                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: February 18, 2016                   521496
________________________________

TOWN OF KINDERHOOK,
                      Respondent,
     v                                      MEMORANDUM AND ORDER

LEONARD W. VONA et al.,
                    Appellants,
                    et al.,
                    Defendant.
________________________________


Calendar Date:   January 6, 2016

Before:   McCarthy, J.P., Garry, Rose and Devine, JJ.

                             __________


      Hanlon & Veloce, Latham (Christine D'Addio Hanlon of
counsel), for appellants.

      Tabner, Ryan & Keniry, LLP, Albany (Thomas R. Fallati of
counsel), for respondent.

                             __________


Devine, J.

      Appeal from an order of the Supreme Court (Mott, J.),
entered May 21, 2015 in Columbia County, which denied a motion by
defendants Leonard W. Vona and Fraud Auditing, Inc. for summary
judgment dismissing the complaint against them.

      Pegeen Mulligan-Moore served as plaintiff's bookkeeper from
2002 until 2010. Douglas McGivney was plaintiff's Supervisor
during that period and, in 2008, learned that plaintiff was
experiencing cash flow problems and that Mulligan-Moore had
deposited a large personal check into plaintiff's bank account.
He accordingly contacted defendant Leonard W. Vona, a certified
public accountant and certified fraud examiner, and asked Vona to
                              -2-                521496

look into the situation. No written agreement was reached as to
the nature and extent of Vona's services, but an accountant in
his employ reviewed documents provided by plaintiff, and a
December 2008 report found no cause for suspicion with regard to
the check or any other payments made on plaintiff's behalf by
Mulligan-Moore from January 2007 to August 2008. Vona was
compensated for having produced the report and subsequently did
consulting work for plaintiff.

      Mulligan-Moore was replaced after McGivney left office,
after which it became clear that she had falsified the records
provided to Vona and had embezzled over $400,000 from plaintiff
from 2007 onward.1 Plaintiff commenced this action in 2011,
asserting that Vona and related entities breached the terms of
their contract with plaintiff and were professionally negligent
in failing to uncover the malfeasance of Mulligan-Moore. Vona
and defendant Fraud Auditing, Inc. (hereinafter collectively
referred to as defendants) served an answer and, following
discovery, moved for summary judgment dismissing the complaint
against them. Supreme Court denied the motion, and this appeal
ensued.

      To prevail on their motion for summary judgment, it was
incumbent upon defendants "to tender evidentiary prima facie
proof in admissible form sufficient to justify judgment as a
matter of law in [their] favor that [they] did not breach the
contract or perform [their] services in a professionally
negligent manner" (Cumis Ins. Socy. v Tooke, 293 AD2d 794, 796
[2002]; see Kristina Denise Enters., Inc. v Arnold, 41 AD3d 788,
788-789 [2007]). Defendants devote the bulk of their energies
attacking plaintiff's claim for accounting malpractice, which
"contemplates a failure to exercise due care and proof of a
material deviation from the recognized and accepted professional
standards for accountants and auditors, . . . which proximately
causes damage to plaintiff" (Cumis Ins. Socy. v Tooke, 293 AD2d


    1
        Mulligan-Moore was convicted of numerous offenses
relating to her thefts from plaintiff and another municipality,
for which she served a term of imprisonment and was ordered to
pay restitution (People v Mulligan-Moore, 112 AD3d 1154 [2013]).
                              -3-                521496

at 797-798; accord Board of Trustees of IBEW Local 43 Elec.
Contrs. Health & Welfare, Annuity & Pension Funds v D'Arcangelo &
Co., LLP, 124 AD3d 1358, 1359 [2015]). Defendants argue that
plaintiff did not retain them to perform an audit and that, as a
result, they cannot be held liable for failing to properly
perform one. They further argue that, even if they were engaged
by plaintiff, their failures were not the proximate cause of its
damages.

