Software Design & Application, Ltd. v. Price Waterhouse

This is an appeal from a judgment following the granting of Price Waterhouse, LLP’s (Price Waterhouse) (respondent) motion for summary adjudication as to causes of action for negligence, negligent misrepresentation and breach of contract.1 Mand Chatterjee and Software Design and Application, Ltd. (SDA) (collectively appellants) entrusted significant funds to a dishonest financial adviser and, upon the adviser’s urging, invested those funds in a company for which he was simultaneously performing investment banking services. Their investment failed, as did the company. Appellants then pursued litigation against respondent, the company’s auditor. They have no claim and, accordingly, we affirm the judgment.

I. Facts

SDA is a Hong Kong corporation principally owned and controlled by Manu Chatterjee. In May 1991 Chatterjee retained Patrick McDonald to supervise and manage certain funds of SDA, with McDonald guaranteeing an annual return of 19 percent. Around April or May of the following year, McDonald approached Chatterjee with a suggestion that he consider investing in Embrace System Corporation (Embrace). In that same time frame, appellants transferred $688,509 to…