BDO Seidman, LLP v. Mindis Acquisition Corp.
Georgia Supreme Court
276 Ga. 311, 578 S.E.2d 400 (2003)
BDO Seidman, LLP (BDO) (plaintiff) was an accounting firm that performed audits of financial statements. BDO audited the financial statements of Mindis Corporation and certified that the financials were free of material misstatements, including as to Mindis’s reported inventory value. Relying on Mindis’s audited financial statements, Mindis Acquisition Corp. (MAC) (defendant) purchased Mindis for a certain price. Subsequently, MAC discovered that Mindis’s inventory value was less than what was reported on the financial statements. MAC sued BDO for negligent misrepresentation based on an allegedly negligent audit. A jury trial ensued. The trial court instructed the jury that the proper measure of damages in a case of negligent misrepresentation was the benefit-of-the-bargain standard. The jury returned a verdict for MAC of $44 million. The court of appeals affirmed. The Georgia Supreme Court agreed to review the matter, considering BDO’s argument that the jury was instructed with an improper standard of damages.
Rule of Law
Holding and Reasoning (Fletcher, C.J.)
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