The defendant is correct in its statement of Texas law, which prohibits the “fracturing” of
a professional malpractice action by use of a breach of contract action. See Askanase v. Fatjo,
828 F.Supp. 465, 469 (S.D.Tex. 1993) (gathering Texas law on the point). In Blackwell v.
Deloitte & Touche, LLP, however, this court wrote in its recommendation to the district court
that “at this early stage in the proceedings, it is not certain that plaintiff could prove no set of
facts in support of a breach of contract action which is separate from his claim for
negligence/professional malpractice.” The district court accepted that recommendation, over the
Bankruptcy Judge at 3, Blackwell v. Deloitte & Touche, LLP, CA SA-03-CA-143-FB (July 30,
2003). There could, in theory, be causes of action which are uniquely contractual in nature, as
there were in the Blackwell matter. In that case, the court observed that there were some terms in
the engagement letter that were “more truly contractual” ... for example “a failure to disclose
irregularities, illegal acts, or reportable conditions to the board of directs would directly
contravene an express contractual duty set out in the engagement letter.” Id.
The problem for the Committee here is that it relies on the same exact allegations for its
breach of contract claims as it does its negligence/malpractice claims (failure to abide by the US
GAAS and AICPA standards). When a plaintiff’s breach of contract claim is nothing more than
a thinly disguised restatement of a claim for breach of a professional’s duty, the claim cannot
stand. Askanase v. Fatjo, supra.14 This action cannot stand as currently pleaded. Nonetheless,
given the standard for dismissal under Rule 12(b)(6) so recently reiterated by the Fifth Circuit in
Posey, the court best avoids error by affording the plaintiff the opportunity to replead its contract
action with facts and allegations that will survive the legal standard set by Texas law. If the
plaintiff fails to replead within twenty days of entry of this decision and order, then the breach of
14 See Goffney v. Rabson, 56 S.W.3d 186, 191 n.4 (Tex. App. - Houston 2001); Jordan v. Bustamante, 158 S.W.3d 29, 36 (Tex. App. Houston 2005); Archer v. Medical Protective Co. of Ft. Wayne, 2004 WL 119445 at *4 (citing cases); see also FDIC v. Ernst & Young, 967 F.2d 166, 172 (5th Cir. 1992).