The following e-filed documents, listed by NYSCEF document number (Motion 001) 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17 were read on this motion to/for DISMISSAL. DECISION + ORDER ON MOTION This action arises from defendant Marcum LLP’s (Marcum) allegedly negligent services as auditor and accountant for now-bankrupt entities City Line Behavioral Healthcare, LLC, formerly known as Liberation Behavioral Health, LLC (LBH), and its subsidiary, Life of Purpose-Pennsylvania, LLC, formerly known as Liberation Way, LLC (Liberation Way) (collectively, the Liberation companies). Plaintiff Gary F. Seitz, as trustee of the bankruptcy estates of the Liberation companies, asserts four claims against defendant for accounting malpractice, breach of fiduciary duty, breach of contract, and unjust enrichment. In this motion, defendant moves pursuant to CPLR 3211 (a) (5) and (a) (7) to dismiss the complaint in its entirety. For the following reasons, the motion is granted, and the complaint is dismissed. I. BACKGROUND The following facts are taken from plaintiff’s complaint and are assumed to be true for the purposes of this motion. The Liberation companies operated three facilities in Pennsylvania that provided treatment for drug and alcohol addiction. Liberation Way was a single-member limited liability company owned and controlled by LBH, which was, in turn, managed by a five-person board of directors. From the very first year of its founding in 2015, the CEO, CFO, and COO and President of LBH began engaging in fraudulent schemes including “(i) fraudulently billing patients and insurance companies for treatments that were not provided, not medically necessary or were substandard; (ii) paying for patients to fraudulently obtain high-end insurance policies and fraudulently billing the insurance companies under those policies; (iii) generating kickbacks by sending thousands of medically unnecessary urine tests from the Company’s patients to co-conspiring labs in Florida; (iv) housing clients at sober-living homes associated with the Company without an inpatient license; and (v) failing to comply with [the Pennsylvania Department of Drug and Alcohol Program's] regulations and licensing requirements” (compl 28). In addition, the Liberation companies “manipulated [their] financial statements, including by overstating [their] revenue collection figures” (id. 29). Around May 2016, the Liberation companies engaged defendant Marcum to perform accounting and auditing services for them. In 2016, Independent Blue Cross (IBC), an insurance company that insured many of the Liberation companies’ patients, began conducting an audit of the Liberation companies’ claims and billing practices. Through the audit, IBC discovered the fraud and other misconduct that the Liberation companies committed between July 2015 and late 2017. IBC’s audit was known to the Liberation companies’ officers, directors, and critical advisors, and legal counsel to the Liberation companies disclosed the audit to defendant by no later than March 31, 2017. In December 2016, non-party Fulcrum Equity Partners, Inc. (Fulcrum) offered to purchase the Liberation companies and entered into a period of negotiation and diligence. Under the proposed transaction, certain members of LBH would sell their membership units in LBH to LBH Holdings, LLC (LBH Holdings), a company newly created to become the parent company for LBH, and its subsidiary, LBH Holdco Corp. (LBH Holdco) pursuant to a Unit Purchase and Contribution Agreement (Purchase Agreement), in exchange for millions of dollars and membership units in LBH Holdings. In the Purchase Agreement, the selling members of LBH represented “that the [Liberation companies] and its staff had always followed all applicable laws, that they had not engaged in activity in violation of Pennsylvania law governing rehabilitation facilities, and that they maintained all required records.” (compl 58). These representations and warranties induced LBH Holdings and LBH Holdco to enter into the Purchase Agreement. As a result of the transaction, LBH became a wholly owned subsidiary of LBH Holdings. In connection with this proposed transaction, defendant performed accounting services for the Liberation companies, including valuation, due diligence, and opening balance sheet corrections. However, in its April 2017 audit report and accounting work, defendant never investigated or considered the implications of the IBC audit. Fulcrum and non-party Vocap Partners ultimately acquired the Liberation companies on December 11, 2017, contributing $12 million in cash and $29.6 million in funds loaned from Oxford Finance LLC (Oxford) and another bank, to purchase 70 percent of LBH Holdings. The $29.6 million loan was secured primarily by LBH’s assets. The selling members of LBH maintained a 30 percent stake in LBH Holdings. After the Fulcrum