degree, to some should find that it was 0.$.1991 provides perti- in 9. See 23 which it then is Defendant's contention Plaintiffs' part: nent negli- negligence own exceeded Defendant's gence, prevent any recovery so as to Plaintiffs brought, whether aris- 'In all actions hereafter in this lawsuit. ing act, date of this before or after the effective you may Under the law not find the Plaintiffs resulting personal injuries negligence or negligent you were unless also find that Plain- death, wrongful property, or contributo- negligence tiffs' contributed to Defendant's fail- recovery, any ry negligence shall not bar a unless means, ure to its audit work. This how- preform negligence person injured, damaged or of the so ever, have been Plaintiffs' must killed, any negligence greater degree is of than under the circumstances and inter- unreasonable corporation causing person, or such the firm ability duty. perform fered with Defendant's its damage, any negligence unless of the or you negligent If find that Plaintiffs were under killed, greater injured, damaged de- so is of para- the circumstances described in the above negligence any per- gree than the combined sons, you graph, compare percentage causing then are to corporations dam- firms or such Plaintiffs, (0%-100%) negligence any, if age." (0%-100%) percentage negligence with Defendant, any. you if If find the Plaintiffs' OK 571 P.2d Anderson, 10. Hames v. negligence did not contribute to Defendant's fail- Pitcock, Inc. v. 831, 833; Pontiac, Wat Henry syl.no. perform you may ure to its audit work then III evidence which rea any competent
there is jury's verdict sonably supports IT TO WAS NOT ERROR INSTRUCT errors shown prejudicial
there are no THE THAT IT COULD COM- JURY instructions, neither court's PARE THE PLAINTIFFS NEGLI- judgment based thereon will IN-
verdict nor TO ANDERSEN'S ONLY GENCE Further, on review.11 be disturbed IT INTERFERED WITH SsOFARAS THE LATTER'S PROFESSIONAL engage will not process the Court appellate AUDIT) (i.e., UNDERTAKING produced evidence of deciding party which decision-where weight.12 The greater today's neces- 1 12 In forensic contest is lies-is of the evidence preponderance sary context in which the to understand the judge issues arose before their reso- the exclusive determinative
left only It one credibility.13 Lastly, in as lution is addressed. when witnesses' of the relate to realizes that the asserted errors sufficiency to sustain saying the evidence's [i.e., lability separate components and dam- all views the Court negligence-action ages] plaintiff's support judgment, light tending to fully pronouncement can be that the Court's inference every reasonable "together with appreciated. therefrom, rejecting all evidence deducible prima facie case of To establish which conflicts party adverse adduced prove: must it," duty care-arising from owed a accounting ser rendition of its the Court reviews 110 When plaintiffs, that the was vices-to in a in error claimed fundamental-law breached, injury and the resul objection timely which a struction as to directly the result of tant were trial, apply plain error rule we not made duty.17 perform Andersen's failure to instruction, showing require a required to clear two evi- are a matter of law given, erroneous as when *6 compensato dentiary hurdles to be awarded ie, injury, was demon in effect caused and First, ry they prove that damages. must just harmless. To strably prejudicial and not duty degree of Andersen breached asserting error
justify party reversal them and which resulted which was owed to high proving that the error a burden of injury. they bears Then must adduce evi their compensa establishing the amount of seriously dence affected
was obvious or otherwise tory damages which is their due. judicial proceedings' fairness. today's Initially, pronounce 114 of Lastly, YT11 the trial court's denial used for ment enunciates the criteria to be essen
prejudgment interest identifying scope plaintiff's a conduct question of law which is tially presents a a decides wheth which is relevant when appellate An court has reviewed de novo.15 negligent conduct is and er a defendant's non-deferential au
plenary, independent and injury. Then we assess whether legal court's ruli
thority proof to reexamine a trial as to plaintiffs met their burden of
ngs.16 damages. plaintiff finds the has When a v. 2000 Services, H, Inc., 15. K & K Food Inc. S & ¶ 9, OK 87 969 Robinson,
11. DeCorte v.
1998
Hollister,
705;
Co. v.
