North American Specialty Insurance Co. v. Lapalme

258 F.3d 35 (2001)

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North American Specialty Insurance Co. v. Lapalme

United States Court of Appeals for the First Circuit
258 F.3d 35 (2001)

  • Written by Sharon Feldman, JD

Facts

Jeffrey Canty owned Canty Roofing and Sheetmetal, Inc. (CRS). Massachusetts law required contractors to post a bond for each public project. North American Specialty Insurance Co. (NASI) (plaintiff) provided the bonds for CRS’s public jobs. After Canty sold CRS, CRS’s accounting firm, Dias & Lapalme (D&L) (defendant) prepared a 1995 financial statement. The statement lacked specific information about the ownership change and misleadingly implied that Canty was continuing as CRS’s sole shareholder. NASI wrote bonds for CRS’s new public projects. CRS defaulted on the bonds, costing NASI almost $2 million. NASI sued D&L and partner David Lapalme (defendant) for negligent misrepresentation, alleging it would not have continued to issue bonds had D&L’s financial statement been accurate. A new owner testified that he told Lapalme the new owners would use the 1995 financial statement to meet CRS’s obligation for ongoing bonds. The new owners were looking for new accountants and were required to retain D&L only until the financials for 1995 were completed. The district court granted summary judgment to D&L and Lapalme. NASI appealed.

Rule of Law

Issue

Holding and Reasoning (Selya, J.)

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