transaction, Fulcrum selected new officers and directors to control and direct the Liberation companies, including a new CEO. In January 2018, defendant began its audit and accounting services for year 2017 for the Liberation companies. During the audit, defendant learned of a material overstatement of net accounts receivable that it had missed in its 2016 audit and accounting services for the Fulcrum transaction. In addition, in reviewing the companies’ legal bills, defendant became aware of a series of governmental investigations that placed them in jeopardy, such as an order from the Pennsylvania State Department of Drug and Alcohol Programs (DDAP) to cease patient intake at multiple locations due to problems discovered during its inspections, an investigation by the Pennsylvania Office of the Attorney General, and an order from the federal Drug Enforcement Agency regarding violations of federal regulations governing Narcotics Treatment Programs. Defendant also learned that the Liberation companies were in default of their Credit Agreement with Oxford, according to a notice of default received on July 6, 2018. When defendant issued its 2017 audit report on August 8, 2018, it conducted no investigation into the government subpoenas or letter inquiries and never revisited findings from the IBC audit or Oxford’s notice of default. Likewise, when defendant began its audit and accounting service for 2018 in January 2019, it did did not investigate or address any of these issues. On March 25, 2019, the Pennsylvania Office of the Attorney General announced criminal charges against LBH and its former officers and directors. At or about that time, defendant informed LBH’s new CEO that the Liberation companies should no longer rely on its audited financial statements. Defendant continued to perform audit and accounting services, including in connection with the Attorney General’s investigation, until the Liberation companies declared bankruptcy on April 17, 2019. Marcum never issued an audit report for 2018. The Liberation companies declared bankruptcy on or about April 17, 2019, and plaintiff Seitz was appointed as the trustee of the bankruptcy estates of the Liberation companies. On April 16, 2021, plaintiff commenced this action by filing a summons with notice. Plaintiff filed a complaint on May 20, 2021, asserting four causes of action for accounting malpractice, breach of fiduciary duty, breach of contract, and unjust enrichment with respect to defendant’s audit and accounting services from 2016 to 2019. On June 18, 2021, defendant filed the instant motion to dismiss the complaint. Plaintiff opposes the motion. II. DISCUSSION On a motion to dismiss under CPLR 3211 (a) (7), the court accepts the facts as alleged in the complaint as true, accords plaintiff’s the benefit of any possible favorable inference, and determines only whether the facts as alleged fit within any cognizable legal theory (see Leon v. Martinez, 84 NY2d 83 [1994]). Defendant principally argues that the claims should be dismissed under the principle of in pari delicto. The doctrine of in pari delicto “bars a party that has been injured as a result of its own intentional wrongdoing from recovering for those injuries from another party whose equal or lesser fault contributed to the loss” (Rosenbach v. Diversified Group, Inc., 85 AD3d 569, 570 [1st Dept 2011]). The doctrine is available as a defense against all of the claims here (see Kirschner v. KPMG LLP, 15 NY3d 446 [2010] [malpractice]; Donovan v. Rothman, 302 AD2d 238 [1st Dept 2003] [breach of contract], Gitlin v. Chirinkin, 121 AD3d 939 [2d Dept 2014] [breach of contract, breach of fiduciary duty, unjust enrichment]). Where a corporation seeks to impose liability on a defendant for its contribution to an injury wrought by the corporation’s own officers or management, “[t]raditional agency principles play an important role in an in pari delicto analysis” (Kirschner at 465). In Kirschner, the Court of Appeals observed the “fundamental principle that has informed the law of agency and corporations for centuries” that “the acts of agents…while acting within the scope of their authority are presumptively imputed to their principals” (id.) As the “principal that selected the agent,” “[a] corporation must, therefore, be responsible for the acts of its authorized agents even if particular acts were unauthorized,” including acts of fraud (id.). Thus, acts of fraud by the officers of the corporation in the course of their corporate dealings “is in law the fraud of the corporation” (id.). This reflects the assessment that “the principal is generally better suited than a third party to control the agent’s conduct” (id.). The decision of the Court of Appeals in Kirschner comprehensively resolves this motion. Plaintiff has alleged that LBH’s officers themselves engaged in fraud and other malfeasance (compl