1922
3 P.3d
Keith v. Mid-Continent
358, 360;
31, ¶ 7,
P.2d
Lawton
OK
Ref.
2.
19,
13,
196,
OK
86 Okla.
proved professional provides facie case of services the initial context in which the Court considers SCI's
plaintiff damages is entitled to recover those naturally plaintiff's] are and [the foreseeable flow stands inter- posed as a defense to Andersen's fault. negligent
from the defendant's acts.18 In the regard
latter it is axiomatic that a defendant damages solely not liable for seope duty 117 The attributable of Andersen's plaintiff's only conduct but instead is provider professional care owed as a ac proved by
liable for those which are counting only by services is established not to extend from the defendant's the formalized adopted by standards i.e., breach-of-duty, negligence.
established American Institute of Certified Public Ac stated, Simply question the latter issue is counts-ie., GAAS and GAAP-but also proving damages. one's Assessment of statutory regulatory pro Oklahoma compensatory damages resulting govern visions which or flow the field20 A CPA's
ing negligent from the defendant's duty client, while not coterminous his/her presents question square a factual which lies lawyers doctors, with those of is certain ly jury's province. within the ly comparable in recog violation governing profession
nized rules can be used to duty evidence a breach of in a civil A professional action and can result also discipline.21 The Court is mindful of the public accounting When a certified obligations responsibilities enhanced engaged purposes, firm is for audit public by owed to the who dons the
employed to discover "inadvertent errors" in professional. mantle of a systems bookkeeping
its client's and further protect employees' the client from own At sought T18 trial Andersen to assert a company's failure to find errors in the books comparative-negligencedefense to the alle accounting system. general Stated gation it had committed terms, give the auditor is retained to malpractice. requested In essence Andersen opinion in conformity whether with GAAP fudge to instruct [Generally Accepted Accounting Principles] plaintiffs' negligent causing conduct [if more fairly the client's financial repre statements damages] than 50% of its could be used position.19 sent its financial negligent performance excuse its own pro public
A116 certified accountant judge rejected [CPA] fessional duties. The trial
owes different of care to client position. judge defendant's Rather the trial his/her *7 rendering professional
when jury services than instructed the that as it considered duty ordinary
the of care which members of whether Andersen breached a duty of care
society owe to each other. It plaintiffs, only is Andersen's to owed could consider that
alleged professional duty breach of its negligence plaintiff as an the of which interfered which
auditor lies at the heart of provision professional with the defendant's Stroud/ Hence, negligence provision SCT's claim. the services. 18. See 23 0.$.1991 whose terms See Industries, Kemin note 19 at 217. provide: supra "Any person who suffers detriment from the . another, omission recover from the may sought 22. Andersen to have the trial court in- compensation in fault a therefor in mon- jury struct the that it could excuse its own con- damages." which is called ey, [ie., plaintiff's duct as an auditor if the conduct general a For discussion of an auditor's re- negligently keeping the books which Andersen Shore, sponsibilities, see Kenneth Edward auditing] to itself. This is akin Watching Watchdog: Argument the An For Audi- attempting negligent to the doctor to excuse the Parties, tor To Third 53 SMU L.Rev.387 Liability provision emergency of medical services in the (Winter 2000). Industries, See also Kemin Inc. v. by asserting room to the accident victim that it KPMG Peat LLP, Marwick 578 NW.2d plaintiff's negligence was the own that caused (Iowa 1998). place. the accident first Andersen was engaged to audit the books to find the
20. See "Oklahoma Act", 59 0.8. Accountancy mistakes and errors in the same. § 15.1 A4. See also Okla Admin.Code seq. §§ 10 et quest 122 In our to determine adduce at trial evidence 19 Andersen did pro a plaintiff's of the conduct to relevance have inferred
from which the could claim, legal fi- Stroud/SCI-independent of the audited fessional-negligence we find the analysis Surety24 National and the Tenth negligent several nancial statements-made Appeals' Cireuit of U.S. Cireuit Court subsequent to Andersen's
