Broz v. Plante & Moran, PLLC

• Decision Date: 11 December 2018
• Docket Number: No. 340381,340381
• Citation: 326 Mich.App. 528,928 N.W.2d 292
• Parties: Robert F. BROZ and Kimberly Broz, Plaintiffs-Appellants, v. PLANTE & MORAN, PLLC, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

326 Mich.App. 528

928 N.W.2d 292

Robert F. BROZ and Kimberly Broz, Plaintiffs-Appellants,

v.PLANTE & MORAN, PLLC, Defendant-Appellee.

No. 340381

Court of Appeals of Michigan.

Submitted December 4, 2018, at Lansing.

Decided December 11, 2018, at 9:00 a.m.

MahanyLaw (by Anthony Dietz, Lansing and Brian Mahany ) for plaintiffs.

Miller, Canfield, Paddock and Stone, PLC, Detroit (by Michael W. Hartmann and James Woolard ) for defendant.

Before: Boonstra, P.J., and Jansen and Gadola, JJ.

Gadola, J.Plaintiffs, Robert F. and Kimberly Broz, appeal as of right the order of the trial court granting summary disposition to defendant, Plante & Moran, PLLC, under MCR 2.116(C)(8) and (10). We affirm.

I. FACTS

This case involves alleged accounting malpractice. When this case was previously before this Court in Broz v. Plante & Moran, PLLC , unpublished per curiam opinion of the Court of Appeals, issued May 17, 2016 (Docket No. 325884) 2016 WL 2908341, we summarized the underlying facts as follows:

Robert Broz operated several businesses that provide cellular telephone services, including RFB Cellular and Alpine PCS. He organized the businesses as S Corporations, which provided for pass through taxation. The IRS audited the [Brozes'] tax returns and issued a notice of deficiency, or 90-day letter, to them. The IRS listed various deficiencies in the [Brozes'] tax payments for tax years 1996, 1998, 1999, 2000, and 2001. Plante Moran prepared the [Brozes'] tax returns for each of those years. The parties' professional relationship ended in February 2006.

After the end of the relationship, but before the IRS issued the notice of deficiency, the [Brozes] filed amended tax returns for years 1998-2001, each one designated as a "protective filing" and showing a decrease in adjusted gross income of $ 35,675,453. Having claimed a large net operating loss for tax year 2002, they filed the amended returns in hopes of taking advantage of the 2002 enactment of the Job Creation and Worker Assistance Act, P.L. 107-147, § 102(a); 116 Stat. 21, which allowed taxpayers to carry back net operating losses incurred in tax years 2001 and 2002 for five years instead of the normal two.

The [Brozes] then sued the IRS in the United States Tax Court and disputed the deficiencies; they alleged in relevant part that all but a nominal amount of any tax deficiency assessed as a result of the audit would be eliminated by their 2002 net operating loss carryback. Despite raising the 2002 carryback as an issue in their petition to the Tax Court, the [Brozes] chose not to press that matter as part of their case before that tribunal. Their trial lawyer explained at deposition that this was done for strategic reasons and with the knowledge and approval of Robert Broz.

The [Brozes] sued Plante Moran for malpractice in 2008, but the parties entered into a series of tolling agreements pending the resolution of the case in the United States Tax Court. The Tax Court issued a decision in favor of the IRS on the deficiencies on September 1, 2011, Broz v. Comm'r of Internal Revenue , 137 T.C. 46 (US Tax Ct., 2011). The [Brozes] then filed this action on January 19, 2012. They also appealed the decision of the Tax Court to the United States Court of Appeals for the Sixth Circuit. While that appeal was pending, the [Brozes'] lawyer attempted to fight collection efforts by the IRS by asserting that the judgment could be reduced either by a favorable ruling from the Sixth Circuit, or by application of the [Brozes'] 2002 net operating loss carryback, which they were still pursuing with the IRS. The federal appellate court affirmed the judgment of the Tax Court in August 2013. See Broz v. Comm'r of Internal Revenue , 727 F.3d 621 (C.A. 6, 2013). On September 16, 2014, the IRS sent the [Brozes] a letter disallowing the [Brozes'] carryback claims. The [Brozes'] lawyer responded with a letter stating their disagreement and requesting an appeals conference.

Plante Moran moved for summary disposition of this case on November 5, 2014. It argued that the case must be dismissed because it was not yet ripe; specifically, it stated that the IRS’s review process could yet determine that no damages existed. It also argued that, by failing to assert the carryback argument in the United States Tax Court, the [Brozes] caused their own losses. The trial court agreed that the cause of action was not ripe. Although the [Brozes] had been assessed a tax liability, the court explained, they had not suffered any present injury because it was possible that that liability would be offset if they prevailed in their pending action with the IRS. On that basis, the trial court granted Plante Moran’s motion for summary disposition under MCR 2.116(C)(4) and dismissed the case without prejudice. [ Broz , unpub. op. at 1-2.]

