Full opinion text
MEMORANDUM AND ORDER BELOT, District Judge. This matter is before the court on the various motions for summary judgment and/or dismissal. Several miscellaneous motions are also pending. The court has previously outlined the factual circumstances and procedural history of this litigation. See 762 F.Supp. 1434, 1437-38 (per Theis, J.), and will discuss additional facts as they relate to the respective motions. For convenience, the court provides an index of the pending matters. Page I. Summary Judgment and/or Dismissal Motions .......................1137-1163 A. FDIC v. Accountants...........................................1137-1146 1. Liability of FDIC for Acts of RCSA’s Agents...............1138-1143 2. Causation Requirements for Auditor Malpractice.............1143-1144 3. Reckless and Wanton Conduct..............................1144-1145 4. Statute of Limitations ......................................1145-1146 B. Comeaus v. Accountants........................................1146-1154 1. Section 10(b) and Rule 10b-5................................1146-1151 2. Breach of Fiduciary Duty and Reckless Conduct.............1151-1152 3. Standing to Assert Claims Against Fox.....................1152-1154 C. Accountants v. A.J. Schwartz........................................1154 D. Comeaus v. Rupps .............................................1154-1161 1. Federal Securities Claims...................................1154-1155 a. § 10(b) of the Securities Act of 1934.........................1154 b. § 12(2) of the Securities Act of 1933.........................1154 2. State Law Claims ..........................................1155-1161 a. Securities Claims.......................................1156-1160 b. Common Law Claims........................................1160 E. FDIC v. Rupps.................................................1161-1162 F. Accountants v. Rupps..........................................1161-1162 G. Accountants v. Comeaus.............................................1162 H. Accountants v. Bryan Ronck & Jack Curtis .....................1162-1163 II. Motion for Order Approving Settlement..............................1163-1164 III. Accountants' Motion to Dismiss FDIC’s Complaint and Other Sanctions .............................................................1165-1167 IV. Objections to Magistrate's Order.........................................1167 V. Motion to Bifurcate.................................................1167-1168 VI. Conclusion...............................................................1168 I. Summary Judgment and/or Dismissal Motions Several parties have moved for summary judgment. Rule 56(c) of the Federal Rules of Civil Procedure directs the entry of summary judgment in favor of the party who “show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” A principal purpose “of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses____” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The court’s inquiry is to determine “whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate if there is sufficient evidence on which a trier of fact could reasonably find for the non-moving party. Prenalta Corp. v. Colorado Interstate Gas Co., 944 F.2d 677, 684 (10th Cir.1991). The burden of proof at the summary judgment stage is similar to that at trial. “Entry of summary judgment is mandated, after an adequate time for discovery and upon motion, against a party who ‘fails to make a showing to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.’ ” Aldrich Enters., Inc. v. United States, 938 F.2d 1134, 1138 (10th Cir.1991) (quoting Celotex, 477 U.S. at 322, 106 S.Ct. at 2552). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact by informing the court of the basis for its motion. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. This burden, however, does not require the moving party to “support its motion with affidavits or other similar materials negating the opponent’s claim.” Id. (emphasis in original). Once the moving party properly supports its motion, the nonmoving party “may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. at 2514; Devery Imylement Co. v. J.I. Case Co., 944 F.2d 724, 726 (10th Cir. 1991). The court reviews the evidence in a light most favorable to the non-moving party, e.g., Washington v. Board of Public Utilities, 939 F.2d 901, 903 (10th Cir.1991), under the substantive law and the evidentiary burden applicable to the particular claim. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513. A. FDIC v. Accountants (Doc. 821) Defendants Grant Thornton (“Grant”) and Fox & Company (“Fox”) (collectively, “the Accountants”) move for summary judgment on all claims filed against them by the Federal Deposit Insurance Corporation (“FDIC”). A brief recitation of the nature of these claims is in order. The FDIC brings this action in its corporate capacity as the successor in interest to the Rooks County Savings and Loan Association (“RCSA” or “Association”). The FDIC has sued Terry and C.F. Rupp (“the Rupps”), who from May 1983 until February 1986 were majority owners, president, and directors of the RCSA. The minority owners and directors during this same time period were plaintiffs Roger, David, and Charles Comeau (“the Comeaus”). The FDIC alleges that the lending practices of the Rupps caused the RCSA to suffer losses on specific loans, for which the FDIC seeks recovery under a single theory of breach of fiduciary duty to the Association. The FDIC also brings common law claims against the Accountants. The FDIC alleges that the Accountants negligently and recklessly certified RCSA’s financial statements for the years 1984 and 1985 as conforming to Generally Accepted Accounting Principles (“GAAP”), notwithstanding the Accountants’ actual or constructive knowledge of the high risk posed by certain participation loans. The specific loans for which the FDIC seeks recovery originated from the Halle Mortgage Company— a mortgage brokerage in Colorado Springs, Colorado that was involved in real estate acquisition and development in Colorado. The FDIC alleges that the Accountants failed to recognize the high risk nature of these loans, and that the losses suffered on these loans would have been avoided if the Accountants had properly alerted the Comeaus and George Ostmeyer — alleged “outside directors” of the RCSA Board. The Accountants raise a series of interrelated legal arguments that will frame the scope of the court’s factual review. According to the Accountants: (1) the Rupps’ knowledge and concealment of material facts, which the FDIC itself alleges, must be imputed to the RCSA and the FDIC as its successor in interest; (2) the Rupps’ misfeasance, imputed to the FDIC, is contributory negligence on the part of plaintiff FDIC, which bars the FDIC from recovery; (3) reliance on the 1984 and 1985 audits is an essential element of the FDIC’s malpractice claim against the Accountants, and the FDIC cannot demonstrate such reliance. As an initial matter, the court notes the parties’ apparent agreement that it is appropriate to rely on Kansas law in addressing the claims of and defenses against the FDIC. (FDIC Amended Response, Doc. 871, at 80; Accountants’ Reply, Doc. 917, at 5 n. 1). The court has previously noted that federal common law governs the rights and obligations of the FDIC in this action. 