business decisions Beck25 Fullmer v. & decisions building and [e.g., purchase of Wohlfeiler first audit Hig Corp. et al. v. Johnson & Steimer Ruidoso, moving corporate headquarters persuasive. There gins to be Weatherford, of California26 OK] New Mexico from could as courts held that an accountant financial and ICOPS contributed SCI negligent plaintiff's own sert as defense plaintiffs adduced response the
woes. In to the acts when such conduct contributed testimony-upon which
evidence-see Stroud perform failure work. accountant's his/her could have concluded Stroud/ Circuit, to hold other As noted the Tenth allegedly negligent decisions business SCTI's illusory the that an would render notion wise the flawed finan-
were made reliance perfor accounting negligent firm when its which had been audited cial statements care it as a mance breaches the owes the defendant. injury. public professional to the and causes evidentiary conflict over Despite the defi An accountant cannot defend his/her injury, whose conduct caused Stroud/SCT's by asserting that professional cient did not concluded negligent unless its client was also performance of the with Andersen's interfere proven can be to have inter client's conduct audits,. offered no in- respective Andersen pro provision of fered with the accountant's something requested stance where it Today's clarification of fessional services. financial plaintiffs regarding the SCI/ICOPS necessary prima facie proof to establish provided to the was not statements which pre negligence does not case of staff, partici- who Even the auditors audit asserting-as it did- Andersen from vent at trial pated engagement and testified for which seek very cooperative that the stated from its compensation did not flow or result requests. all of Andersen's prevent conduct. It does [the auditors'] lability pro excusing its defendant from judge correctly understood negligence by interjecting facts into fessional cireumseribing the adduced the use of to the issue of the trial which are unrelated negligence in re plaintiff's own negligently-provided responsibility evidentiary elements gard the first two professional services.27 facie case of prima of a [duty breach] reasons, from Andersen we hold that did 123 For the above foreclose reasonably Instruction No.1628 arguing plaintiff's that the broke legal standard to be used when states the injuries/damages
chain of causation as pur proven jury assays conduct for professional's from the defendant's
which emanated neglige preclude poses determining whether it is negligence.23 Nor did it the contested instruction Since trial, that its acts arguing,
from as it did nt.29 directly cause the dam correctly as an auditor did not the law in Oklah states the status of *8 oma,30 jury in compensa giving it did not mislead sought
ages for which Stroud/SCI profes its assessment whether Andersen's
tion. text of Instruction No. 16 see requested con- 28. For the no instruction
23. Andersen intervening supra cerning supervening causation. note 7. or supra
24. note 8. See Robinson, 87, ¶ 15, 1998 OK 969 29. DeCorte 358, P.2d 362. Cir.1990). 1394, (10th 25. F.2d 1397-98 Today's pronouncement its reach is limited in 30. Cir.1998). 684, (10th
26. 135 F.3d negligence assert- extend to claims and does not 132, pro- McKinne, against tortfeasors other than ed classes of CIV APP 27. See Fritts v. 1996 OK fessionals. P.2d 371. negligent resulting injury was and does not conduct and the
sional conduct grounds
afford for reversal.31 presence establish the of a controverted fac question tual which should be submitted to
B jury.33 If judge-after the trial assess ing sufficiency-allows the evidence to reach evi- Andersen asserts adduced jury, plaintiff bears the burden of dence was insufficient to establish that persuasion.34 juris While Oklahoma'sextant plaintiff's injury. Defendant also al- prudence required allows the nexus between leges plaintiffs the evidence which the negligent injury proved by be quantum damages used to of its establish evidence, cireumstantial the adduced evi speculative. was Resolution of the asserted probative dence must have "sufficient force requires errors we review whether inference, legal to constitute the basis for a properly instructed on the issue of mere speculation...."35 rather than The required causal nexus between the defen- sought proved by plain conclusion to be inju- dant's and the certainty tiffs must flow with reasonable ries/damages necessary jury's to sustain the probability from the adduced evidence.36 In verdict and whether reasonable infer- regard holding the latter Court's Har ences can be drawn from the adduced evi- Div., desty Corp.