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Chicago (March 12, 2003) -- The Georgia Supreme Court has overturned the Georgia Court of Appeals and struck down a $44 million damages award against BDO Seidman.The Supreme Court ruled unanimously that the trial court erred in its instructions to the jury, resulting in an inappropriate award. It ordered a new trial to determine proper damages, if any, in Mindis Acquisition Corporation v. BDO Seidman.
Denis Field, chairman and chief executive officer, said that BDO is preparing for a new trial "in which we will prove that Mindis Acquisition Corporation suffered no damages at all."
At the original trial, the jury awarded $44 million to Mindis Acquisition (MAC) despite the fact that MAC only paid $40 million for the scrap metal company, a former audit client of BDO. The trial judge threw out the verdict entirely, finding lack of reasonable reliance by the purchaser on the audited financial statements. The Court of Appeals reversed the trial judge and reinstated the jury verdict.
In the latest decision, the Supreme Court found that the measure of damages used in the trial, the "benefit-of-the-bargain" standard, was not correct for a negligence case where no fraud or deliberate misconduct on the part of the auditor was alleged. Instead, the trial judge should have instructed the jury to apply the "out-of-pocket" loss standard--the difference, if any, between what was paid and the value received.
-- Electronic Accountant Newswire staff
