Alvarado v. H&R Block

• Decision Date: 16 May 2000
• Citation: 24 S.W.3d 236
• Parties: (Mo.App. W.D. 2000) Octavio Alvarado, et al., Appellant v. H & R Block Inc., et al., Respondent WD57230 0
• Court: Missouri Court of Appeals

24 S.W.3d 236 (Mo.App. W.D. 2000)

Octavio Alvarado, et al., Appellant v. H & R Block Inc., et al., Respondent

WD57230

Missouri Court of Appeals Western District

05/16/2000

Appeal From: Circuit Court of Jackson County, Hon. Justine Elisa Del Muro

Counsel for Appellant: John B. Neher

Counsel for Respondent: Nancy Louise Ellingsworth and Eric G. Zahnd

Opinion Summary: Octavio and Sheryl Alvarado appeal summary judgment in favor of H&R Block, Inc., H&R Block Tax Services, Inc, and Samuel McWhorter, individually, on the Alvarado's tort claims arising out of tax return preparation services.

Division Two holds: (1) Where defendant Mr. McWhorter failed to file a motion for summary judgment, the trial court erred as a matter of law in entering summary judgment in favor of both defendant Mr. McWhorter and defendant Block based on Block's summary judgment motion. However, the trial court's erroneous grant of summary judgment in favor of Mr. McWhorter does not deprive the appellate court of jurisdiction over the summary judgment in favor of Block.

(2) Where Block pleaded the Missouri borrowing statute in its initial responsive pleading, a motion to dismiss, and thereafter pleaded the respective California statute of limitations in its amended answer, Block sufficiently pleaded the applicable statute of limitations defense as an affirmative defense.

(3) Where the Alvarados received the IRS notices of deficiency while they resided in California, their tort claims pertaining to income tax preparation services were ascertainable and are subject to California's statutes of limitations.

Robert G. Ulrich

Octavio and Sheryl Alvarado appeal from the trial court's grant of summary judgment in favor of H&R Block, Inc., H&R Block Tax Services, Inc. (collectively "Block"), and Samuel W. McWhorter on each of the Alvarado's five count petition based in tort. The Alvarados contend the trial court erred in granting summary judgment in three respects: (1) the trial court's summary judgment was not final and appealable because Mr. McWhorter failed to file a motion for summary judgment, (2) Block failed to plead Missouri's borrowing statute in its statute of limitations defense, and (3) the trial court applied the incorrect state's statute of limitations to the Alvarado's claims.

The judgment of the trial court is affirmed in part and reversed in part.

Facts

This suit arises out of income tax return preparation services provided to the Alvarados and their corporation by Samuel McWhorter, a franchisee of H&R Block, Inc. The Alvarados claim these tax services, provided at Mr. McWhorter's principle place of business in Van Horn, Texas, were performed in a negligent and fraudulent manner.

The Alvarados employed Mr. McWhorter to prepare their personal tax returns and the tax returns of their corporation, W.F. Wildcatter, Inc., for the 1987, 1988, and 1989 tax years. During this time period, Mr. McWhorter operated a Block tax preparation service franchise in Van Horn, Texas. Mr. McWhorter prepared and filed the Alvarado's tax returns at his Van Horn, Texas, office. The Alvarados claim they were not residents of Texas when the tax returns were prepared but were merely working in Texas at that time.

In January 1989, the Internal Revenue Service (IRS) sent the Alvarados a notice seeking substantiation of the mileage deduction on their 1987 personal income tax returns. The IRS sent the Alvarados a notice in October 1989, regarding income, deductions, and credits reported on their 1987 personal income tax return. The Alvarados spoke with Mr. McWhorter in January 1990, and Mr. McWhorter represented to them that their execution of IRS Form 2848, Power of Attorney and Declaration of Representative, was necessary. Mr. McWhorter did not sign the Power of Attorney until June 8, 1992.

The IRS sent the Alvarados notices, in February and November 1991, stating that the Alvarado's personal and corporate income tax liability for 1987 was being increased and that the Alvarados were being assessed a negligence penalty on their personal return. The IRS requested information from the Alvarados regarding their 1988 and 1989 personal and corporate tax returns in November 1991, and began an audit of those returns.

On February 25, 1993, the IRS assessed a tax deficiency against the Alvarados for their 1987 personal and corporate income tax returns and sent corresponding notices of deficiency. Soon thereafter, the Alvarados discovered that Mr. McWhorter had failed to appear for previously scheduled meetings with the IRS and had signed an IRS Notice of Deficiency - Waiver without their authorization. The Alvarados terminated Mr. McWhorter's services on April 26, 1993.