-Webster v. Andro 1976 OK judgment. support dence which 129, 1080, [quoting 555 P.2d Martin v. T25 An essential element of action Television, Inc., 13, 1916 OK Griffin negligence complained-of able is that the con insightful. P.2d 92] is There it held: injury duct be the direct cause of the prohibition recovery damages "The compensation sought.32 Jury is In uncertainty speculative because of and too struction No. 9-almost a verbatim mirror of applies damage nature to the fact of (second) 9.6-eorrectly OUJI-CIV No. out damage." not to the amount of plaintiffs prove in lines what the must order parties question do not damages. provides: to establish It injured. were fact The defendant's issue which, Direct cause means a cause in a jury's damage-award with the verdict and sequence, produces natural and continuous particularly more addresses who what and/or injury injury and without which the would plain- caused the economic losses which the happened. negligence not have For to be experienced tiffs and how value was ascribed necessary a direct it is cause that some injury. against to the It is these standards person property to a to the of a jury's the Court reviews whether person in Plaintiffs situation must have damage-award supported by verdict and are reasonably
been a foreseeable result of competent evidence. negligence. In a present
%2%6 action a 1127 In the case the required required degree adduce evidence which to assess the of care utilized
(in judge's opinion) meeting sufficient Andersen obli gations approximately over
to induce reasonable to believe that five-year period.37 presented The case was
a causal link exists between the defendant's Tulsa, Krueger,
31. See CNA Ins. Co. v. Inc. 37. Andersen would have the Court in its review 142, 14, ¶ 1997 OK 949 P.2d 679. jury's entirely upon verdict to focus almost the 1988 audit of 1987 financial audit. SCI's Keuchel, Graham v. 847 P.2d any request by The record is devoid of special findings requiring to assess audit-year incurred on an annual Inc., McKellips Hosp., v. St. Francis Such basis. would have been availableto Ander- 0.$.1991 provisions sen under the of 12 *9 engagement Id. Instead entire ex- Andersen's audit tending subject from 1988 to 1992 was the Longfellow Corp., 35. Downs v. plaintiffs' at action. Andersen cannot now this 999, syl. P.2d stage proceedings secure that which it did not ask for at trial. Id. at 1004. theory furnished the plaintiffs' of causa financial statements-never jury on the Andersen owed them a which is that to SCI. Andersen defended its tion same
professional duty-of-care which breached by asserting preconditions that the for the and that in reli
by rendering flawed audits by completionwere met SCI.39 audit's never product work upon Andersen's defective ance weigh to How chose business decisions made several testimony completely witnesses' various injury.38 in their
which resulted their bailiwick and the Court will not within that De record reflects ICOPS' T28 The re-weighing engage in the evidence.40 None 31,1987 statement reflected financial cember theless, (spanning the adduced evidence Crop Insurance liability the Federal no five-year occurring events over business entity federal Corporation [FCICl-the relationship between and Ander SCI/ICOPS purchased crop through which ICOPS sen) evidence-ie., competent ev constitutes There was also evi insurance which it sold. jury reasonably upon which the could idence January that on dence adduced SCI (1) concluded-that an indebtedness have business after [one week SCI/ICOPS's inaccurately owed to FCIC which was in year a check the amount of drew closed] reflected in the financial statements SCI ICOPS, $1,009,472.37 by premiums owed (2) audited;41 that and ICOPS Andersen corporation payable to the federal and that disregard that the defendant with reckless verify not how this transaction Andersen did welfare failed to exercise that for its client's veracity year-end of SCI's 1987 affected the degree professional required of of no Habilities statement in ac auditors to discover errors its clients' in that SCI's presented also after counting systems; that made SCI sug accounting [Patti Scott] ternal in its detriment several business decisions to in that an under
gested reliance on the flawed financial statements of Hability owed to the FCIC
statement finds that its worth. The Court its review years in the
had existed for several SCI accounts, light of the adduced evidence and the intercompany Andersen- ICOPS
although paid for its audit of SCI's inferences which can be drawn reasonable exacily theory addressing attempts 41. There is limited evidence to characterize the
