FRANK A. LANE AND CAROL P. LANE, APPELLANTS,
v.
PEAT, MARWICK, MITCHELL & CO., APPELLEE
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The Lanes appealed summary judgment dismissing their accounting malpractice action against Peat Marwick based on the statute of limitations. The court reversed, holding that the statute of limitations in professional malpractice actions does not begin to run until the plaintiff knows or should know that redressable harm exists, which occurred when the tax court entered judgment against the Lanes, not when they received the initial IRS deficiency letter.
The statute of limitations for professional malpractice begins to run only when the client knows or should know that redressable harm exists. In this case, the Lanes did not suffer redressable harm until the tax court entered judgment against them on May 9, 1983, so the malpractice action filed on February 22, 1985 was timely filed within the two-year limitation period.
[1] A cause of action for accounting malpractice accrues when the client knows or should know that a cause of action exists and redressable harm has been established.
[2] In accounting malpractice actions, redressable harm is established when a court enters an order adverse to the client's position, not merely when the client receives a no…
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Join FLexlaw to unlock all legal intelligence“A cause of action for professional malpractice does not arise until 'the existence of redressable harm has been established.'”
Establishes the core standard for when the statute of limitations begins to run in professional malpractice cases
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Join FLexlaw to unlock all legal intelligenceThe Lanes retained Peat Marwick as their tax advisors for 1976-1979. On December 30, 1976, Peat Marwick recommended that the Lanes invest in a limited…
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BASKIN, Judge.
Frank and Carol Lane appeal the entry of summary final judgment in favor of Peat, Marwick, Mitchell & Co. [Peat Mar-wick].1 The trial court found that the Lanes’ cause of action for accountant malpractice was barred by the statute of limitations.2 We reverse.
Frank and Carol Lane retained the Peat Marwick accounting firm to serve as their tax advisors and to prepare their tax returns for the years 1976 through 1979.
On December 30, 1976, Peat Marwick recommended that the Lanes invest in a limited partnership known as Northern Voices, Ltd. The Lanes followed Peat Marwick’s recommendation. Peat Marwick attributed various deductions from the Lanes’ taxes to the losses sustained by the Northern Voices partnership.
On March 17, 1981, the Lanes received a deficiency letter from the Internal Revenue Service [IRS], challenging the deductions Peat Marwick had taken for the Lanes deriving from their Northern Voices investment. Upon receiving the deficiency letter, the Lanes contacted Peat Marwick and were advised that a sound basis for challenging the deficiency letter existed. The Lanes filed a petition to redetermine the deficiency, and when IRS denied their petition, filed suit in the United States Tax Court.
On May 9, 1983, the Lanes entered into a stipulation with IRS for the entry of a tax court order; the tax court entered its order on May 9, 1983.
The Lanes commenced an accounting malpractice action against Peat Marwick on February 22, 1985. Peat Marwick moved for summary final judgment, asserting that the statute of limitations began to run when the Lanes received the first notice of delinquency, and therefore, the Lanes’ cause of action was barred. The trial court granted the motion and entered summary final judgment; the Lanes appeal.
The issue pertaining to the commencement of the running of the statute of limitations in an accounting malpractice action is one of first impression in this court. Accounting is a profession for purposes of the statute of limitations governing professional malpractice. Pierce v. AALL Ins., Inc., 531 So. 2d 84, 87 (Fla.1988).
Causes of action predicated on accounting malpractice are sufficiently analogous to actions based on legal malpractice so that opinions dis cussing legal malpractice limitations are helpful to our consideration of similar accounting statutes. Those cases inform us that a cause of action for negligence does not accrue until the client knows or should know a cause of action exists. A cause of action for professional malpractice does not arise until “the existence of redressable harm has been established.” Diaz v. Piquette, 496 So. 2d 239, 240 (Fla. 3d DCA 1986), review denied, 506 So. 2d 1042 (Fla.1987); see also Haghayegh v. Clark, 520 So. 2d 58 (Fla. 3d DCA 1988); Richards Enter., Inc. v. Swofford, 495 So. 2d 1210 (Fla. 5th DCA 1986); Adams v. Sommers, 475 So. 2d 279 (Fla. 5th DCA 1985); Kellermeyer v. Miller, 427 So. 2d 343 (Fla. 1st DCA 1983); Birnholz v. Blake, 399 So. 2d 375 (Fla. 3d DCA 1981); cf. Breakers of Ft. Lauderdale, Ltd. v. Cassel, 528 So. 2d 985 (Fla. 3d DCA 1988) (cause of action for negligent failure of attorney to settle lawsuit arises when client learns of revival of suit, not when revived suit reaches judgment, because failure to settle changed only amount of damage ultimately suffered by client); but see Sawyer v. Earle, 541 So. 2d 1232 (Fla. 2d DCA 1989).
