Judith Wilder Briskin, Manuel F. Rothberg, Marshall Irwin Siskin v. Ernst & Ernst, a Co-Partnership, Newton Glekel, Mark Williams

A group of former shareholders of a closely held furniture company (Sloane) sued officers and agents of Beck Industries, Inc., and Beck’s accounting firm, for damages arising out of losses sustained by Sloane shareholders following the acquisition of Sloane by Beck. The cases were dismissed as time-barred, and the shareholders appeal.

Two actions were commenced on June 13, 1973, by nine Sloane shareholders. One was against Ernst & Ernst, Beck’s accounting firm; the other, against the other appellees. A few days later, the nine attempted by another complaint to convert the actions into class actions, but the district court denied certification. Thereafter, the two cases proceeded as one, and through joinder combined the claims of 45 shareholders. We treat the cases as consolidated.

The theory of liability is that the individual defendants made material misrepresentations in the negotiations leading up the acquisition of Sloane by Beck, and that the accounting firm was “reckless” in failing to reveal inaccuracies in Beck’s financial statements.

The only question before us is, when did California’s three-year statute of limitations begin to run?

All parties agree that the…