ERNST & YOUNG v. PACIFIC MUT. LIFE INS. CO.

No. 00-0232.

51 S.W.3d 573 (2001)

ERNST & YOUNG, L.L.P., Petitioner, v. PACIFIC MUTUAL LIFE INSURANCE COMPANY, Respondent.

Supreme Court of Texas.

Decided June 21, 2001.


Attorney(s) appearing for the Case

Ralph I. Miller, Collyn A. Peddie, Weil Gotshal & Manges, Dallas, J. Andrew Heaton, Asst. Gen. Counsel, Washington, DC, for Petitioner.

Bruce A. Budner, Bruce A. Budner & Associates, Dallas, Stewart M. Weltman, Stewart M. Waltman & Associates, Chicago, IL, for Respondent.


Justice O'NEILL delivered the opinion of the Court.

In this case, we must decide the scope of an accounting firm's liability for making fraudulent misrepresentations in an audit report. Specifically, we consider whether the intent-to-induce-reliance element of a fraud claim requires a direct relationship between the alleged fraudfeasor and a specific known person—commonly referred to in this context as "privity." The court of appeals followed the Restatement...

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