The Alvarado's tax dispute regarding all three tax years was finally settled with the IRS in February 1994. The Alvarados instituted the lawsuit against Block and Mr. McWhorter on October 31, 1996. Their petition for damages alleged four courts of tortious conduct, including negligent preparation of tax returns, negligent representation, fraudulent misrepresentation, and negligent misrepresentation against Block as principle of its franchisee, Mr. McWhorter, and against Block and Mr. McWhorter individually. The petition also alleged one count of negligent supervision against Block alone.

Mr. McWhorter filed his answer to the Alvarado's petition on December 9, 1996, which was a one-paragraph general denial of the allegations. He did not plead any affirmative defenses in his answer. He did not file any other pleadings in this case.

Block filed its first motion to dismiss the negligence claims asserting that the Alvarado's claims were barred by the Texas statute of limitations on January 8, 1997. The Alvarados filed suggestions in opposition to Block's motion to dismiss and included the affidavit of Sheryl Alvarado stating that the Alvarados did not live in Texas. The trial court denied the first motion to dismiss. Block thereafter filed its initial answer and later its answer to the first amended petition alleging the Alvarado's claims were "barred by the applicable statute of limitations." Block thereafter filed its amended answer to the first amended petition on January 22, 1999, asserting that the Alvarado's claims were barred by sections 338 and 339 of the California Code of Civil Procedure and/or Texas Civil Practice and Remedies Code 16.003(1).

Block filed a motion for summary judgment asserting that the Alavarado's claims were barred by the California statute of limitations. The trial court held oral argument on Block's motion for summary judgment and thereafter granted Block's motion for summary judgment on March 12, 1999. The court's judgment purported to enter judgment in favor of "defendants and against plaintiffs." Alvarado's counsel wrote the trial court, informing the court that its order and judgment was not final for purposes of appeal under Rule 74.01(d). In response to counsel's letter, the court entered its Amended Order and Judgment granting summary judgment against the Alvarados in favor of all defendants, including McWhorter, on March 29, 1999. The trial court found that April 26, 1993, was the date the Alvarados knew or could have known that Mr. McWhorter's and Block's representations to them were false. The court also found that the Alvarados were living in California at all relevant periods alleged in their petition and that their cause of action originated in California and, thus, was barred by California's two-year statute of limitations as applied by the Missouri borrowing statute. This appeal followed.

Standard of Review

Review of an order granting summary judgment is essentially de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). The record is reviewed in the light most favorable to the party against whom judgment was entered, and the latter is given the benefit of all reasonable inferences from the record. Id. Unless the moving party establishes that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law, summary judgment is not appropriate. Id.; Rule 74.04.

Jurisdiction

The Alvarados contend that the trial court erred in granting summary judgment in favor of all defendants, including Mr. McWhorter, because Mr. McWhorter never filed a motion for summary judgment. The Alvarados claim that since the trial court erred in granting Mr. McWhorter summary judgment, the trial court's order is not final and appealable under Rule 74.01 and this court lacks jurisdiction.

A prerequisite to appellate review is that there be a final judgment. Gibson v. Brewer, 952 S.W.2d 239, 244 (Mo. banc 1997). If the trial court's judgments are not final, the appellate court lacks jurisdiction and the appeal must be dismissed. Id. For a judgment to be final and appealable when more than one claim is presented or multiple parties are involved, it must dispose of all of the claims as to all of the parties in the case leaving nothing for future determination. Moreland v. Farren-Davis, 995 S.W.2d 512, 516 (Mo. App. W.D. 1999). To be a final judgment the court must adjudicate "all the claims and the rights and liabilities of all the parties." Rule 74.01(b).

In this case, the trial court noted on its amended order and judgment that "this motion for summary judgment was filed on behalf of Defendants H&R Block, Inc. and H&R Block Tax Services, the court's judgment applies to all defendants including Samuel H. McWhorter." As the trial court in this case adjudicated all the claims as to all of the parties, the trial court's amended judgment is final and appealable.

In order for a trial court to grant summary judgment, it must normally have a motion for summary judgment before it and notice of a hearing must be made. Williams v. Mercantile Bank of St. Louis NA, 845 S.W.2d 78, 82 (Mo. App. E.D. 1993). Parties seeking relief must initiate court action by filing a motion because ...