762 F.Supp. at 1439 n. 5. The primacy of federal common law over claims involving the FDIC-Corporation is expressly mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, § 209, 103 Stat. 183, 216 (codified at 12 U.S.C. § 1819(b)(2)(A)), the jurisdictional provisions of which apply retroactively to pending cases. In re Meyerland Co., 960 F.2d 512, 514 n. 2 (5th Cir.1992) (en banc; citing cases); id. at 522 n. 1 (Politz, J., dissenting; citing cases). Nonetheless, the court may look to state law in fashioning federal common law. Downriver Community Federal Credit Union v. Penn Square Bank, 879 F.2d 754 at 761 (10th Cir.1989). Neither party asserts that Kansas law is incompatible with the need for a uniform federal rule. The court will therefore turn to Kansas law for guidance, bearing in mind that the common law claims of the FDIC arise under federal law. 1. Liability of FDIC for Acts of RCSA’s Agents Much of the Accountants’ motion is premised on the argument that the wrongful actions of the Rupps, which the FDIC itself alleges, must be imputed to the FDIC. In its previous order, the court noted that under traditional tort principles, the acts and omissions of the RCSA’s officers and directors are imputable to the RCSA, and to the FDIC as its successor in interest. 762 F.Supp. at 1441. See also City of Arkansas City v. Anderson, 243 Kan. 627, 635, 762 P.2d 183, 189 (1988), cert. denied, 490 U.S. 1098, 109 S.Ct. 2449, 104 L.Ed.2d 1004 (1989). The court further ruled that the decision of the Kansas Supreme Court in FSLIC v. Huff, 237 Kan. 873, 704 P.2d 372 (1985) did not alter the general rule that imputes the wrongful conduct of a corporation’s officers to that corporation and its successors. 762 F.Supp. at 1441-43. The court also noted, however, that the parties had not addressed whether other considerations might alter the general rule. Id. at 1440 n. 6 (citing Cenco, Inc. v. Seidman & Seidman, 686 F.2d 449, 454-56 (7th Cir.), cert. denied, 459 U.S. 880, 103 S.Ct. 177, 74 L.Ed.2d 145 (1982)); see also W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 74, at 529 (5th ed. 1984) (for purposes of contributory negligence, “there may be special reasons of policy in particular cases which will lead to the imputation of [an agent’s] negligence to a defendant, but not to a plaintiff”). The Accountants now contend that no other considerations should alter the court’s earlier decision adhering to the general rule that imputes actions of a corporation’s officers to that corporation. In Cenco, Inc. v. Seidman & Seidman, 686 F.2d 449, 454-56 (7th Cir.), cert. denied, 459 U.S. 880, 103 S.Ct. 177, 74 L.Ed.2d 145 (1982), which also involved allegations of auditor malpractice, the court addressed the circumstances under which the misconduct of corporate employees will be imputed to the corporation. In that case, former managers of the defendant corporation had engaged in a massive fraudulent scheme to inflate the corporation’s inventories. The immediate effect of this fraud was to provide several benefits to the corporation, at the expense of outsiders such as creditors. Id. at 451. When the fraud was discovered, certain stockholders sued the corporation, which in turn sued the accounting firm that had audited the corporation and failed to discover the fraud. The auditors set up the defense of contributory negligence against the corporation’s claims, alleging that the actions and knowledge of the corrupt former managers should be imputed to the corporation. In interpreting Illinois law, the Cenco court prefaced its discussion with the assumption that two fundamental objectives of tort liability remained applicable: to compensate the victims of wrongdoing and to deter future wrongdoing. 686 F.2d at 455. The court noted that the stockholders would be the real beneficiaries of a judgment in favor of the corporation, and that such a result would effectively allow the stockholders to benefit from the fraud. As to the goal of deterrence, the court found that allowing the corporation to shift liability to the accountant would reduce the shareholder’s incentive to hire more honest managers and to monitor their behavior more closely. The court summarized the pertinent considerations: Fraud on behalf of a corporation is not the same thing as fraud against it. Fraud against the corporation usually hurts just the corporation; the shareholders are the principal if not only victims; their equities vis-á-vis a careless or reckless auditor are therefore strong. But the stockholders of a corporation whose officers commit fraud for the benefit of the corporation are beneficiaries of the fraud. Maybe not net beneficiaries, after the fraud is unmasked and the corporation is sued — that is a question of damages, and is not before us. But the primary costs of a fraud on the corporation’s behalf are borne not by the stockholders but by outsiders to the corporation, and the stockholders should not be allowed to escape all responsibility for such a fraud, as they are trying to do in this case. 686 F.2d at 456. Because the stockholders were the beneficiaries of the former managers’ fraud, the court found no error in an instruction that allowed the jury to impute the fraud to the corporation. Id.; cf. Schacht v. Brown, 711 F.2d 1343, 1347-49 (7th Cir.) (conduct of former officers not attributable where fraud artificially prolonged corporation’s existence past insolvency), cert. denied, 464 U.S. 1002, 104 S.Ct. 509, 78 L.Ed.2d 698 (1983). As stated in Cenco, the exception to the general rule of respondeat superior focuses on whether the misdeeds of the corporate employee worked to the benefit or detriment of the corporation. If the corporation’s agent acted adversely to the interests of the corporation, the agent’s acts are not imputed to the corporation. See Supreme Petroleum, Inc. v. Briggs, 199 Kan. 669, 675-74, 433 P.2d 373, 378 (1967) (agent’s acts that are adverse to principal’s interest are not imputed to principal unless agent is sole representative of principal); Ryan v. Scovill, 140 Kan. 588, 590-91, 37 P.2d 1007 (1934); First Nat’l Bank of Arkansas City v. Skinner, 10 Kan.App. 517, 62 P. 705, syl. ¶1 (1900); Greenstein, Logan & Co. v. Burgess Mktg., Inc., 744 S.W.2d 170, 190-91 (Tex.Ct.App.1987) (evidence tended to show that employee’s fraud grievously harmed rather than benefited corporation and fraud would not be imputed to corporation); Adair State Bank v. American Casualty Co., 949 F.2d 1067, 1074 (10th Cir.1991) (court would not impute to corporation conduct that adversely affected it); see generally 3 Fletcher Cyclopedia of the Law of Private Corporations § 819 (perm. ed. 1986). This exception was recognized by two recent circuit court decisions that have considered whether the conduct of former employees of a failed savings and loan may be imputed to the FDIC. In FDIC v. Ernst & Young, 967 F.2d 166 (5th Cir.1992), the FDIC sued the auditors of a savings and loan that had been owned and operated by a sole shareholder. The FDIC also sued the sole shareholder for his unsafe underwriting practices and fraudulent book entries. Significant to the court's decision was the FDIC’s decision to prosecute the action only as an assignee of the savings and loan, and not on the FDIC’s own behalf. For this reason, the court held that the FDIC assumed no greater rights than those of any other assignee