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Complaint at 19. At best, this allegation, accepted as true, would demonstrate negligence on the

part of the officers and directors, but not a breach of their fiduciary duty. Even if the failure to

supervise were characterized as a breach of fiduciary duty, it is difficult to comprehend how

Grant Thornton could “knowingly participate” in a breach of fiduciary duty described as “failure

to supervise the auditors,” by failing to perform the audit properly. It makes not sense to say that

Grant Thornton knowingly participated in the officers’ failure to supervise Grant Thornton –

especially if that “knowing participation” consisted solely of not performing the audit properly

due to an alleged lack of supervision.

Once again, however, mindful of the difficult standard for dismissal set by Posey, the

court will permit the Committee to replead this claim, if it can. If the claim is not repleaded,

then the claim will be dismissed.

Claim for Exemplary Damages

Grant Thornton argues that the Committee must plead that Grant Thornton’s conduct was

grossly negligent pursuant to section 41.003 of the Texas Civil Practice and Remedies Code.

Therefore, Grant Thornton argues, the Committee must plead that “1) Grant Thornton’s alleged

negligent acts when viewed objectively from Grant Thornton’s perspective involved an extreme

degree of risk, considering the probability and magnitude of the harm; and (2) Grant Thornton

had actual, subjective awareness of the risk involved but proceeded in conscious indifference to

its client’s rights, safety or welfare.

The Committee argues that it has properly pleaded this claim because it has tracked the

statute:

Grant Thronton’s wrongful acts … were aggravated by the kind of conduct for which the law permits exemplary damages. When viewed objectively from Grant Thornton’s viewpoint at the relevant times, Grant Thornton’s conduct involved an extreme degree of risk, considering the probability and magnitude of the potential harm to the Debtors. Further, Grant Thornton was subjectively aware of the risks involved, but proceeded with

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