Franklin Supply Company, Etc. v. Albert W. Tolman, Jr. And Peat, Marwick, Mitchell & Company, Etc.

This appeal is from a judgment awarding damages to plaintiff below, Franklin Supply Company, from Peat, Mar-wick, Mitchell & Co., an international certified public accounting firm and defendant below, based upon multiple claims of negligence and misrepresentation; fraud; breach of contract; and fraudulent conspiracy in performing an audit. Also named as a defendant was Albert W. Tolman, a citizen of Texas, representing a class of persons known as Peat, Marwick, Mitchell & Co.

The action was filed in the United States District Court for the Central District of California with jurisdiction founded upon 28 U.S.C. § 1332 (Diversity of citizenship).

Franklin Supply Co. (Franklin) is a Nevada corporation with its principal place of business in Colorado, and is one of the large oil field supply companies in the United States. It entered into an agreement with Servicios Hydro-carb C. A. (Servicios), a Venezuela corporation, to purchase all of the capital stock of Petroleum Industry Consultants C. A. (Peticon), a Venezuela corporation, which was a wholly owned subsidiary of Servicios. Peticon was in the oil field supply business in Venezuela.

Negotiations leading to this transaction…