of the association’s assets. Id. at 169-70. Noting the exception to the general rule that imputes a bank director’s knowledge to the bank, the court went on to hold that the sole shareholder had acted on the association’s behalf because the owner had also served the association by serving his own interests. Id. at 171. Thus, the court held that the conduct of the shareholder was attributable to the FDIC, where “the FDIC, as assignee of a corporation with a dominating sole owner, sues an auditor for negligently performing an audit upon which neither the owner nor the corporation relied.” Id. at 172. A different result was reached by the Ninth Circuit in a case decided shortly before Ernst & Young. In FDIC v. O’Melveny & Meyers, 969 F.2d 744 (9th Cir.1992), the savings and loan association had become involved in the funding of two real estate projects, for which a law firm had been hired to assist in the preparation of two private placement memoranda. After the association went into receivership, the FDIC sued the law firm, alleging that the private placement memoranda were inaccurate and had misled the outside investors. The law firm defended with the argument that the fraud of the association’s former officers must be imputed to the FDIC. The court rejected this defense: Here, disaster, not benefit, accrued to [the association] through the malfeasance of [its officers]. Schacht [v. Brown, 711 F.2d 1343 (7th Cir.), cert. denied, 464 U.S. 1002, 104 S.Ct. 509, 78 L.Ed.2d 698 (1983) ] and [In re] Investors Funding [Corp., 523 F.Supp. 533 (S.D.N.Y.1980) ]. elaborate that conduct aggravating a corporation’s insolvency and fraudulently prolonging its life does not benefit that corporation. Indeed, under Schacht, even if the corporation were somehow to benefit from the wrongdoing of insiders, the insiders’ conduct is still not attributable to the corporation if a recovery by the plaintiff would serve the objectives of tort liability by properly compensating the victims of the wrongdoing and deterring future wrongdoing. O’Melveny, 969 F.2d at 750. The O’Melveny court also rejected the argument that FDIC, as receiver of the association, assumed no greater rights than the association itself would have had. After noting that federal common law rather than state law determines the defenses available against the FDIC, the court explained: A receiver, like a bankruptcy trustee and unlike a normal successor in interest, does not voluntarily step into the shoes of the bank; it is thrust into those shoes. It was neither a party to the original inequitable conduct nor is it in a position to take action prior to assuming the bank’s assets to cure any associated defects or force the bank to pay for incurable defects____ Also significant is the fact that the receiver becomes the bank’s successor as part of an intricate regulatory scheme designed to protect the interests of third parties who also were not privy to the bank’s inequitable conduct. That scheme would be frustrated by imputing the bank’s inequitable conduct to the receiver, thereby diminishing the value of the asset pool held by the receiver and limiting the receiver’s discretion in disposing of the assets. In light of these considerations, we conclude that the equities between a party asserting an equitable defense and a bank are at such variance with the equities between the party and a receiver of the bank that equitable defenses good against the bank should not be available against the receiver. To hold otherwise would be to elevate form over substance — something courts sitting in equity traditionally will not do. O’Melveny, 969 F.2d at 751-52 (citations omitted). The court finds the analysis of O’Melveny persuasive and fully applicable to this case. See also FDIC v. Clark, 978 F.2d 1541, 1549 (10th Cir.1992) (relying on O’Melveny to prevent defendant attorneys from imputing conduct of former bank officers to FDIC). As the facts of this case demonstrate, it is questionable whether a savings and loan association can be said to benefit from slipshod bookkeeping, non-existent internal controls, and investment practices fraught with risk. This conduct may have personally benefitted the Rupps, who allegedly drove RCSA to the brink of insolvency before selling their overvalued shares to the Comeaus. But it has brought only financial ruin to the RCSA. In the court’s view, it would present at least a question of fact whether the Rupps acted for personal gain or for the purpose, however misguided, of benefiting RCSA. See Cenco, 686 F.2d at 456 (trial court properly allowed jury to attribute managers’ fraud to corporation only if it found that managers had acted for benefit of corporation); Greenstein, 744 S.W.2d at 191. Even assuming that the wrongful conduct of RCSA’s former owners was undertaken to benefit RCSA, the court finds that the considerations of federal common law set forth in O’Melveny preclude attribution of this conduct to the FDIC. As had the court in Cenco, the O’Melveny court premised its analysis on the underlying objectives of tort liability: to compensate the victims of wrongdoing and to deter future misconduct. In Cenco, these objectives were well served by adherence to the rule that imputes wrongful conduct to the corporation-principal, because in that case the true beneficiaries of a verdict in favor of the corporation would be the shareholders. As Cenco explained, the shareholders, although innocent of any actual misconduct, should not be rewarded for a failure to hire honest managers and to monitor the corporate employees more carefully. 686 F.2d at 456. A far different set of equities is present in this case, where the FDIC has acquired separate interests from those of the current holders of RCSA stock. First and foremost, the beneficiaries of a verdict for the FDIC will not be RCSA’s stockholders. Rather, it will be the public, which had no voice in hiring or electing RCSA’s officers and directors, nor even in becoming the assignee of certain of the RCSA’s assets and liabilities. Thus, the status of the FDIC in this ease is more akin to that of a creditor, rather than a stockholder or a voluntary assignee of the association. If the court were to treat plaintiff-FDIC as a stockholder — which was appropriate in Cenco, or as simply another assignee— under the wooden approach of the court in Ernst & Young — then the public would be made to pay for wrongs that it was in no real position to prevent, and that have been visited upon it by the very persons who owe it a heightened fiduciary duty. See 762 F.Supp. at 1442; FSLIC v. Huff, 237 Kan. 873, 881, 704 P.2d 372 (1985) (officers and directors of savings and loans owe duty not only to corporation, but to public). Such a policy would defeat rather than further the tort principle of compensating the victim, while doing nothing either to deter culpable parties from refraining from tortious conduct, or to encourage the shareholders to employ more trustworthy corporate managers. Nor does the court find any inequity in withdrawing from the Accountants’ litigation arsenal a defense that would normally be available. The Accountants seek to impute the Rupps’ conduct to the FDIC for two reasons: (1) to set up the defense of contributory negligence to their own negligence as alleged by the FDIC, and (2) to obtain indemnity from the FDIC in the event that they are