38. Andersen (of magni- as one for causation advanced when indebtedness ICOPS/SCI's chance", arguing issue) that in effect "loss of Stroud/ FCIC first arose. Nonethe- tude here in attempting SCI are to recover for economic less, is adduced evidence that such indebt- there they they after made business chances which lost accurately reflected edness existed and was not predicated upon decisions Andersen's audits. SCI and ICOPS' financial statements persuaded at- the defendant's We are which Andersen audited. accurately tempted reflects recharacterization primary theory causation transcript 42. Review of the trial reveals evidence support the evidence which it adduced in from which the could have concluded to reach the issue Hence, same. we do not have and reckless. Andersen's was wanton applies the "loss of chance" doctrine whether adduced evidence that in 1993 when Plaintiffs malprac- than medical actions other possi- presented evidence of a Andersen was a discussion of the "loss of chance" tice. For error, Oklahoma, audit it denied the exis- ble million-dollar McKellips, adopted see doctrine as supra 12 at 471-75. note TR. [see tence of the same Patti Scott testimony 472-488.]; pgs. a limited Andersen made preconditions which Andersen 39. One of the accounting discrepancy/er- to reconcile the effort before it would release the au- wanted satisfied pgs. pointed out to [see ror once it was them TR. signing rep- dited financial statement was the 504-507, 526]; (3) Botwin, plaintiffs' Bruce ex- letters Patti Scott and Stroud. resentation witness, pert acts of outlined for the certain request predated Andersen's several months clearly inap- which he viewed as the defendant completion projected of the audit. Plaintiffs' 646-647, pgs.628 propriate TR 671- [see Botwin, expert CPA] testified that never [Bruce 673]; (a) an Andersen auditor testified did know of an in his career he suggestion there was a when confronted with asking representation be auditor letters to prepared mistake in its audits he and others complete. signed de- before an audit was He analyses written of the earlier audits and Patti "completely illogi- scribed Andersen's conduct as (b) Scott's work these written papers inappropriate. cal" and destroyed analyses were later and not made part 1404-1406]. files Florafax, supra [TR. of Stroud's note 14
798 requirements jurispru extant Oklahoma's evidentiary therefrom, competent there is a jury dence. the defendant's conduct is Where the could have from which
foundation duty the that Andersen breached concluded reckless, jury may wanton or the found to be to auditor care it owed as contributory negli compare plaintiffs' not the finding-that jury's the plaintiffs. the recovery gence preclude to cither or reduce 7 duty the of care owed defendant breached 4 thereby injury-is plaintiffs the reasons, 132 For the above by competent supported evidence. proof is affirmed both as to acknowledged At trial it was 130 liability damage-award. and the valuing damages as those the result that such an sci breach was not exact
of defendant's IV 43 Nonetheless, expert ence. approximate range of dam as to an
testified A AND STROUD WAS FORESEEABLE by valuing companies [SCI the two ages RELIER THE KNOWN UPON AU- under different at different times ICOPS] PREPARED BY ANDERSEN DITS vigorously and was cross-examined scenarios HENCE, AND, A PROPER PAR- IS by concerning the same. defendant's counsel TY-PLAINTIFF jurisprudence is clear that where Oklahoma's { suf
there is evidence that has objects 33 Defendant to the award which loss, jury injury is the fered and some individually. jury made to Steve Stroud determining proper vehicle for what loss acknowledges that while Anderson Stroud which the case's is from the best evidence of party in he is a real interest insofar as Here the amount awarded nature admits.44 asserting damages a claim for on his own by approximately damages as behalf, duty him he was it owed no since dollars less than the lower three million never its client. Defendant further asserts range damages plain testified to personal assert that a shareholder cannot expert. The adduced evidence at tiff's corporation causes for occasioned an adequately supports such award. solely by breach of a owed to the com- cognizant The Court is also that 131 analysis persuasive. not pany. Andersen's engaged in found the defendant T law remains 34 The common reckless misconduct as evi wanton and/or explic full force in unless a statute damages.46 Oklahoma punitive award of denced Further, contrary.48 itly provides as to The trial court's instruction presumption preservation of common-law damages properly comports with the favors
