Opinion ID: 2229827
Heading Depth: 1
Heading Rank: 5

Heading: operative petition

Text: Subsequently, and after a prior unsuccessful effort at amending its original petition, St. Paul, on August 17, 1990, filed the operative petition which asserts that St. Paul suffered damages because Touche negligently examined and reported on the financial condition of Commonwealth and its subsidiaries for the fiscal years ending March 31, 1981, and the fiscal years it had specified in its original petition, i.e., 1982, 1983, 1984, and 1985; claims that the various documents Touche prepared were inaccurate and misleading such as to constitute a negligent misrepresentation that Commonwealth was solvent in a significant degree; and avers that Touche made misrepresentations about Commonwealth's financial statements and condition which Touche knew were false when made or were made recklessly without knowledge of their truth, upon which St. Paul reasonably relied. More specifically, St. Paul avers that the documents Touche produced were represented and certified to have been prepared and examined in accordance with generally accepted auditing standards or accounting principles, when in fact they were not so prepared; that the documents overrecognized the margins from contracts in progress and grossly overstated the net worth position and the net quick position of Commonwealth and its subsidiaries. St. Paul also alleges that it is the usual standard and customary practice of public accountancy firms dealing with construction contractors such as Commonwealth to prepare audit reports and provide opinions and certificates for obtaining bonds and sureties; that not only did Touche not restrict Commonwealth's ability to distribute such documents, but that Touche met with and communicated directly with St. Paul in providing to Commonwealth on a continuing basis the documents it prepared for the intended purpose of making them available to St. Paul in the underwriting of bonds and extending surety and other credit; that Touche should have known Commonwealth and St. Paul were engaged together in certain bonded and unbonded projects; that Touche was employed by Commonwealth in part to assist it in obtaining surety credit; and that Touche delivered its audit opinions to St. Paul 3 or 4 months after the end of each fiscal year. St. Paul further asserts that it did not know and could not have known of the inaccurate and misleading nature of the documents until it received the report of another firm of accountants on or about July 15, 1986.