The action giving rise to this appeal was commenced in the United States District Court for the Southern District of New York (Cedarbaum, J.) by plaintiff-appellant Official Committee of the Unsecured Creditors of Color Tile, Inc. ("Color Tile Committee"), as assignee of the bankruptcy estate of Color Tile, Inc., against defendant-appellee Coopers & Lybrand, LLP ("Coopers"), an accounting firm that provided auditing and consulting services for Color Tile and its controlling shareholders. The services were provided in connection with a merger and acquisition transaction (the "Transaction") and a public debt offering that was used to finance the Transaction. The gravamen of the claims asserted against Coopers is that it breached the fiduciary duties it owed to Color Tile, as well as the terms and conditions of its consulting agreement with Color Tile, by failing to disclose to Color Tile's Board of Directors all material information pertaining to the Transaction. Color Tile Committee alleges that the Transaction would not have taken place had these disclosures been made. The District Court dismissed the claims for breach of fiduciary duty and breach of contract set forth in the Second Amended Complaint upon a finding that, under Texas law, the complaint failed to state claims upon which relief could be granted because the facts pled therein demonstrated as a matter of law the affirmative defense of in pari delicto. The District Court subsequently denied a motion filed by Color Tile Committee to reconsider the dismissal of the Second Amended Complaint in light of the District Court's decision to grant partial summary judgment in favor of certain other defendants and for leave to file a Third Amended Complaint.
On appeal, Color Tile Committee principally argues that the District Court erred in dismissing its Second Amended Complaint on the pleadings because the defense of in pari delicto had not been established as a matter of law. For the reasons that follow, we affirm the judgment of the District Court, although we decline to embrace the entirety of the District Court's analysis of Texas law with respect to the in pari delicto defense.
Miner '56, Roger J., "Official Committee v. Coopers & Lybrand, 322 F. 3d 147 - Court of Appeals, 2nd Circuit 2003" (2003). Circuit Court Opinions. 120.