punitive Miller, amounted to expert a Certified found the defendant's
43. Plaintiffs' was Don Planner, Analyst disregard a Certified Valuation Financial or reckless of another's "wanton diplomat the American Board of Foren- and a rights." Among things provided: other agreed plain- parties that sic Accountants. All Andersen & Co. was ''The conduct of Arthur expert qualified. was well tiffs' disregard or reckless of another's in wanton aware, rights did if Defendant was either or Div., Hardesty Corp.-Webster v. 44. Andro was a substantial and un- care, there P.2d of on [disapproved necessary its conduct would cause risk grounds]; Southwest Ice & Prods. v. other Dairy In order the con- serious to others. Faulkenberry, Okla. disregard of duct be in wanton or reckless P.2d 257. rights, it must have been unreason- another's scope 45. The of "wanton reckless" circumstances, and also there able under the Grakam, succinctly supra stated note 32 high probability must have been at There the Court held: 362. cause serious harm to another conduct would "The intent in and wanton misconduct willful person." injury; an is not an intent to cause it is instruction-given The above intent to do an act-or the failure to do (see- significant part OUJI-CIV court-irrors ond) disregard consequences act-in reckless objected No. 5.5 and was not instruction circumstances that a reasonable and under such by the defendant. know, know, man would or have reason to likely such conduct would be to result sub- Graham, supra note stantial harm to another." Wright Newspaper Company, Grove Sun Instruction No.14 informed the Inc., punitive damages OK it could not award unless it
794 right third-party On the issue of only proper party plaintiff, not a he also was s.49 group persons fell the of that with ambit audited financial statements
reliance on whom Andersen of care. to owed in the Rest. principle embraced common-law (Second) § 552 is determinative. of Torts y is:
The text of that section ARE NOT ENTITLED TO STROUD/SCI who, profes ... in the course of his One PREJUDGMENT INTEREST UN- supplies information for the ... false sion THE DER PROVISIONS OF in their trans guidance of others business (B) 0.8.8upp.1997 § 727 actions, subject liability pecuniary to negli I 35 Plaintiffs' claim that Andersen's justifiable to them their loss caused injured "personal rights" gent conduct their information, if he fails to upon the reliance thereby entitling prejudg to them receive competence in reasonable care or exercise ment under terms of 12 interest communicating the information.... obtaining or (E).53 § O.S.Supp.1997 The trial court
50 their motion for the same.54 The denied 727(E)'s § does not find ambit to be as Court test an auditor would the Restatement Under sweeping suggest. as the Were we people group of embrac to a limited
be liable provisions § 727s as to extend the reach of guidance the auditor ing those for whose prac requested, our decision would have the supply the audit data and intended to extending prejudgment- tical effect of auditor knows his client to whom the those every prevailing to interest allowance almost supply audited financial to intended party in a tort action. Such a result would adequately The record sub statements.51 legislatively-imposed limita eviscerate of the common-law satisfaction provisions. §
stantiates in tions 727s embodied liability. Andersen knew Stroud
rule of judgments 136 At common law personal assets to cross-collateralize used his Hence, recovery do not bear interest. and ICOPS. It the indebtedness of both SCI judgment on a must be authorized interest certainly that in Stroud's busi foreseeable statute.[27,28] 136 At common law judgments do not bear interest. Hence, recovery of interest on a judgment must be authorized by statute.55 injuries The of which both SCI enter relationships with these related ness injuries complain to and Stroud are business rely finan prises upon the audited he would assets, ie., property. When prepared.52 cial which Andersen statements first considered whether Court compelling imagine a more case It is hard to involving injury property claim an to § rule. application Under injury" provisions "personal under effect, § it present 727 then held was not
factual cireumstances here Stroud At Andersen did not assert that Stroud's 490, Okl. 82 P. Reaves,
