Wisconsin Supreme Court rules former shareholder cannot sue.

• Date: 15 June 2009
• Author: Ziemer, David

Byline: David Ziemer

Third parties lack standing to sue an accountant unless it was reasonably foreseeable that they would rely on the accountant's reports.

The June 10 opinion from the Wisconsin Supreme Court also clarifies when shareholders should bring derivative or direct actions.

Henry J. Krier and Michael Vilione were business partners whose operations were divided between three corporations -- EOG Disposal; EOG Environmental; and Vil-Kri Invest-ments.

Michael's brother, Donald Vilione, who works at Virchow Krause & Company, was the accountant for the three corporations.

Krier alleged that Michael Vilione misappropriated more than $1.2 million from EOG Environmental and $7,000 from EOG Disposal, and a settlement was reached in 2003.

Under the settlement, Krier became the sole owner of EOG Disposal and Vil-Kri, and Michael became the sole owner of EOG Environmental. However, they continued to do business together for the next two years.

In 2005, Krier brought suit against Donald Vilione, alleging a variety of theories, but claiming in short, that Vilione was either negligent in failing to discover the misappropriations, knew but failed to prevent them, or assisted in them.

The circuit court granted summary judgment in favor of Vilione, concluding that the suit could go forward only on the $7,000 allegedly embezzled from EOG Disposal, but...