Pennsylvania Superior Court Reinstates Le-Nature’s Trustee’s Malpractice Complaint Against Law Firm and Accounting Firm

Pennsylvania Superior Court Reinstates Le-Nature’s Trustee’s Malpractice Complaint Against Law Firm and Accounting Firm

On May 14, 2012, the Pennsylvania Superior Court reversed the trial court’s dismissal of the action brought by Kasowitz, on behalf of the Trustee for the Le-Nature’s Liquidation Trust against the law firm K&L Gates, LLP and the accounting firm Pascarella & Wiker, LLP alleging that the defendants’ professional negligence, in failing to uncover massive fraud at Le-Nature’s in their investigation of the company, led to more than $500 million dollars in damages to Le-Nature’s and led to Le-Nature filing for bankruptcy.  In its far-reaching decision, the Superior Court rejected the notion that an insolvent corporation suffers no damages from the misconduct of those substantially assisting a fraud and found that the Trustee was seeking damages, including for increased liabilities, decreased value of assets, additional looting, and corporate waste that was “cognizable and compensable.”  The Superior Court also rejected the defendants’ in pari delicto defense and held that the Trustee sufficiently alleged that the defendants did not act in good faith and that material misstatements of corporate financial information so as to hide looting of the company did not provide any benefit to Le-Nature's.  Kasowitz partners Hector Torres, David S. Rosner, Christine A. Montenegro and Kim Conroy are leading the firm’s representation of Le-Nature’s in this matter.