RGH LIQUIDATING TRUST v. DELOITTE TOUCHE LLP (2008)

Order, Supreme Court, New York County (Karla Moskowitz, J.), entered September 29, 2006, which, to the extent appealed from, dismissed plaintiff's fourth cause of action for fraudulent conveyance and all causes of action asserted by plaintiff on behalf of Reliance Group Holdings (RGH) and Reliance Financial Services (RFS), unanimously affirmed, with costs.

 The fourth cause of action for fraudulent conveyance was properly dismissed for failure to plead lack of fair consideration (see Debtor and Creditor Law §§ 272, 273).   While the complaint alleges deficiencies in the accounting and actuarial work performed by defendants before RGH and RFS filed for bankruptcy, it does not allege that defendants failed to provide the services for which they were paid.

 The causes of action asserted on behalf of RGH and RFS were improperly dismissed as barred by the doctrine of judicial estoppel.   RGH and RFS and defendant Deloitte & Touche applied jointly to the bankruptcy court for an order authorizing RGH and RFS to retain Deloitte, and the order was granted based on the representations of RGH and RFS and Deloitte.   Thus, it cannot be said that RGH and RFS obtained a “ruling in their favor” and adverse to Deloitte (see Olszewski v. Park Terrace Gardens, Inc., 18 A.D.3d 349, 350-351, 798 N.Y.S.2d 1 [2005];  see also In re BCP Mgt., Inc., 320 B.R. 265, 275-279 [D.Del.2005] ).   Moreover, it was Deloitte that was in a position to know whether or not the representation that it was a “disinterested person” under the Bankruptcy Code (11 USC § 101[14];  § 1107[b] ) was false (see generally Rome v. Braunstein, 19 F.3d 54 [1st Cir.1994] ).

 However, plaintiff's fraud claims were properly dismissed as duplicative of its breach of contract claim, since they are based on alleged fraudulent misrepresentations related to defendants' obligation under their agreements with RGH and RFS to conduct audits of financial statements with reasonable care, and allege no misrepresentations collateral or extraneous to the agreements (Coppola v. Applied Elec. Corp., 288 A.D.2d 41, 42, 732 N.Y.S.2d 402 [2001] ).   The breach of contract claim is, as defendants correctly contend, in essence a claim of professional malpractice (as are all plaintiff's claims) (see American Tissue, Inc. v. Arthur Andersen LLP, 275 F.Supp.2d 398, 405 n. 7 [S.D.N.Y.2003] ), and was properly dismissed as barred by the three-year statute of limitations for malpractice claims “regardless of whether the underlying theory is based in contract or tort” (CPLR 214[6];  Matter of R.M. Kliment & Frances Halsband, Architects (McKinsey & Co., Inc.), 3 N.Y.3d 538, 788 N.Y.S.2d 648, 821 N.E.2d 952 [2004] ).   This action, which alleges deficient accounting services in connection with audits and actuarial opinions issued in 1999-2000, was not commenced until January 6, 2006.

We have considered and rejected appellant's remaining contentions.