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Tekman, v. Berkowitz

United States District Court, E.D. Pennsylvania

April 28, 2014




Plaintiffs, Ilhami ("John") Tekman and his wife, Mehtap Tekman, [1] have brought this action against Defendants, Herbert Berkowitz and the Pennsylvania accounting firm Herbert Berkowitz and William Howe & Co. (known collectively as "Berkowitz") alleging four causes of action: professional negligence, breach of contract, breach of fiduciary duty, and loss of consortium. The plaintiffs allege Berkowitz had a duty to them because he performed accounting services including preparing tax returns and providing tax advice for John Tekman personally and for several of John Tekman's businesses. Berkowitz has filed a motion to dismiss the Tekmans' amended complaint, arguing that they have failed to state a claim for which relief may be granted under Pennsylvania law.[2] For the reasons discussed below, Berkowitz's motion is being GRANTED.


This case involves a dispute over the affairs of a family-owned business, Tekman & Company, LLC ("the Company"), that was created for the purpose of owning and operating a Quality Inn in Delaware. Am. Compl. at ¶ 12. John was the Company's manager and owned a 25 percent interest in it, his brother Nuh owned 25 percent, his brother Nick owned 25 percent, and their parents, Ali and Nuriye, owned 25 percent. Id. at ¶¶ 13-15. John and Nick Tekman were the original managers of the Company.[3] Id. at ¶ 15. John actively managed the motel in 2001 and part of 2002, but in that year stepped back and Nuh became the active manager of the motel. Id. at ¶¶ 15-16. Although no longer managing the motel, John continued to receive distributions from the Company from the operation of the motel. Id. at ¶ 17. However, John learned that his payments were substantially less than those to Ali and Nuh. Payments to John dwindled until late 2009. Id. at ¶ 18.

In or around September 2008, all members of the Company, except John, signed an LLC resolution authorizing a guarantee of all assets of the Company to obtain an $11 million loan for the construction of a Sleep Inn in Ocean City, Maryland. Id. at ¶ 23. John's signature was forged on the LLC resolution.[4] Id. at ¶ 24.

In 2009, John believed that Nuh was inappropriately compensating himself without regard to John's ownership interest. Id. at ¶ 20. John questioned Berkowitz about the payments to Nuh, who advised him that the amounts paid to Nuh were appropriate compensation for management of the motel. Id. at ¶ 21. Nonetheless, John asserts these payments were prohibited by the Company's agreement. Id. at ¶ 22. In or around June 2010, Berkowitz attended a meeting where he was advised by Nick Tekman that John's signature had been forged on the LLC resolution back in 2008. Id. at ¶ 25. In late 2010, as a result of a conversation with Ann Aysetul Tekman, Nick's former wife, John learned of the forgery of his name on the Company's resolution. Id. at ¶ 26.

On August 27, 2010, John filed suit in the Chancery Court of Delaware alleging that the other members of the Company had committed fraud and a breach of fiduciary duty. During the trial of that case, John learned for the first time that Berkowitz knew in June 2010 that Nick had forged John's signature. Id. at 29. Berkowitz testified that, since 2005, he had been aware that the Company was not operating in accordance with standard accounting practices. Id. at ¶ 31.

In this action, John contends that because Berkowitz failed to inform him of the forgery, the bookkeeping irregularities, and the misuse of the Company funds, Berkowitz is liable to him for negligence, breach of contract, and breach of fiduciary duty. In a fourth count, John's wife, Mehtap, claims Berkowitz is liable to her for loss of consortium.

In support of his motion to dismiss, Berkowitz attached a copy of John's complaint in the Delaware case and urged that it is relevant in this case. It is true on a motion to dismiss, a court may consider an authentic document attached to the defendant's motion if the plaintiff's claims are based upon it. Pension Benefit Guaranty Corp. v. White Consolidated Industries, Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). Here, John's claims are not based on his Delaware lawsuit but on the assertions that Berkowitz's accounting services were deficient. It follows that I cannot consider John's Delaware complaint, except as it is referred to in these pleadings.


It is well established that a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim should be granted if the complaint does not contains facts to establish a plausible claim. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007). I am to accept well-pled allegations as true for purposes of a motion to dismiss, but the complaint must be more than "a formulaic recitation of the elements of a cause of action" or "naked assertion[s] devoid of further factual enhancement." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). If I can only infer the mere possibility of misconduct, the complaint must be dismissed because it has alleged - but failed to show - that the plaintiff is entitled to relief. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).


Berkowitz has moved to dismiss the amended complaint for failure to set forth sufficient information to outline the elements of the claims or to permit inferences to be drawn that these elements exist. Berkowitz contends that the nature of his relationship with the plaintiffs did not create a fiduciary duty as they claim. As tax accountant, his duty was to prepare tax returns based upon data he received from the Tekman family. He had no independent knowledge of how the Tekmans operated their business on a daily basis, and he had no duty to monitor their business practices. Berkowitz also claims that John was aware of the forgery of his signature long before Berkowitz was told about it, as evidenced by the complaint filed by John in the Delaware Court.[5] Finally, Berkowitz also asserts that the lack of a contractual agreement between them is fatal to John's contract claims against him.

John describes this as an action in accounting malpractice involving his interests in a business venture, Tekman Company, LLC, which he owned and operated with certain members of his family. He goes on to allege that the defendants performed accounting services including, but not limited to, [6] preparing tax returns, providing tax advice/opinions, and preparing financial statements for lenders for John personally, and several of his businesses, including the ...

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