found liable to the Comeaus. See 762 F.Supp. at 1441. In either case, the relief sought by the Accountants would come into play only upon plaintiff’s initial showing of some culpable conduct on the part of the Accountants. But by imputing to FDIC the torts of RCSA’s officers, the Accountants would shift their liability for plaintiff’s losses to the FDIC. Thus, this is not a case where a wholly innocent party will be called upon to pay for a loss caused by another. To the contrary, allowing the FDIC to disavow the wrongful acts of RCSA’s former officers prevents culpable parties from transferring liability for their tortious conduct to an entity that is indisputably without fault in bringing about RCSA’s losses: the public, in the person of the FDIC. In any event, refusing to impute to the FDIC the conduct and knowledge of RCSA's managers does not lessen plaintiff’s burden to prove that its losses were caused by the Accountants’ wrongful conduct. In other words, the Accountants may still argue that the knowledge and actions of the Comeaus and/or Rupps, although not attributable to the RCSA, were the legal cause of plaintiff’s losses, which could not have been prevented by more prudent accounting practices. See infra at 1143-1144. For these reasons, the court concludes that the Accountants may not impute to the FDIC the knowledge or conduct of RCSA’s officers, directors, and owners— either for the purpose of asserting the defense of contributory negligence against the FDIC’s claims, or for the purpose of claiming indemnity from the FDIC. 2. Causation Requirements for Auditor Malpractice The Accountants contend that the FDIC cannot demonstrate that their alleged negligence was the legal cause of RCSA’s losses. According to the Accountants, reliance is an essential element of the FDIC’s negligence claim, and the FDIC cannot show that the operatives at RCSA relied on the 1984 and 1985 audits. The parties appear to be in agreement that plaintiff may establish legal causation under the “substantial factor” test. See, e.g., Roberson v. Counselman, 235 Kan. 1006, 1011, 686 P.2d 149 (1984); Donnini v. Ouano, 15 Kan.App.2d 517, 520, 810 P.2d 1163, 1166 (1991). A defendant’s conduct is a substantial factor if it “ ‘has such an effect in producing the harm as to lead reasonable men to regard it as a cause, using that word in the popular sense, in which there always lurks the idea of responsibility, rather than the so-called “philosophic sense,” which includes every one of the great number of events without which any happening would not have occurred.’ ” Roberson, 235 Kan. at 1012, 686 P.2d 149 (quoting Restatement (Second) of Torts § 431 comment a (1965)). To be a substantial factor, however, the defendant’s conduct need not be the only factor. Id. at 1016, 686 P.2d 149 (quoting Jones v. Montefiore Hosp., 494 Pa. 410, 416, 431 A.2d 920 (1981)). The Accountants do not attack these general principles of negligence law, but instead contend that in malpractice actions against accountants, the “substantial factor” test necessarily includes the element of reliance on the negligently prepared audit. See FDIC v. Ernst & Young, 967 F.2d 166, 170 (5th Cir.1992); Smolen v. Deloitte, Haskins & Sells, 921 F.2d 959, 964 (9th Cir.1990); Drabkin v. Alexander Grant & Co., 905 F.2d 453, 455-57 (D.C.Cir.), cert. denied, 498 U.S. 999, 111 S.Ct. 559, 112 L.Ed.2d 566 (1990); E.F. Hutton Mortgage Corp. v. Pappas, 690 F.Supp. 1465, 1473-75 (D.Md.1988), aff'd mem., 900 F.2d 255 (4th Cir.1990); Bonhiver v. Graff, 311 Minn. 111, 248 N.W.2d 291 (1976); Restatement (Second) of Torts § 552 (1979). Regardless of whether the “but for” or “substantial factor” test of causation is to be applied, the court agrees that reliance is an essential element of the FDIC’s burden of proof on causation. “Under the common-law theory of professional negligence in most jurisdictions, an accountant must have actual knowledge that a certain class of persons will rely on the accounting before the accountant can be found liable.” Gillespie v. Seymour, 14 Kan.App.2d 563, 575, 796 P.2d 1060 (1990) (emphasis added). Thus, if the evidence allows the inference that a properly prepared audit would not have been relied upon in any event, an accountant’s negligent performance cannot be said to be a cause of the financial loss. The Accountants’ argument is flawed, however, because it implicitly assumes that the Rupps were the only class of persons entitled to rely on the 1984 and 1985 audits. The Accountants make no attempt to profess ignorance of the reliance that the RCSA Board as a whole placed on their audits. David Comeau and George Ostmeyer — also members of the RCSA Board — have testified that they would have taken corrective action if they had been informed of the serious problems with RCSA’s lending practices. (D. Comeau Depo., 3/29-3/30/89, pp. 714, 844-45, 879; Ostmeyer Depo., pp. 13-17). In addition, the FDIC’s accounting expert has testified that in his experience, an audit that advises an association of the need for a $500,000 loan loss reserve — which was not done in this case — can reasonably be expected to “get management’s attention very quickly.” (Dooley Depo., p. 142). Finally, the corrective steps actually taken by the RCSA Board when it did obtain additional information concerning the Halle loans — after the Comeaus assumed 100% ownership — undermines any claim that other members of the Board would not have used an adequate audit to prevent the loan losses. Viewing the evidence most favorably to the FDIC, there are genuine issues of fact as to whether the RCSA Board as a whole relied upon the audits, thus causing loan losses that would not otherwise have been sustained. See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 41, at 270 (5th ed. 1984) (causation may be inferred if a particular omission may be expected to produce a result, and that result has in fact followed). 3. Reckless and Wanton Conduct The Accountants claim that they are entitled to summary judgment on the FDIC’s claim that their conduct was reckless and wanton. The parties appear to be in agreement as to the appropriate standard governing accountant liability for reckless and wanton conduct. In order to prove that an accountant has acted recklessly or wantonly, “the plaintiff must establish that the defendant lacked a genuine belief that the information disclosed was accurate and complete in all material respects.” McLean v. Alexander, 599 F.2d 1190, 1198 (3d Cir.1979) (citing Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931) & O’Connor v. Ludlam, 92 F.2d 50 (2d Cir.), cert. denied, 302 U.S. 758, 58 S.Ct. 364, 82 L.Ed. 586 (1937)). The Accountants contend that plaintiffs can make no such showing in this case, because there is no evidence that the Accountants knew that their financial statement opinions were wrong, nor that they intentionally and deliberately failed to conduct a GAAS audit. In essence, the Accountants argue that they must have had a specific intent to violate a known duty, or at least knowledge that they were in fact violating this duty. The court rejects the Accountants’ cramped view of the evidentiary support needed to establish reckless or wanton conduct. As the very word suggests, “reckless” conduct does not require evidence that the actor “intentionally and deliberately” failed to perform a duty. Rather, in