Opinion ID: 493289
Heading Depth: 3
Heading Rank: 1

Heading: The Submissions of the Parties

Text: 30 Toro acknowledges that Indiana has not adopted the Restatement standard. However, it argues that just because Indiana has rejected the Restatement position, it cannot be assumed that it has embraced the Ultramares standard. Rather, submits Toro, Indiana would impose liability not only when there is privity between the accountant and the injured party but also when there is actual knowledge on the part of the accountant that the injured party will rely on the work product. Appellants' Br. at 18. This standard is required, it submits, by the holding of the Supreme Court of Indiana in Citizens Gas & Coke Util. v. American Economy Ins. Co., 486 N.E.2d 998 (Ind.1985) where the court, discussing Essex, wrote, [t]he surveyor owed no duty to subsequent purchasers of property because he had no knowledge they would rely on his survey and because he was not in privity with them. 486 N.E.2d at 1001. 31 Toro continues by urging that sound policy reasons support its view as to the content of Indiana law. The audited financial report, it notes, has been singled out by both federal and state legislation to be an important vehicle to encourage public confidence in the accuracy of financial information. Appellants' Br. at 20. Moreover, the business community has long recognized the responsibility a certified public accountant owes the public when engaged in an audit. Id. at 21. The appellants note that the Supreme Court of the United States has stated:An independent certified public accountant performs a different role. By certifying the public reports that collectively depict a corporation's financial status, the independent auditor assumes a public responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegience to the corporation's creditors and stockholders, as well as to the investing public. 32 United States v. Arthur Young & Co., 465 U.S. 805, 817-18, 104 S.Ct. 1495, 1502-03, 79 L.Ed.2d 826 (1984). Finally, Toro notes that the Indiana licensing scheme for certified public accountants contemplates a person who is not only technically competent, but ... [whose] ... financial reports ... are worthy of the public trust and confidence. Appellants' Br. at 22-23. 33 Krouse does not disagree with Toro on the identity of the controlling precedent and, like its opponent, grounds its argument on the holdings of the Supreme Court of Indiana in Citizens Gas and of the Indiana Court of Appeals in Essex. Its reading of those cases is, however, substantially different from that offered by its opponent. In Krouse's view, these Indiana cases set forth a test that is the equivalent of the test articulated by the Court of Appeals of New York in Ultramares and recently reaffirmed as the governing law in New York in Credit Alliance. Krouse notes that the Indiana Court of Appeals specifically relied upon the New York court's Ultramares holding in formulating its own holding in Essex. In turn, the Essex case, submits Krouse, provides an essential cornerstone of the [Indiana] supreme court's Citizen's Gas decision. Appellees' Br. at 18. There, the Supreme Court of Indiana, submits Krouse, reaffirmed the continued vitality of the privity principle in Indiana. Krouse also notes that the Essex court specifically declined to adopt Sec. 552, Restatement (Second) of Torts (1977), that extends liability for supplying false information to any one or more of a group of persons for whose benefit and guidance a professional supplies information, even if the person who becomes the plaintiff is not known to the professional as an individual. Appellees' Br. at 18.