In Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, the Supreme Court addressed "whether and to what extent an accountant's duty of care in the preparation of an independent audit of a client's financial statements extends to persons other than the client." ( Id. at p. 375.) Bily held that "an auditor's liability for general negligence in the conduct of an audit of its client financial statements is confined to the client, i.e., the person who contracts for or engages the audit services. Other persons may not recover on a pure negligence theory." ( Id. at p. 406, ) Further, intended beneficiaries of an audit may not recover on a general negligence theory. ( Id. at p. 413.) In that case, the accountancy firm of Arthur Young & Co. had prepared financial statements for the Osborne Computer Corporation. The plaintiffs in the action against Arthur Young & Co. were investors in the Osborne Computer Corporation and their claim was that the financial statements prepared by Arthur Young & Co. were seriously in error, that the plaintiffs had relied on those statements and that, as a result, they had sustained substantial economic harm. The contract under which Arthur Young & Co. had prepared the financial statements was with the Osborne Computer Company; the plaintiffs in Bily v. Arthur Young & Co, were not parties to that contract. The issue was "whether and to what extent an accountant's duty of care in the preparation of an independent audit of a client's financial statements extends to persons other than the client." (Id. at p. 375.) Plaintiffs were investors in a company. Defendant accounting firm was retained by the company to perform audits and issue audit reports on the company's financial statements. Defendant issued "unqualified" audit opinions, stating that upon review, the company's financial statements fairly presented its financial position. The reports were addressed to the company. The plaintiffs testified that their investments were made in reliance on defendant's unqualified audit opinions. (Id. at pp. 377-378.) One plaintiff did not rely on the audit reports. Judgment in his favor was reversed and no issue was raised in the Bily v. Arthur Young & Co matter as to him. (Bily, supra, 3 Cal.4th at p. 378, fn. 2.) Plaintiffs ultimately lost their investments when the company was forced into bankruptcy. They sued defendants for fraud, negligent misrepresentation, and professional negligence. (Id. at p. 379.) The court's "central concerns" were that (1) given the secondary "watchdog" role of the auditor, the complexity of audit opinions, and the potentially tenuous causal relationships between audit reports and economic losses from investment decisions, allowing liability to all foreseeable third parties would subject auditors to potential liability far out of proportion to their fault; (2) the more sophisticated class of plaintiffs in auditor liability cases permitted the effective use of contract rather than tort liability to control and adjust the risks through "private ordering" (as where investors could "privately order" the risk of inaccurate financial reporting by contractual arrangements with the client); and (3) the effect of imposing a duty on auditors to third persons was such that the costs outweighed the benefits (the court doubted that improvements in audit care would result from an expanded rule of liability, and that deleterious economic effects (increases in audit costs and decreases in availability of audit services) were just as likely to occur). (Bily, supra, 3 Cal.4th at pp. 398, 403-405.) Significantly, the court introduced the checklist of the aforesaid factors with the statement that "we have employed a checklist of factors to consider in assessing legal duty in the absence of privity of contract between a plaintiff and a defendant." (Bily, supra, 3 Cal.4th at p. 397.) Technicolor predicates its analysis of the duty issue on six factors identified in Bily v. Arthur Young & Co., supra, 3 Cal.4th 370, 397-398. These factors are: the extent to which the transaction was intended to affect the plaintiff; the foreseeability of harm to the plaintiff; the degree of certainty that the plaintiff suffered injury; the closeness of the connection between the defendant's conduct and the injury suffered; the moral blame attached to the defendant's conduct; and the policy of preventing future harm. (Ibid.) The Bily court concluded that "an auditor's liability for general negligence in the conduct of an audit of its client's financial statements is confined to the client, i.e., the person who contracts for or engages the audit services. Other persons may not recover on a pure negligence theory." (3 Cal.4th at p. 406.) The court examined the distinction between a cause of action for general negligence and a cause of action for negligent misrepresentation. "Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit. 