B is corrent. A CPA’s liability for constructive fraud is established by the following elements: (1) misrepresentation of a material fact, (2) reckless disregard for the truth, (3) reasonable reliance by the injured party, and (4) actual damages. Gross negligence constitutes a reckless disregard for the truth.
A is incorrect because the presence of the intent to deceive is needed to satisfy the scienter requirement for fraud. However, even in the absence of the intent to deceive, the CPA can be liable for constructive fraud based on reckless disregard of the truth.
C is incorrect because ordinary negligence is not sufficient to support a finding of constructive fraud.
D is incorrect because the liability for constructive fraud does not depend upon who has losses.
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