the context of auditor malpractice actions, it is sufficient for the plaintiff to prove that the auditor lacked a genuine and honest belief in the truth of his report. Seiffer v. Topsy’s Int'l, Inc., 487 F.Supp. 653, 665 (D.Kan.1980). This may include the pretense of knowledge when there is none, or “ ‘shoddy accounting practices amounting at best to a “pretend audit,” or ... grounds supporting a representation “so flimsy as to lead to the conclusion that there was no genuine belief back of it”____’ ” Id.; see also State Street Trust Co. v. Ernst, 278 N.Y. 104, 15 N.E.2d 416, 419 (1938). Similarly, “[t]o constitute wantonness, the acts complained of must show not simply lack of due care, but that the actor must be deemed to have realized the imminence of injury to others from his acts and to have refrained from taking steps to prevent the injury because indifferent to whether it occurred or not.” Folks v. Kansas Power & Light Co., 243 Kan. 57, 72, 755 P.2d 1319, 1332 (1988) (quoting Cope v. Kansas Power & Light Co., 192 Kan. 755, 761, 391 P.2d 107 (1964)) (quoting Frazier v. Cities Serv. Oil Co., 159 Kan. 655, 157 P.2d 822 (1945) (emphasis added by Folks court). It is true that wantonness requires intent to act, as opposed to intent to bring about the consequences that act. See Beck v. Kansas Adult Auth., 241 Kan. 13, 735 P.2d 222, 237 (1987). But presumably, the Accountants would not somehow inadvertently or unconsciously neglect to perform the specific omissions alleged by plaintiffs, in which case the requisite element of intent might be lacking. In other words, the only element of “intent” that plaintiffs need prove is that the Accountants intentionally performed or omitted certain acts. Whether the Accountants specifically knew that these acts and omissions constitute a breach of their duty is not the proper inquiry in determining whether they acted recklessly or wantonly. Viewed under the proper standards, the court finds that a jury could reasonably conclude that the Accountants’ alleged omissions were sufficiently egregious to constitute reckless and wanton conduct. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986) (summary judgment must be denied if there is sufficient evidence from which jury could infer defendant’s tortious state of mind). 4. Statute of Limitations Finally, the Accountants contend that the FDIC's claims based on the 1984 audit are barred by the Kansas two-year statute of limitations. The parties agree that the applicable statute of limitations for the claims against the Accountants is the Kansas two-year statute. See K.S.A. § 60-513; Brueck v. Krings, 230 Kan. 466, 638 P.2d 904, 907 (1982). Under this statute, the action accrues when “the act giving rise to the cause of action first causes substantial injury, or ... [when] the fact of injury becomes reasonably ascertainable to the injured party____” K.S.A. § 60-513(b). The claims based on the 1984 audit were not filed until December 1988. The Accountants contend that RCSA, and thus, the FDIC, knew or should have known of the existence of these claims at least by June 16, 1986, the date when RCSA filed suit against the Rupps for the same losses that the Accountants are alleged to have caused. The Accountants first argue that it is irrelevant whether plaintiff had reason to suspect that Fox was responsible for the losses based on the 1984 audit, as long as plaintiff was aware of a substantial injury caused by someone during the 2-year period prior to December 1988. This argument is untenable. It is not only the injury, but also the wrongful act that must be “reasonably ascertainable” before the action accrues. Roe v. Diefendorf, 236 Kan. 218, 689 P.2d 855, syl. ¶ 1 (1984); FDIC v. Ashley, 754 F.Supp. 179, 183 (D.Kan.1990). The “wrongful act” alleged against Fox is its negligently performed 1984 audit. Therefore, the question is when it was reasonably ascertainable that this audit had caused the injuries of which plaintiff complains. The Accountants also contend that no later than June 16, 1986, plaintiffs had knowledge of specific facts that should have caused them to investigate possible claims against Fox. Actual knowledge, however, and not mere suspicion of a wrong is required to trigger the running of the Kansas statute, and the action does not accrue during that time when the plaintiff has been lulled into confidence to forego further investigation. Augusta Bank & Trust v. Broomfield, 231 Kan. 52, 63, 643 P.2d 100, 108 (1982). Plaintiff alleges that it had no actual knowledge of possible claims against the Accountants until April 1987, when the Accountants first produced their workpapers for the 1985 audit. The FDIC further alleges that the delay in investigating claims against the Accountants is attributable to the Accountants’ fraudulent concealment of their wrongful conduct. This allegation is further supported by the fact that from July 1986 until June 1987, plaintiffs had actually retained the Accountants as litigation consultants against the Rupps — conduct that might be considered peculiar for an injured party who has reason to suspect the consultant of wrongdoing in the same litigation. The court finds that this matter is rife with genuine issues of material fact. Accordingly, the jury will decide when plaintiffs’ cause of action against the Accountants accrued. See, e.g., Olson v. State Highway Commission, 235 Kan. 20, 679 P.2d 167, 174 (1984). B. Comeaus v. Accountants (Doc. 817) The Accountants move for summary judgment on all claims raised against them by the Comeaus and Rupp Financial Corporation (collectively, “the Comeaus”). The Comeaus and the Rupps entered into a stock sale agreement on August 27, 1985 that effectively gave the Comeaus 100% ownership of RCSA. The sale was not closed, however, until February 10, 1986. The Comeaus allege that the price they paid to purchase the Rupps’ stock was based on the book value of RCSA as reported in its year-end June 30, 1985 financial statement. Grant conducted the 1985 audit of this statement. The Comeaus claim to have relied upon Grant’s unqualified audit report and opinion giving a “clean bill of health” to the 1985 financial statement of RCSA. The Comeaus further claim that Fox recklessly performed the 1984 audit. The Comeaus seek damages resulting from their purchase and redemption of the Rupps 70% stock ownership, as well as damages due to the diminution in the value of the Comeaus’ preexisting 30% minority stock interest in RCSA. The Comeaus also seek punitive damages. The Comeaus claim relief against the Accountants under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-6, 17 C.F.R. § 240.10(b)(5); as well as under state law common law theories of breach of fiduciary relationship and reckless conduct. 