'Where the defendant makes false statements, honestly believing that they are true, but without reasonable ground for such belief, he may be liable for negligent misrepresentation, a form of deceit.' (5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, 720 at p. 819; see also 1572, subd. 2 'the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true'; 1710, subd. 2 'the assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true'.)" (Bily, supra, 3 Cal.4th at pp. 407-408.) Representations by a professional expressing an opinion may be the basis for liability for negligent misrepresentation. "Under certain circumstances, expressions of professional opinion are treated as representations of fact. When a statement, although in the form of an opinion, is 'not a casual expression of belief' but 'a deliberate affirmation of the matters stated,' it may be regarded as a positive assertion of fact. Citation. Moreover, when a party possesses or holds itself out as possessing superior knowledge or special information or expertise regarding the subject matter and a plaintiff is so situated that it may reasonably rely on such supposed knowledge, information, or expertise, the defendant's representation may be treated as one of material fact. Citations." (Bily, supra, 3 Cal.4th at p. 408.) The statements in audit opinions were found to fall within these principles. (Ibid.) The question in Bily was whether the investors were entitled to rely on the auditor's representations. Traditionally, the "the person or 'class of persons entitled to rely upon the representations is restricted to those to whom or for whom the misrepresentations were made. Even though the defendant should have anticipated that the misinformation might reach others, he is not liable to them.' Citations." (Bily, supra, 3 Cal.4th at p. 408.) The Supreme Court adopted the approach of the Restatement Second of Torts section 552, subdivision (b). (Id. at p. 408.) Section 552 of the Restatement states "a general principle that one who negligently supplies false information 'for the guidance of others in their business transactions' is liable for economic loss suffered by the recipients in justifiable reliance on the information. (Id., subd. (1).) But the liability created by the general principle is expressly limited to loss suffered: '(a) By the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.' (Id., subd. (2).)" (Bily, supra, 3 Cal.4th at p. 392, quoting Rest.2d Torts; italics added.) The Supreme Court rejected criticism of the Restatement approach: "As the authors of section 552 observe, liability should be confined to cases in which the supplier 'manifests an intent to supply the information for the sort of use in which the plaintiff's loss occurs.' (Id., com. (a), italics added.)" (Bily, supra, 3 Cal.4th at p. 409, quoting Rest.2d Torts.) The court concluded that intended beneficiaries of the audit report are entitled to recovery on a negligent misrepresentation theory. (Id. at pp. 409-412.) In light of these principles, the Bily court suggested that the pattern jury instruction be revised in such cases to read: "'The representation must have been made with the intent to induce plaintiff, or a particular class of persons to which plaintiff belongs, to act in reliance upon the representation in a specific transaction, or a specific type of transaction, that defendant intended to influence. Defendant is deemed to have intended to influence its client's transaction with plaintiff whenever defendant knows with substantial certainty that plaintiff, or the particular class of persons to which plaintiff belongs, will rely on the representation in the course of the transaction. If others become aware of the representation and act upon it, there is no liability even though defendant should reasonably have foreseen such a possibility.'" (Id. at p. 414.) The Bily court anticipated application of these principles in the context of summary adjudication, recognizing that the question of intent to benefit a third party is not inevitably a question of fact. "If competent evidence does not permit a reasonable inference that the auditor supplied its report with knowledge of the existence of a specific transaction or a well-defined type of transaction which the report was intended to influence, the auditor is not placed on notice of the risks of the audit engagement. In such cases, summary adjudication will be appropriate because plaintiff will not, as a matter of law, fall within the class of intended beneficiaries." (Bily, supra, 3 Cal.4th at pp. 414-415.) Where the cause of action is for intentional fraud, different policy considerations are involved. (Bily, supra, 3 Cal.4th at p. 415.) "By joining with its client in an intentional deceit, the auditor thrusts itself into a primary and nefarious role in the transaction." (Ibid.) The Bily court explained that "in this context, the auditor's actual knowledge of the false or baseless character of its opinion is not required: 'If the defendant has no belief in the truth of the statement, and makes it recklessly, without knowing whether it is true or false, the element of scienter is satisfied.' Citations." (Ibid.) A revision of the pattern instruction on intentional