Appellate Court Upholds $10M Ruling Against PwC

Georgia's Court of Appeals upheld a $10 million jury verdict against Big Four firm PricewaterhouseCoopers on behalf of four family trusts. In 2007, a jury in Cobb County found the audit firm liable for negligent misrepresentation in a series of financial audits of a nursing home conglomerate. In 1995, Georgia businessmen and brothers Stiles A. Kellett Jr. and Samuel B. Kellett had merged their Marietta, Ga.-based nursing home, Convalescent Services, with the larger Mariner Health Group. Six years ago, the Kelletts, two of their limited liability partnerships and four Kellett family trusts sued PwC and three former senior executives of Mariner Health, charging that the defendants engaged in fraud that ultimately cost the Kelletts more than $126 million in stock losses. In the suit, the Kelletts sought more than $400 million and to prevent PwC from doing business in the state of Georgia. The litigation charged that Coopers & Lybrand, the precursor firm to PwC, had generated inaccurate financials on Mariner that overstated earnings and understated liabilities. The Kelletts claimed that the misstatements persuaded them that the merger would be a profitable one.