Here's an engaging story inspired by a true case to answer a key question for successful business owners:
If your customer gets into a lawsuit with someone else, can you be blamed for the damages just because your services related to their dispute?
By the Way, You’re Being Sued Too!
The sun had barely risen over Morristown, New Jersey, when Tony Capello stepped into his office, coffee in one hand, regret in the other.
Three months earlier, he’d proudly closed the books on what was supposed to be his firm’s signature deal of the year: the sale of a bustling Honda dealership on Route 10. Tony was the managing partner at Capello & Stein, a boutique accounting firm that promised “due diligence with distinction.” The client? A fast-talking, high-energy entrepreneur named Rick DiLuca, who had just bought the dealership through his company, MetroMotors NJ.
Rick had swagger. He wore Italian loafers with no socks and once called his own haircut “a brand asset.” He’d been eyeing the dealership for months and finally pulled the trigger after Tony’s team gave him the green light. The sellers, Donovan Auto Group,-/7 seemed like seasoned operators. Everyone shook hands, signed papers, and toasted with espresso shots at a gas station café.
But 90 days later, Rick stormed back into Tony’s office like a hurricane with product knowledge.
“This place is a financial black hole,” Rick growled, waving a folder full of red ink. “They cooked the books. And guess who’s getting sued? Me.”
Tony blinked. “Okay... but why are you here?”
“Because I’m suing you next,” Rick snapped. “Your due diligence missed this mess. If they defrauded me, and you didn’t catch it, you're part of the problem.”
Tony blinked again, slower this time.
The Blame Game
What followed was a legal mess messier than a Jersey diner at 2 a.m. Rick sued Donovan Auto Group for fraud, claiming they had misrepresented the dealership’s profitability. But he didn’t stop there, he dragged Capello & Stein into it too, filing a third-party complaint for professional malpractice. According to Rick, Tony and his team should have flagged the dealership’s shaky numbers and saved him from himself.
Tony’s lawyer called it “blame-by-proximity.” Their defense? Pretty simple: Rick admitted in his deposition that he bought the dealership despite their lukewarm advice. He was going to make that deal no matter what the numbers said. The accountant’s report could’ve come with a skull and crossbones watermark and Rick would’ve still inked the contract.
Rick’s team never produced the expert evidence required to support a malpractice claim. No testimony about what standard of care Tony’s firm allegedly breached. No explanation of how the supposed errors actually caused the harm. Just a vague, finger-pointy mess.
The court wasn't impressed.
The judge threw out the malpractice claim against Capello & Stein, ruling that expert testimony was required to establish professional negligence, and Rick’s team hadn’t brought it. The court also wasn’t buying the argument that this was a “common knowledge” case that didn’t need the insights of a specialist. This wasn’t the kind of mistake you can spot from across the room. It needed an expert.
But that didn’t mean everyone walked away clean. The fraud claim against the dealership’s sellers stuck. There was enough smoke for the judge to let that fire go to trial. And since Rick was suing them for damages, the court also put a pause on enforcing the promissory note tied to the sale.
Tony exhaled. He wasn’t being blamed for someone else’s business brawl — this time. But the experience left him rattled.
That night, he rewrote every engagement letter his firm had. Each one now had a clause that said, in plain English: “If your deal turns into a lawsuit, and we’re not the cause, don’t name us as co-stars.”
Takeaway for Business Owners
So dear business owners, remember: Make sure your contract with a customer protects you if you are blamed for damages in a lawsuit between your customer and someone else.
This story is based on a real court case, with names and details modified for clarity and confidentiality. The legal principles remain the same, providing important lessons for business owners facing similar situations
Are you wondering about any of the issues mentioned above? Please email us at info@wilkinsonlawllc.com or call (732) 410-7595 for assistance.
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