misrepresentation was recommended by the Supreme Court: "'The representation must have been made with the intent to defraud plaintiff, or a particular class of persons to which plaintiff belongs, whom defendant intended or reasonably should have foreseen would rely upon the representation. One who makes a representation with intent to defraud the public or a particular class of persons is deemed to have intended to defraud every individual in that category who is actually misled thereby.' (See BAJI No. 12.50 third alternative; 1711.)" (Bily, supra, 3 Cal.4th at p. 415.) In sum, The Court concluded that while an independent accountant did not owe a general duty of care to third parties with respect to the conduct of an audit prepared for its client company, it could be liable for negligent misrepresentation to "intended beneficiaries" who relied on the audit report. In so holding, the court adopted section 552 of the Restatement Second of Torts, which provides that one who negligently supplies false information " 'for the guidance of others in their business transactions' " is liable for loss suffered " '(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.' " (Bily, supra, 3 Cal. 4th at p. 392, citing Rest.2d Torts, 552, subd. (2).) The Court held an accounting firm could never be liable to third parties for simple negligence in preparing an independent audit of a client's financial statements. ( Id. at p. 376.) The court did agree, however, an accounting firm may "be held liable for negligent misrepresentations in an audit report to those persons who act in reliance upon those misrepresentations in a transaction which the auditor intended to influence." (Ibid.) Later in this opinion, we will refer to this as the "intended reliance" rule. The court also held an accounting firm may be held liable "to reasonably foreseeable third persons for intentional fraud in the preparation and dissemination of an audit report." (Ibid.) The Court emphasized that there were three policy concerns that had to be considered before a duty could be found under the Biakanja v. Irving (1958) factors: (1) liability may in particular cases be out of proportion to fault; (2) parties should be encouraged to rely on their own ability to protect themselves through their own prudence, diligence and contracting power; (3) the potential adverse impact on the class of defendants upon whom the duty is imposed. (Bily, at pp. 399-405; See also Thing v. LaChusa, supra, 48 Cal. 3d at p. 668; Nally v. Grace Community Church (1988) 47 Cal. 3d 278, 297 253 Cal. Rptr. 97, 763 P.2d 948 "Mere foreseeability of the harm or knowledge of the danger, is insufficient to create a legally cognizable special relationship giving rise to a legal duty to prevent harm."; Elden v. Sheldon (1988) 46 Cal. 3d 267, 274 250 Cal. Rptr. 254, 758 P.2d 582 "Policy considerations may dictate a cause of action should not be sanctioned no matter how foreseeable the risk . . . for the sound reason that the consequences of a negligent act must be limited in order to avoid an intolerable burden on society.".) The Court rejected a claim against an accountant that had conducted audits of a company manufacturing personal computers. Even though the plaintiffs had allegedly made investments in reliance on the audit reports, the court held that an auditor can be held liable in general negligence only to the person or entity contracting for the auditing services. "In light of the relationships between auditor, client, and third party, and the relative sophistication of third parties who lend and invest based on audit reports, it might also be doubted whether auditors are the most efficient absorbers of the losses from inaccuracies in financial information. Investors and creditors can limit the impact of losses by diversifying investments and loan portfolios. They effectively constitute a 'broad social base upon which the costs of accounting errors can be spread.' In the audit liability context, no reason appears to favor the alleged tortfeasor over the alleged victim as an effective distributor of loss. . . . In applying the Biakanja factors . . ., we are necessarily required to make pragmatic assessments of the consequences of recognizing and enforcing particular legal duties. In our judgment, a foreseeability rule applied in this context inevitably produces large numbers of expensive and complex lawsuits of questionable merit as scores of investors and lenders seek to recoup business losses. In view of the prospects of vast if not limitless liability for the 'thoughtless slip or blunder,' the availability of other efficient means of self-protection for a generally sophisticated class of plaintiffs, and the dubious benefits of a broad rule of liability, we opt for a more circumscribed approach. In so doing, we seek to deter careless audit reporting while avoiding the specter of a level of liability that is morally and economically excessive." ( Bily, supra, 3 Cal. 4th at pp. 405-406; see also Quelimane Co. v. Stewart Title Guaranty Co., supra, 19 Cal. 4th at pp. 57-60.)