1. Section 10(b) and Rule 10b-5 Grant contends that the Comeaus cannot demonstrate that they justifiably relied on the 1985 audit report in purchasing the Rupps’ 70% interest. The plaintiffs have the burden of establishing every element of their § 10(b) and Rule 10b-5 claim by a preponderance of the evidence. Feldman v. Pioneer Petroleum, Inc., 813 F.2d 296, 301 (10th Cir.), cert. denied, 484 U.S. 954, 108 S.Ct. 346, 98 L.Ed.2d 372 (1987). The court, however, must read § 10(b) and Rule 10b-5 flexibly, not technically or restrictively. Farlow v. Peat, Marwick, Mitchell & Co., 956 F.2d 982, 986 (10th Cir.1992). Justifiable reliance on the misrepresentation or omission is a necessary element to liability under § 10(b) and Rule 10b-5. Zobrist v. Coal-X, Inc., 708 F.2d 1511, 1516 (10th Cir.1983). Several factors may be relevant in determining whether plaintiff’s reliance was justifiable: (1) the sophistication and expertise of the plaintiff in financial and securities matters; (2) the existence of long standing business or personal relationships; (3) access to the relevant information; (4) the existence of a fiduciary relationship; (5) concealment of the fraud; (6) the opportunity to detect the fraud; (7) whether the plaintiff initiated the stock transaction or sought to expedite the transaction; and (8) the generality or specificity of the misrepresentations. Id. No single factor is determinative and all must be considered and balanced. Id. at 1517. Moreover, the court must be mindful that [¡justifiable reliance is not a theory of contributory negligence; rather, it is a limitation on a rule 10b-5 action which insures that there is a causal connection between the misrepresentation and the plaintiffs harm. Only when the plaintiffs conduct rises to a level of culpable conduct comparable to that of the defendant’s will reliance be unjustifiable. In this circuit, such conduct must amount to at least reckless behavior. Id. at 1516 (emphasis added; citations omitted). The element of justifiable reliance denies recovery to a plaintiff who has “close[dj his or her eyes and refuse[d] to investigate in disregard of a known risk or a risk so obvious that the plaintiff must be taken to have been aware of it.” Grubb v. FDIC, 868 F.2d 1151, 1163 (10th Cir.1989). Grant argues that the Comeaus had actual or constructive knowledge of the financial straits menacing the RCSA between August 1985 — when the Comeaus and Rupps signed the purchase agreement— and February 1986 — when the transaction was closed. Grant supports its argument with the following evidence: 1. Roger and Charles Comeau were directors of RCSA at all times relevant to this lawsuit. (Accountants’ Motion for Summary Judgment, Doc. 817, Statement of Fact H 3, at p. 7). The Comeaus contend that they were not involved in active management of RCSA between May 1983 and February 1986, which the court accepts as true for purposes of this motion. 2. The stock agreement provided that the closing of the transaction was contingent upon an examination and audit of all internal records and documents of RCSA— to the satisfaction of the Comeaus. (Ext. 13 to Accountants’ Motion, Doc. 818, ¶ 8, at p. 8). 3. Each month, the RCSA reported its loan delinquencies (loans past due 60 days or more) to the Federal Home Loan Bank Board (“FHLBB”). In these FHLBB reports, the RCSA reported loan delinquencies of $985,00 at August 31, 1985; of $3,298 million at October 31, 1985; and of $3,611 million at December 31, 1985. It also reports the total regulatory net worth of the RCSA to be $2,617 million on August 31, 1985; $2,166 million on October 31, 1985; and $2,261 million on December 31, 1985. (Appendix to Memorandum and Order; Exts. 14, 15, 16 to Accountants’ Motion, Doc. 818). 4. It is disputed whether the FHLBB reports were presented to the board of directors at their monthly meetings, and the Comeaus disavow actual knowledge of these reports. (Comeaus’ Response, Doc. 860, at ¶¶ 27 & 31 pp. 17-19). It is undisputed, however, that a delinquent loan list was presented to and reviewed by the board at the monthly meetings. The delinquent loan list contained the name of the loan and the length of the delinquency, but not the amount. (Comeaus’ Response, Doc. 860, at ¶ 27, pp. 17-18). The Comeaus contend that their reliance on the 1985 audit was justified on the basis of several factors: the Comeaus were unsophisticated buyers who had no previous experience in investing in financial institutions; both the Rupps and the Accountants — long-time friends and/or associates of the Comeaus — were fiduciaries of the Comeaus; the Comeaus had no access to relevant information because they were “outside” directors who relied upon management to provide them with relevant financial information; the Rupps and the Accountants initiated the stock agreement; and the Accountants’ 1985 unqualified report was a specific misrepresentation that RCSA’s financial statements “presented] fairly the financial position of [RCSA] at June 30,1985 and 1984____” The Comeaus also claim to have relied on the Accountants’ repeated assurances, through the person of Roy Brungardt, that they would “take care of” the Comeaus throughout the stock sale transaction. The Comeaus make no attempt to dispute the seriousness of the delinquent loans that had multiplied over a seven-month period to an amount far in excess of the net worth of the Association itself. In fact, the Comeaus offer no opposition to Grant’s argument that, as a matter of law, actual knowledge of such information would preclude a finding of justifiable reliance on Grant’s seven-month-old audit. Rather, the only defense presented by the Comeaus is that they had no actual knowledge of this information and justifiably relied upon other persons such as the Accountants to call it to their attention. Thus, for purposes of this motion, the question is whether a jury could reasonably find that the Comeaus justifiably failed to take personal notice of the precipitous rise in RCSA’s delinquent loans to an amount exceeding the net value of the Association by a factor of almost two. The court thinks not. It is true that Kansas law allows for a wide range of responsibilities for S & L directors, see K.S.A. §§ 17-5302, -5310 (duties fixed by bylaws), and that a director who has only a limited role in the corporation’s affairs may rely upon the superior knowledge of another director or officer. See Oberhelman v. Barnes Investment Corp., 236 Kan. 335, 338, 690 P.2d 1343 (1984); Noll v. Boyle, 140 Kan. 252, 255, 36 P.2d 330, 331 (1934) (director not in active charge of a corporation is not chargeable with the knowledge of those officers in active charge). Nonetheless, the law charges even an "outside” director with such knowledge as he could have discovered in the exercise of reasonable care attending his responsibilities. See Newton v. Homblower, Inc., 224 Kan. 506, 582 P.2d 1136, syl. ¶ 6 (1978). In determining the scope of a particular director’s responsibilities, the court must consider all the facts, including the nature of the corporation and the degree of attention and care that ordinary directors of like corporations would be expected to devote to the corporation’s affairs. See FSLIC v. Huff, 237 Kan. 873, 879, 704 P.2d 372 (1985); Sampson v. Hunt, 233 Kan. 572, 584, 665 P.2d 743 (1983); Speer v. Dighton Grain, Inc., 229 Kan. 272, 276, 624 P.2d 952 (1981). The corporation in this case is a savings and loan association, whose officers and directors are held to a heightened standard of conduct even among the general class of corporate officers. Huff, 237 Kan. at 879-80, 704 P.2d 372; Comeau, 762 F.Supp. at 1442. The general scope of knowledge that is chargeable to such corporate directors was stated in Weigand v. Union Nat’l Bank of Wichita, 227 Kan. 747, 610 P.2d 572 (1980): The directors of a corporation are chargeable with knowledge of such corporate affairs as it is their duty to keep informed of, of the financial condition