Bailey, J.
Case Summary
Magic Circle Corporation d/b/a Dixie Chopper (“Magic Circle”) and several of its shareholders filed a multi-count complaint against numerous parties, including Magic Circle’s former auditing firm, Crowe Horwath LLP (“Crowe”). The trial court dismissed several counts, and this Court affirmed that decision on appeal, leaving only two counts against Crowe. Subsequent to the appeal, Crowe filed a motion to dismiss the remaining counts against it, and the trial court granted Crowe’s motion on the grounds that the claims were barred by the economic loss rule and several exculpatory provisions. Magic Circle now appeals the trial court’s order.
We reverse and remand for further proceedings.
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However, our supreme court has made clear that the economic loss rule is a general rule, and thus certain purely economic losses fall within exceptions that permit recoveries at tort. Id. Among the exceptions articulated by the Indiana Supreme Court are “lawyer malpractice, breach of a duty of care owed to a plaintiff by a fiduciary, breach of a duty to settle owed by a liability insurer to the insured, and negligent misstatement.” Id. at 736. Magic Circle argues that the nature of its negligence claim—accountant malpractice—is among the exceptions to the rule.
We have found no Indiana case that addresses directly the question of whether the economic loss rule applies to bar actions at tort for accountant malpractice….
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… However, we conclude that the trial court was incorrect as a matter of law when it concluded that the economic loss rule barred Magic Circle’s tort claim against Crowe. We agree with our sister courts that the full scope of the work performed by an accountant is not capable of being described in an engagement letter, and that the real benefit of the work of an auditor is the audit itself—not simply the resultant documents. Crowe’s engagement letters indicate that the firm would exercise considerable independent judgment, referring on several occasions to the generation of “opinion” concerning Magic Circle’s financial status. (App’x Vol. 2 at 68, 69.) The wide-ranging scope of the work is further noted in the engagement letter with reference to Crowe’s request for contact persons toward whom to direct inquiries. We accordingly hold that the trial court erred as a matter of law when it concluded that Magic Circle had failed to state a claim in tort due to the operation of the economic loss rule.
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Conclusion
The economic loss rule does not have the effect of barring an accountant malpractice claim at tort. The exculpatory and limitation of liability clauses did not operate to preclude a recovery such that Magic Circle failed to plead a claim upon which, based upon the facts as pled in the complaint, relief could be granted. Thus the trial court erred in dismissing the Second Amended Complaint as to negligence through accountant malpractice.
Reversed and remanded.
Vaidik, C.J., and Riley, J., concur.