Murphy v. BDO Seidman, LLP

INTRODUCTION

Appellant Michael Murphy and literally scores of others appeal from the trial court’s judgment dismissing their corrected fifth amended complaint for failing to state a cause of action. Although the complaint is long, with numerous allegations, dozens of paragraphs, and more than 100 plaintiffs, the gist of the complaint is the following: Accountants BDO Seidman, LLP, and Logan, Throop & Company intentionally or negligently overstated their client’s assets in financial statements they prepared. Appellants relied on those financial statements when they invested in the accountants’ client and in another company in the process of merging with the client, and relied on those statements in approving the merger. Appellants lost their investments when the merged company went bankrupt, and the company’s assets were revealed as grossly overstated. Because the foregoing tells, if true, a story of accounting misfeasance, with few exceptions the court erred in dismissing the complaint at the pleading stage. Accordingly, we affirm in part, reverse in part, and remand.

FACTUAL AND PROCEDURAL BACKGROUND

Because this is an appeal from a sustained demürrer, we rely on the…