BREVET DIRECT LENDING SHORT DURATION FUND v. APRIO LLP LLP (2024)

Order, Supreme Court, New York County (Jennifer G. Schecter, J.), entered on November 2, 2023, in index No. 656441/18, which, insofar as appealed from, granted defendant's motion for summary judgment dismissing Brevet Direct Lending–Short Duration, L.P.’s claims, unanimously affirmed, without costs.  Order, same court and Justice, entered on December 1, 2023, in index No. 650651/19, which, insofar as appealed from as limited by the briefs, granted defendant's motion for summary judgment dismissing BHSC Global, LLC, BHSC Global Holdings, LLC, and Royal SEM, LLC's claims, unanimously affirmed, without costs.

Contrary to plaintiffs’ contention, gross negligence does not always present a question of fact precluding summary judgment (see e.g. Colnaghi, U.S.A. v. Jewelers Protection Servs., 81 N.Y.2d 821, 823–824, 595 N.Y.S.2d 381, 611 N.E.2d 282 [1993];  David Gutter Furs v. Jewelers Protection Servs., 79 N.Y.2d 1027, 1029, 584 N.Y.S.2d 430, 594 N.E.2d 924 [1992]).

Both complaints allege that defendant breached its duty under the American Institute of Certified Public Accountants’ Statement on Standards for Consulting Services.  This constitutes a formal judicial admission (see e.g. Penna, Inc. v. Ruben, 72 A.D.3d 523, 523–524, 898 N.Y.S.2d 143 [1st Dept. 2010]).  Thus, plaintiffs’ contention that there are issues of fact as to whether defendant's confirmation of the accounts receivable should be governed by audit/attestation standards, is unavailing.

“Gross negligence, when invoked to pierce an agreed-upon limitation of liability in a commercial contract, must smack of intentional wrongdoing or evince a reckless indifference to the rights of others” (Matter of Part 60 Put–Back Litig., 36 N.Y.3d 342, 352, 141 N.Y.S.3d 410, 165 N.E.3d 180 [2020] [brackets and internal quotation marks omitted]).  Defendant's failure to check if the addresses from which emails, which did not bounce back and which appeared to come from legitimate addresses, were sent were the actual addresses of their purported senders, does not meet this standard.  Defendant's conduct “does not evince the recklessness necessary to abrogate” a contractual limitation of liability (Colnaghi, 81 N.Y.2d at 824, 595 N.Y.S.2d 381, 611 N.E.2d 282).

In index no. 656441/18, Brevet's argument that it is entitled to statutory interest and/or lost profits is unpreserved.  Unlike the situation in 13th & 14th St. Realty LLC v. Board of Mgrs. of the A Bldg. Condominium, 132 A.D.3d 561, 17 N.Y.S.3d 867 (1st Dept. 2015), this issue is not determinative – the court did not grant defendant's motion on this basis.