On appeal in this Court, plaintiffs argued that the trial court erred by granting summary disposition to defendant on ripeness grounds. This Court agreed, reversing the decision of the trial court and remanding the case to the trial court for further proceedings. Id . at 4.

On remand, the parties engaged in additional discovery, and defendant again sought summary disposition of plaintiffs' amended complaint, which alleged breach of contract, professional negligence (malpractice), negligent misrepresentation, breach of fiduciary duty, and "estoppel to mitigate and indemnity." The trial court granted defendant’s motion, dismissing plaintiffs' claim for professional negligence (malpractice) under MCR 2.116(C)(10) and dismissing all other counts of plaintiffs' complaint under MCR 2.116(C)(8) and (10). Plaintiffs again appeal in this Court.

II. ANALYSIS

Plaintiffs contend that the trial court erred by granting summary disposition of their claims under MCR 2.116(C)(8) and (10). We review de novo a trial court’s decision to grant or deny summary disposition. Lowrey v. LMPS & LMPJ, Inc. , 500 Mich. 1, 5-6, 890 N.W.2d 344 (2016). In so doing, we review the entire record to determine whether the moving party was entitled to summary disposition. Maiden v. Rozwood , 461 Mich. 109, 118, 597 N.W.2d 817 (1999). We also review de novo issues of statutory construction. Trentadue v. Buckler Automatic Lawn Sprinkler Co. , 479 Mich. 378, 386, 738 N.W.2d 664 (2007).

A motion for summary disposition under MCR 2.116(C)(8)"tests the legal sufficiency of the complaint. All well-pleaded factual allegations are accepted as true and construed in a light most favorable to the nonmovant." Maiden , 461 Mich. at 119, 597 N.W.2d 817. A motion for summary disposition under this section is properly granted when, considering only the pleadings, the alleged claims are clearly unenforceable as a matter of law and no factual development could justify recovery. Id . at 119-120. By contrast, when reviewing an order granting summary disposition under MCR 2.116(C)(10), this Court considers all documentary evidence submitted by the parties in the light most favorable to the nonmoving party. Dawoud v. State Farm Mut. Auto. Ins. Co. , 317 Mich. App. 517, 520, 895 N.W.2d 188 (2016). Summary disposition under MCR 2.116(C)(10) is warranted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id . When a motion is made and supported under MCR 2.116(C)(10), the burden shifts to the nonmoving party to show, by affidavits or other documentary evidence, that there is a genuine issue of material fact. MCR 2.116(G)(4) ; Quinto v. Cross & Peters Co. , 451 Mich. 358, 362, 547 N.W.2d 314 (1996). If the nonmoving party does not make such a showing, summary disposition is properly granted. Quinto , 451 Mich. at 363, 547 N.W.2d 314.

A. PROFESSIONAL NEGLIGENCE (MALPRACTICE)

Plaintiffs first contend that the trial court erred by granting defendant summary disposition under MCR 2.116(C)(10) of plaintiffs' claim of accounting malpractice. We disagree.

1. STANDARD OF CARE

Plaintiffs argue that the trial court erroneously imposed on them a duty to establish the standard of care and whether defendant met that standard of care, which plaintiffs argue is a burden that is not properly imposed on a plaintiff bringing a claim of accounting malpractice. Plaintiffs are incorrect in this assertion.

Professional malpractice arises from the "breach of a duty owed by one rendering professional services to a person who has contracted for such services." Saur v. Probes , 190 Mich. App. 636, 638, 476 N.W.2d 496 (1991). A professional malpractice claim is a tort claim predicated on the failure of the defendant to exercise the requisite professional skill. Stewart v. Rudner , 349 Mich. 459, 468, 84 N.W.2d 816 (1957). Accounting is a profession traditionally subject to common-law malpractice liability. Local 1064, RWDSU AFL-CIO v. Ernst & Young , 449 Mich. 322, 333, 535 N.W.2d 187 (1995).

Members of a state-licensed profession, such as accountants, are subject to liability for malpractice under the rules of the common law as articulated by MCL 600.2912,¹ which provides:

(1) A civil action for malpractice may be maintained against any person professing or holding himself out to be a member of a state licensed profession. The rules of the common law applicable to actions against members of a state licensed profession, for malpractice, are applicable against any person who holds himself out to be a member of a state licensed profession.

(2) Malpractice may be given in evidence in defense to any action for services rendered by the member of a state licensed profession, or person holding himself out to be member of a state licensed profession.

Section 2962 of the Revised Judicature Act, MCL 600.2962, sets forth limitations on liability for accounting malpractice. At all times relevant to this action,² § 2962 provided:

This section applies to an action for professional malpractice against a certified public accountant. A certified public accountant is liable for civil damages in connection with public accounting services performed by

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