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N.K.S. Distributors, Inc. v. Wheeler, Wolfenden & Dwares, P.A.

Superior Court of Delaware, New Castle

September 26, 2014

N.K.S. DISTRIBUTORS, INC. and ROBERT F. TIGANI, SR., Plaintiffs,
v.
WHEELER, WOLFENDEN & DWARES, P.A., Defendant
v.
CHRISTOPHER J. TIGANI, MY PAL LLC, MY PAL #2 LLC, and WORLD CLASS WHOLESALE, INC., Third-Party Defendants.

Date Submitted: June 23, 2014.

Upon Plaintiffs' Motion to Strike or Alternatively for Partial Summary Judgment: DENIED.

Kevin William Gibson, Esquire, Gibson & Perkins P.C., Attorney for the Plaintiffs.

Thad J. Bracegirdle, Esquire, Wilks Lukoff & Bracegirdle LLC, Attorney for Defendant-Third Party Plaintiff Wheeler, Wolfenden & Dwares, P.A.

OPINION

JAN R. JURDEN, Judge.

I. INTRODUCTION

Before the Court is Plaintiffs'[1] Motion to Strike or Alternatively for Partial Summary Judgment. Plaintiffs filed suit against Defendant Wheeler, Wolfenden & Dwares, P.A. ("WWD"), alleging that WWD committed professional malpractice while performing auditing services for N.K.S. Distributors, Inc. ("N.K.S."). Specifically, Plaintiffs allege that WWD negligently failed to discover the misappropriation of millions of dollars from N.K.S. by Christopher Tigani ("Chris Tigani") during the time he served as N.K.S.'s President and later Vice President.

WWD filed a Third-Party Complaint against Chris Tigani and his companies, My Pal LLC, MY Pal #2 LLC, and World Class Wholesale, Inc. (collectively "My Pal"), and raised the affirmative defense of in pari delicto seeking contribution from Chris Tigani and My Pal. WWD maintains that Plaintiffs' claims are barred in whole or in part by the equitable doctrine of in pari delicto because Chris Tigani's improper acts are imputed to N.K.S. by virtue of his former position as a corporate officer and minority shareholder, such that Plaintiffs are precluded from recovery as a fellow guilty party.

Plaintiffs ask the Court to strike WWD's fourth affirmative defense raising the doctrine of in pari delicto pursuant to Superior Court Civil Rule 12(f), or alternatively, for partial summary judgment regarding this affirmative defense.

Plaintiffs argue that the affirmative defense of in pari delicto should be stricken because: (1) the doctrine in the context of auditor malpractice is not clearly settled in Delaware and is inapplicable in the present case; and (2) even if the doctrine applies in an auditor malpractice case, Plaintiffs' claims fall under the "adverse interest exception" because Chris Tigani's actions were purely self-interested, in no way benefited N.K.S., and seriously damaged N.K.S.. Alternatively, Plaintiffs argue they are entitled to partial summary judgment on the in pari delicto defense.

In response, WWD argues that Plaintiffs' motion to strike is untimely pursuant to Rule 12(f), and their request for summary judgment on the affirmative defense of in pari delicto is premature. For the reasons that follow, Plaintiffs' Motion to Strike or Alternatively for Partial Summary Judgment is DENIED.

II. FACTS

N.K.S. is a Delaware corporation which operates in the business of wholesaling and distributing beer, wine, and other alcoholic beverages.[2] Bob Tigani is N.K.S.'s Chairman and President.[3] Prior to his removal for financial mismanagement in April 2009, Chris Tigani exercised day-to-day operational control of N.K.S. as President and later Vice President for Sales and Marketing.[4]

WWD is an accounting firm with its principal place of business in Delaware.[5] From approximately January 1, 2005 until May 1, 2009, N.K.S. retained the services of WWD to audit its financial records and prepare financial statements for N.K.S.'s officers and directors.[6] Plaintiffs allege that during this time Chris Tigani "pilfered N.K.S.'s corporate accounts and lines of credit exclusively for his ...


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