of the corporation, and of facts which the corporate books and records disclose. Id. at syl. II4 (emphasis added). In Harman v. Willbern, 374 F.Supp. 1149, 1161 (D.Kan.1974), aff'd, 520 F.2d 1333 (10th Cir.1975), this court stated: “[T]he directors of a corporation may not totally abandon their duties to the corporation or close their eyes to what is going on about them in the conduct of the business of the corporation and then use this as a defense for injury which results.” See also F.D.I.C. v. Lauterbach, 626 F.2d 1327, 1334 (7th Cir.1980) (“A corporate director may not claim total ignorance of the corporation’s affairs, particularly those matters fairly disclosed by the directors’ meetings and those corporate records to which directors have access.”); Hoye v. Meek, 795 F.2d 893, 896 (10th Cir.1986) (“directors and officers are charged with knowledge of those things which it is their duty to know and ignorance is not a basis for escaping liability”). Thus, although a director is not necessarily charged with knowledge of all affairs of the corporation, Noll, 140 Kan. at 255, 36 P.2d 330, each director — regardless of his level of involvement — assumes “the duty to keep abreast of the general financial status of the corporation; ____” Harman, 374 F.Supp. at 1163 (emphasis added). The policy statements of the Federal Home Loan Bank Board expound upon the duty of S & L directors: The duty of care includes the responsibility of the directors to select and retain competent management; to oversee the activities of the institution by attending directors’ meetings; to require that adequate and reliable information is provided upon which they can make decisions; to carefully review the documentation which is provided; to make the necessary policy decisions upon which management is to operate the institution[;] to monitor the activities that are delegated to the officers of the institution to insure that the board of directors’ policies are being carried out; and to establish controls to assure themselves that the institution is being operated in a safe and sound manner and in compliance with law and regulations. “Directors who willingly allow others to make major decisions affecting the future of the corporation wholly without supervision or oversight may not defend on their lack of knowledge, for that ignorance is itself a breach of fiduciary duty.” FHLBB Memorandum R 62, Directors’ Responsibilities, published in 52 Fed.Reg. 22, 682, 22,684 (June 15, 1987) (emphases added; quoting Joy v. North, 692 F.2d 880, 896 (2d Cir.1982), cert. denied, 460 U.S. 1051, 103 S.Ct. 1498, 75 L.Ed.2d 930 (1983)). See also id. (“All members of the board of directors, however, should regularly attend board meetings [and] read reports of the institution and the committees of the board....”). Accepting the Comeaus’ argument for the moment, it is difficult to conceive of any duties that might remain to an S & L director who chooses not to play an active role in conducting the association’s affairs. The failure of the Comeaus in this case goes beyond their mere non-involvement with the daily affairs of the association, which is permitted under the law. Nor does this case involve an isolated failure to notice an inconsequential or obscure change affecting the association’s financial integrity (or even an isolated failure to notice a substantial, obvious change). The Comeaus, rather, repeatedly neglected over a period of several months to consult a routine monthly document, generated by their own association, that clearly sets forth a stark, easily understood fact: the amount of delinquent loans financed by the RCSA was growing by leaps and bounds. Cf. Grubb v. FDIC, 868 F.2d 1151, 1164 (10th Cir.1989) (plaintiff who had only limited time to investigate purchase and had no access to relevant information justifiably relied on seller’s representations). The Comeaus defend with the contention that the Rupps and the Accountants were their fiduciaries, and that they were entitled to trust the judgment of their fiduciaries in matters for which the Comeaus had no expertise. For purposes of this motion, the court accepts that both the Rupps and the Accountants were fiduciaries of the Comeaus, and that the Comeaus lacked any expertise in conducting or understanding the affairs of financial institutions. The court will go even so far as to assume that the Comeaus had no business experience or acumen in any degree. These concessions, however, do not detract from the duty imposed by law upon S & L directors to take some personal steps to monitor the financial condition of the association to which each director is a fiduciary. The law recognizes that personal responsibility for some duties is so important to the community that they may not be delegated to another. Trout v. Koss Constr. Co., 240 Kan. 86, 93 & syl. ¶ 5, 727 P.2d 450 (1986). See also Lutz v. Peine, 209 Kan. 559, 498 P.2d 60, syl. ¶ 3 (1972) (violation of a duty or a law by plaintiff is contributory negligence that bars plaintiffs recovery if it is a proximate cause of the injury). In the court’s view, directors of a savings and loan association, even if inactive in its daily affairs, must assume a non-delegable duty “to maintain some minimal degree of familiarity with corporate affairs____” Lauterbach, 626 F.2d at 1334. A contrary rule would be irreconcilable with the holding of Huff, 237 Kan. at 879-80, 704 P.2d 372. Nor is the court persuaded by the argument that the Comeaus lacked expertise or ability to “audit” the books of the RCSA or to ascertain the accuracy of its financial statements. It does not require a degree in accounting (or for that matter, a degree in anything) to acquire and appreciate the significance of the information of which the Comeaus profess ignorance. Indeed, the Comeaus do not even attempt to argue that they could have justifiably relied on the June 1985 audit if they had actual knowledge of the amount of the loan delinquencies disclosed in the FHLBB reports. The only defense presented by the Comeaus is that they in fact had no actual knowledge of either the reports or the information contained therein, and that their ignorance of such information was justified. This defense is inimicable to the high standards of fiduciary duty imposed upon Kansas savings and loan directors, runs counter to the dictates of common sense, and is emphatically rejected by the court. The position of the Comeaus is not unlike that of the plaintiff in Zobrist v. Coal-X, Inc., 708 F.2d 1511, 1516 (10th Cir.1983), where the court overturned a jury’s finding of justifiable reliance. In Zobrist, the plaintiff-buyer argued that he justifiably relied on the oral representations of the defendant-sellers when purchasing an interest in a coal mining operation. Although defendants had orally assured plaintiff that his investment “couldn’t miss” and was a “sure thing,” a private placement memorandum provided by defendants clearly stated the risks involved in the investment. The court held that plaintiff must be charged with constructive knowledge of the contents of the private placement memorandum, lest investors be rewarded for their failure to read such a prospectus. Imputing such knowledge to the plaintiff, the court then concluded that, as a matter of law, plaintiff had “acted recklessly by intentionally closing his eyes to and failing to investigate the contradiction between the misrepresentations and the information in the memorandum." 