Caprer v. Nussbaum

In Caprer v. Nussbaum, 36 AD3d 176 [2d Dept 2006] the Appellate Division, Second Department held there were triable issues of fact over whether an individual condominium owner could sue the accountant individually for the accountant's malpractice based on the following facts showing that the unit owners had a relationship sufficiently close to privity: (1) the unit owners were the intended beneficiaries of the accountant's work; (2) the accountants were hired to represent the condominium's records and provide an annual audit; (3) the accountants were paid out of the common charges paid by unit owners; (4) there were several communications between the accountants and several unit owners; (5) the accountants expressly reassured several unit owners of the accuracy of the accounts and vouched for the financial security of the condominium. The Second Department created the right for condominium unit owners to bring a derivative action against the sponsor and sponsor appointed board members. In Caprer, supra at 36 AD3d at 190; 825 NYS2d at 68, the Court held: "The same factors that caused the courts to fashion the derivative action procedure for shareholders and limited partners thus apply to condominium unit owners. All are owners of fractional interests in a common entity run by managers who owe them a fiduciary duty that requires protection. Condominium unit owners are, therefore, entitled to the same consideration by the courts as litigants in those situations in which the courts have historically allowed derivative actions to proceed, independent of any statutory authority." The court, however, did not address the issue of whether the additional pleading requirements of CPLR 3016 (b) were applicable to condominium owner derivative actions