      Vona specifically testified that he was not engaged to
perform an audit, as an audit of town finances was not within his
practice area and plaintiff did not wish to expend the sums
necessary for a thorough investigation. Vona was plainly engaged
to do something, however, as he tasked a subordinate with
examining records provided by plaintiff to determine if there
were overt problems and he billed plaintiff for a "review of
[plaintiff's] checking account." He ultimately issued a written
report reflecting that he had been hired "to examine documents
and records of [plaintiff] for the direct purpose of offering
opinions regarding those documents," finding that there was
nothing suspicious in those documents, and making various
recommendations as to improved procedures. Defendants submitted
the affidavit of a certified public accountant who categorized
this work as a limited assignment to make findings based on
documents provided by plaintiff, and opined that defendants had
no duty to obtain the original banking documents in this non-
audit because they had no authority to do so. He further opined
that the losses incurred by plaintiff stemmed from the absence of
internal controls over finances rather than any failings on the
part of defendants, although he notably failed to explain how
defendants' "alleged failure to detect and report the [fraud] was
not a proximate cause of the damages allegedly sustained by
plaintiff[]" (C.P. Ward, Inc. v Deloitte & Touche LLP, 74 AD3d
1828, 1830 [2010]; see Collins v Esserman & Pelter, 256 AD2d 754,
757 [1998]).

      Even accepting that the foregoing made out a prima facie
case for summary judgment, material questions of fact were raised
by plaintiff with the affidavit of accounting professor Eric
                              -4-                521496

Lewis.2 Lewis made the obvious point that it was impossible for
an accountant to perform work for a client without being engaged
in some manner, and stated that examining financial records to
determine whether funds were being handled improperly was an
"audit-level service." He further opined that, regardless of
whether defendants were hired to conduct an audit or a less
intensive service, they deviated from professional standards by
failing to conduct a thorough investigation or otherwise
explaining to plaintiff that the original banking records were
essential to performing one. The deceptions of Mulligan-Moore
would have been discovered had defendants acted according to
professional accounting standards and obtained the original,
unaltered banking records, and Lewis opined that defendants'
departure from those standards allowed the embezzlement to
continue. Accordingly, Supreme Court properly denied that part
of the motion seeking summary judgment on the accounting
malpractice claim (see C.P. Ward, Inc. v Deloitte & Touche LLP,
74 AD3d at 1830-1831; Cumis Ins. Socy. v Tooke, 293 AD2d at 798-
799).

      Defendants lastly argue that the claim for breach of
contract was duplicative of the claim for professional
malpractice, pointing out that the alleged breach stemmed from
their failure to perform their professional obligations rather
than any distinct contractual requirement. Plaintiff failed to
raise a question of fact as to whether defendants had agreed to
do anything beyond performing their "ordinary professional
obligations" – indeed, Lewis acknowledged that "there is no
evidence of any such agreed-upon procedures" – and Supreme Court
should have granted that part of defendants' motion seeking


    2
        Defendants' claim that Lewis was not qualified to offer
an opinion is unpreserved in light of their failure to raise the
issue before Supreme Court (see Edmund v Albert Einstein Hosp.,
118 AD3d 578, 579 [2014]). In any case, Lewis has extensive
accounting experience, "and the alleged deficits in [his]
qualifications go to the weight, not the admissibility, of [his]
opinion" (Jianrong Wang v Shao Ke, 77 AD3d 1113, 1115 [2010], lv
denied 16 NY3d 713 [2011]; see Plourd v Sidoti, 69 AD3d 1038,
1039 [2010]).
                              -5-                  521496

dismissal of the breach of contract claim (Matter of R.M. Kliment
& Frances Halsband, Architects [McKinsey & Co., Inc.], 3 NY3d
538, 542 [2004]; see Mary Imogene Bassett Hosp. v Cannon Design,
Inc., 127 AD3d 1377, 1379 [2015]; Cherry v Decker, 280 AD2d 867,
868 [2001]).

     McCarthy, J.P., Garry and Rose, JJ., concur.



      ORDERED that the order is modified, on the law, without
costs, by reversing so much thereof as denied that part of the
motion by defendants Leonard W. Vona and Fraud Auditing, Inc. for
summary judgment seeking dismissal of plaintiff's breach of
contract cause of action; motion granted to that extent and said
cause of action dismissed; and, as so modified, affirmed.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