708 F.2d at 1518-19. In this case the reasons are even more compelling than in Zobrist for imputing knowledge of material information to the buyers. Unlike in Zobrist, the stock purchasers in this case were already members of the board of directors and minority owners of a corporation in which they sought to increase their investment. Moreover, the Comeaus failed not merely to protect their own interest, which was sufficient to defeat justifiable reliance in Zobrist, but also to protect the interests of third parties to whom the Comeaus owed fiduciary duties. The issue is not whether the Comeaus could rely upon the Rupps or the Accountants in performing their duties, as they are unquestionably allowed to do under Kansas law. See K.S.A. §§ 17-6301(e), 17-6422 (in the performance of their duties, directors are entitled to rely in good faith on the opinions and reports of others). Rather, the issue is whether the Comeaus could delegate to others the entire performance of their duty to be knowledgeable about rudimentary indicators of the association’s financial condition. Whatever else non-active, outside S & L directors may delegate to others, the court is confident under these facts that the Comeaus had a non-delegable duty to inquire personally into the status of RCSA’s delinquent loans. As a matter of law, the Comeaus acted recklessly in closing their eyes to a routine financial report generated by association itself that discloses at a glance serious financial problems with the association. Based on this constructive knowledge, the Comeaus have no basis for claiming that they could have justifiably relied on the 1985 audit in consummating the stock sale agreement. The Comeaus’ purported reliance on the 1985 audit in purchasing the Rupps’ stock becomes even more baffling in light of information of which the Comeaus indisputably had actual knowledge. At the February 10 closing of the stock sale agreement, the Comeaus, their attorney (A.J. Schwartz), the Rupps, and the Accountants discussed problems that had surfaced regarding the “Compadre loan.” The Com-padre loan was a $1 million loan secured by real estate collateral that was valued on the books of RCSA at $1.5 million. At the time of the February 10 closing, the Com-padre property was in foreclosure. All parties were aware that the Compadre loan had been reappraised since the 1985 audit by a Vern Englehorn, who appraised the Compadre collateral at a value of only $200,000. There is also evidence that the value of the Compadre collateral had been reappraised at only $585,000. The Comeaus assert that they — under the advice of the Accountants — “dismissed or discounted” the Englehorn appraisal and proceeded to close the sale for a purchase price of $1.6 million. Regardless of the accuracy of the Englehorn appraisal, the undisputed evidence establishes that sufficient problems existed with the Compadre loan to require further investigation by the Comeaus. The potential known loss on the Compadre loan ranged anywhere from $585,000 to $800,-000 — or 28% to 38% of the reported net worth of RCSA. At the February 10 closing, the Comeaus even tried to account for this by renegotiating a $200,000 reduction in the valuation of Compadre, which in turn would reduce the purchase price. The Rupps made a counteroffer to reduce the purchase price by $70,000. The Comeaus refused the counteroffer, however, abandoned any effort to mitigate a known potential loss, and signed the agreement on its original terms. Thus, notwithstanding the Comeaus’ actual knowledge of information the gravity of which is belied by the Comeaus’ own actions, the Comeaus proceeded to purchase the stock on terms that assumed accuracy of the audit. The Comeaus also concede actual knowledge of a growing number of delinquent loans, albeit with a disclaimer of actual knowledge as to the amount of these delinquent loans. But it requires no great exercise of intellect to realize that an increase in the number of delinquent loans between the time of the audit and the closing date raises doubts as to the current reliability of that audit. Here too, the Comeaus failed to conduct further investigation. The Comeaus attempt to justify this conduct by noting that they “expressly reserved their rights and remedies under the contract,” (Doc. 860, Comeaus’ Response, at 1136, p. 21), thus implying that they foresaw legal action as a means to redress any loss on their purchase. The element of justifiable reliance, however, insures that a plaintiff seeking recovery under § 10(b) has taken preventative action to avert a known potential loss. A plaintiff cannot justifiably rely on the courts to remedy an injury that the plaintiff was in a position to prevent in the first place. For these reasons, the court concludes that the Comeaus have failed to demonstrate a genuine issue of fact as to the element of justifiable reliance on the 1985 audit. The court discerns no allegation in the pretrial order or in plaintiffs’ present arguments that the violations alleged by the Comeaus under § 10(b) and Rule 10b-5 relate to any conduct other than the purchase of the Rupps’ stock. Accordingly, summary judgment will be granted in favor of the Accountants on the federal securities claims. 2. Breach of Fiduciary Duty and Reckless Conduct The Comeaus allege two state common law claims against the Accountants: breach of fiduciary duty and reckless conduct. For purposes of this motion, the court assumes as true that Grant owed some fiduciary duties to the Comeaus, which were breached, and that Grant acted recklessly in performing the 1985 audit. See Gillespie v. Seymour, 14 Kan.App.2d 563, 568, 796 P.2d 1060 (1990) (whether accountants owe fiduciary duty depends on facts of each case); cf. Bily v. Arthur Young & Co., 3 Cal.4th 370, 11 Cal.Rptr.2d 51, 834 P.2d 745 (1992) (auditors liable to third parties for negligent misrepresentation only if plaintiff justifiably relies on audit). The court has also found, however, that the Comeaus themselves had a nondelegable fiduciary duty to keep abreast of the RCSA’s general financial condition, which duty was recklessly breached by their failure to inform themselves personally of the amount of delinquent loans as of February 10, 1986 and before. The court finds that this conduct on the part of the Comeaus precludes relief under either state common law theory. Although the contributory negligence of a plaintiff is not a defense to a defendant’s reckless conduct, reckless conduct on the part of the plaintiff is a defense to similar conduct of the defendant. Bogle v. Conway, 198 Kan. 166, 169, 422 P.2d 971 (1967); Kniffen v. Hercules Powder Co., 164 Kan. 196, 188 P.2d 980, syl. ¶ 4 (1948); W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 65, at 462 (5th ed. 1984) (citing Restatement (Second) of Torts §§ 482(2) & 503(3)); cf. Goben v. Barry, 234 Kan. 721, 727, 676 P.2d 90 (1984) (where the conduct of both plaintiff and defendant is equally culpable, the parties are said to be in pari delicto, and the court will leave the parties where it found them); Early Detection Center, Inc. v. Wilson, 248 Kan. 869, 879, 811 P.2d 860 (1991). Thus, even assuming that the Accountants were reckless, the Comeaus’ own reckless conduct defeats any claim for relief