The Lanes did not suffer redressable harm until the tax court entered judgment against them. Until that time, the Lanes knew only that Peat Marwick might have been negligent; however, if the tax court did not uphold the deficiency, the Lanes would not have a cause of action against Peat Marwick for accounting malpractice. See Haghayegh; Diaz; Richards Enter., Inc.; Adams; Chapman v. Garcia, 463 So. 2d 528 (Fla. 3d DCA 1985); Birnholz. Thus, the filing of a lawsuit against Peat Marwick within two years of the entry of the adverse tax court ruling was timely.
We certify conflict with the Second District Court of Appeal in Sawyer v. Earle, 541 So. 2d 1232 (Fla. 2d DCA 1989).
Reversed and remanded.
. Peat, Marwick, Mitchell & Co. is now known as Peat, Marwick, Main & Co. . The statute of limitations applicable to an action for professional malpractice is two years from the time the cause of action is discovered or should have been discovered. § 95.11(4)(a), Fla.Stat. (1985).
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Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061 (Fla. 2001)…red and granted summary judgment in Peat, Mar-wick’s favor. On appeal, the Third District Court of Appeal reversed, finding that the limitations period commenced when the judgment was entered in tax court. See Lane v. Peat, Marwick, Mitchell & Co., 540 So. 2d 922 (Fla. 3d DCA 1989). After granting the petition for review, this Court agreed with the district court: In this case, the Lanes chose to appeal the IRS’s determination to the United States Tax Court, in accordance with the advice given them by Peat…
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Peat v. Lane, 565 So. 2d 1323 (Fla. 1990)…OVERTON, Justice. This cause is before the Court on petition to review Lane v. Peat, Marwick, Mitchell & Co., 540 So. 2d 922 (Fla. 3d DCA 1989), in which the Third District Court of Appeal held that the limitations period for a cause of action for accounting malpractice commenced when the United States Tax Court entered judgment against the Lanes, rather than when the Int…
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Spivey v. Trader, 620 So. 2d 212 (Fla. 4th DCA 1993)…not disputed. LAW AND ANALYSIS Section 95.11(4)(a), Florida Statutes (1991), governs actions against lawyers and provides for a two year period in which an action may be brought after such action accrues. In Lane v. Peat, Marwick, Mitchell & Co., 540 So. 2d 922 (Fla. 3d DCA 1989), approved, 565 So. 2d 1323 (Fla.1990), taxpayers sued their accountant for malpractice as a result of an Internal Revenue Service (IRS) decision disallowing certain deductions. The firm argued the limitations period commenced when…
Previewing 3 of 7 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited (11 total)
- Stanford Birnholz v. Blake, 399 So. 2d 375 (Fla. 3d DCA 1981)
- S. Bell Tel. & Tel. Co. v. Elbert S. Carley, 427 So. 2d 343 (Fla. 1st DCA 1983)
- Chapman v. Jorge Garcia, M.D., 463 So. 2d 528 (Fla. 3d DCA 1985)
- Donald and Michele Fierce v. Aall Ins. Inc., 531 So. 2d 84 (Fla. 1988)
- Eligio Barrios & Goldstone Co., N.V. v. Duran, 496 So. 2d 239 (Fla. 3d DCA 1986)
- Bismark Diaz & Bis D. Corp. v. Piquette, 496 So. 2d 239 (Fla. 3d DCA 1986)
- Abdolhossain Haghayegh and Gholamossain Haghayegh v. Clark, 520 So. 2d 58 (Fla. 3d DCA 1988)
- Adams v. Sommers, 475 So. 2d 279 (Fla. 5th DCA 1985)
- Richards Enters., Inc. v. Swofford, 495 So. 2d 1210 (Fla. 5th DCA 1986)
- Sawyer v. Earle, 541 So. 2d 1232 (Fla. 2d DCA 1989)