49. Reaves v. reliance and use of the audited financial (1905). was unforeseeable to it. statements liability §in 552 is 50. The standard of reflected it is clarified comment a to the same. There pertinent provisions 0.$.Supp.1997 53. The of 12 prin- explained that the enunciated common-law (E) § 727 are: undertaking ciple "implies observe a rela- per- verdict for reason of "[I standard, only may be defined tive injuries injury personal rights in- sonal will be terms of the use to which the information to, injury resulting cluding, but not limited put, weighed against magnitude proba- restraint, insult, bodily personal defama- from bility might that use if the of loss that attend tion, privacy, personal invasion proves information to be incorrect." due to an act or omis- relations, or detriment court, accepted by the trial group sion of another is 51. The include under latter would rendering judgment add in- only the court in shall Steve Stroud individu- facts of this case not prescribed pur- said at a rate ally lending terest on verdict institution who first but also suant to subsection I of this section from requested Both the audited financial statements. resulting date the suit parties were foreseeable and known to of these commenced to the date of verdict." come as no Andersen. This conclusion should others, anyone among surprise group, as this 54. See Trial Court's 1998 order. early ex- is identified as as 1924 in Oklahoma's July jurisprudence tant as a foreseeable user of audit- Riedell, Sisney Smalley, ed financial statements. See State v. 233 P. prejudgment interest was unavailable.56 duced along the reasonable statutory amendments to 727 enacted inferences which could be drawn from it persuade not since then do Court sufficiently proves only the fact of the Legislature intended to extend the plaintiffs' injury but also the amount of *12 in "personal" earlier definition of Court's compensatory punitive damages which injury property.57 clude An economicloss were awarded. emanating from a business venture does not "I Upon previously granted, certiorari 727(E)'s qualify personal injury § aas under and, hence,
provisions does not meet the THE COURT OF CIVIL APPEALS statutory requirement prejudgment for an award of OPINION AND IS VACATED THE DIS- est.58 The trial court's denial
inter TRICT COURT JUDGMENT AF- IS prejudgment is interest sustained. FIRMED. HARGRAVE, J., WATT,V.C.J., 1 41 C. VI HODGES, LAVENDER, OPALA, SUMMARY KAUGER, BOUDREAU, SUMMERS and Today's cause calls the Court to JJ., concur. evidentiary process
review the which a [ WINCHESTER, J., dissents. alleging pre- case accountant-malfeasance jury. Appellant
sented to a would have present plain- Court allow it to evidence of a SUPPLEMENTAL OPINION conduct-occurring
tiffs before defen- ON REHEARING engagement dant's as a certified auditor-as {1 Rehearing is denied. The motion to negligence. Today's pro- defense to tax costs the form of may certiorari $100.00 nouncement holds that an accountant filing granted. fee is Supp. Title 20 O.S. not defend the beach of a of care owed by introducing to its client evidence of the 30.4(B); 1.14, § Supreme Rule Court client's conduct unless the latter interfered Rules, Supp. 1; App. 12 O.S. Ch. provision with the defendant's Homes, Sunrizon Inc. v. American Guaran peculiarly services. The above rule is rele- ty 145, ¶ 5, Corp., Investment stage plaintiff
vant to that trial where the is P.2d 1083.
establishing prima facie case of actionable
negligence. preclude
4 38 The above rule does not adducing
defendant from evidence that
plaintiff's injury did not flow from or was not
directly the defendant's conduct. prevent Nor does the announced rule STATE of ex Oklahoma rel. OKLAHOMA asserting supervening defendant from or in- ASSOCIATION, Complainant, BAR causes, be,
tervening any if there break the chain of causation as to the seeking compensa- for which the STORMONT, Respondent. Robert L. tion. At trial Andersen did adduce evidence No. SCBD
which, jury, if believed would have liability exonerated it of for the Supreme Court of Oklahoma. Nonetheless,
sought by Stroud/SCI. chose to believe the Sept. and find otherwise. re-weigh
139 The Court will not the evi-
dence A case before it. review of transcript discloses that the ad- Sisney, supra note Appeals' 58. To the extent that the Court of Civil Holmes, Wynn decision in v. Estate Service, See Rainbow Travel Inc. v. Hilton Ho- CIV APP 1231, could be construed (10th Cir.1990), Corp., tels 896 F.2d permit prejudgment a trial court to assess legal analysis scope prejudg- § 727's negligent injury interest under 727's terms for comparable ment-interest allowance to that property, expressly it is overruled. adopted by today. the Court