Case Name: Empire of America, Federal Savings Bank, Respondent, v. Arthur Andersen & Co., Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1987-04-03
Citations: 129 A.D.2d 990
Docket Number: Appeal No. 2
Parties: Empire of America, Federal Savings Bank, Respondent, v Arthur Andersen & Co., Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 129
Pages: 990–992

Head Matter:
Empire of America, Federal Savings Bank, Respondent, v Arthur Andersen & Co., Appellant.
(Appeal No. 2.)

Opinion:
Order modified on the law and as modified affirmed without costs, in accordance with the following memorandum: The plaintiff bank sued the defendant public accounting firm for negligent and fraudulent preparation of financial statements upon which plaintiff relied in extending loans to an electrical contractor who had hired the defendant to perform an audit. Special Term properly denied defendant's motion to dismiss plaintiff's second cause of action. On a motion to dismiss for failure to state a cause of action (CPLR 3211 [a] [7]) we must assume plaintiff's allegations are true (see Becker v Schwartz, 46 NY2d 401, 408; Cohn v Lionel Corp., 21 NY2d 559, 562). Plaintiff alleged a relationship sufficiently intimate to be equated with privity based upon a direct oral and written communication between plaintiff and defendant (see, Credit Alliance Corp. v Andersen & Co., 65 NY2d 536, 543, 554; First Fed. Sav. & Loan Assn. v Oppenheim, Appel, Dixon & Co., 629 F Supp 427 [SDNY 1986]).
Special Term erred, however, in denying defendant's motion to dismiss plaintiffs third cause of action sounding in fraud. This cause of action merely repeated the allegations of negligence and added a claim that defendant's unqualified opinion letters were recklessly and wantonly made and were known by the defendant to be false. This single allegation of scienter, without additional details concerning the facts constituting the alleged fraud, is insufficient (see, CPLR 3016 [b]; Credit Alliance Corp. v Andersen & Co., supra, at 554; Dworman v Lee, 83 AD2d 507, affd 56 NY2d 816).
All concur, except Dillon, P. J., not participating, and Boomer, J., who dissents and votes to affirm in the following memorandum.