96-0361 La.App. 4 Cir. 8/21/96, Short v. Giffin

• Decision Date: 21 August 1996
• Citation: 682 So.2d 249
• Parties: 96-0361 La.App. 4 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 249

682 So.2d 249

96-0361 La.App. 4 Cir. 8/21/96

Joan C, wife of/and Ronald M. SHORT v. Clifford GIFFIN and Duplantier, Hrapman, Hogan & Maher, et al.

No. 96-CA-0361.

Court of Appeal of Louisiana, Fourth Circuit.

Aug. 21, 1996.

Rehearing Denied Nov. 22, 1996.

Stephen D. Marx, Chehardy, Sherman, Ellis, Breslin & Murray, Metairie, LA, for appellee William Kurtz.

Daniel Lund, Robert E. Durgin, Stephanie A. Lottinger, Montgomery, Barnett, Brown, Read, Hammond & Mintz, L.L.P., New Orleans, LA, for appellees Clifford Giffin, Duplantier, Hrapmann, Hogan & Maher.

Harry D. Hoskins, III, Hoskins & Hoskins, New Orleans, LA, for appellants William E. Wright, Jr., W. Christopher Beary, Deutsch, Kerrigan & Stiles, L.L.P., New Orleans, LA, for appellee International Surplus Lines Ins. Co.

Before CIACCIO, LOBRANO and JONES, JJ.

[96-0361 La.App. 4 Cir. 1] LOBRANO, Judge.

Plaintiffs, Joan and Ronald Short, appeal two trial court judgments: 1) the June 30, 1995, judgment granting summary judgment in favor of defendants, Duplantier, Hrapmann, Hogan and Maher, Clifford Giffin and William Kurtz dismissing plaintiffs' action against those defendants as prescribed and denying plaintiffs' cross motion for summary judgment; and 2) the November 10, 1995 judgment granting summary judgment in favor of defendants William Hogan, Jr., Kenneth Brooks, William Stamm, David Erath, Michael O'Rourke, Duplantier, Hrapmann, Hogan and Maher, L.L.P. and International Surplus Lines Insurance Company dismissing plaintiffs' claims against those defendants and denying plaintiffs' motion for new trial. We affirm both judgments.

FACTS AND PROCEDURAL HISTORY:

In 1982, plaintiffs sought the accounting services of the firm of Duplantier, Hrapmann, Hogan and Maher (DHH & M). In connection with the preparation of plaintiffs' tax returns, Clifford Giffin of DHH & M sent plaintiff information in late 1982 regarding an investment in a limited partnership which he allegedly suggested could provide certain tax benefits to plaintiffs. In December, [96-0361 La.App. 4 Cir. 2] 1982, plaintiffs purchased an interest in the limited partnership known as Barrister Associates Series 99 (Barrister) through defendant William Kurtz, the Barrister sales representative, at a meeting arranged by Giffin. In 1984, plaintiffs were notified that the Internal Revenue Service (IRS) was examining the Barrister partnership. Plaintiffs later received notice from the IRS that tax benefits claimed by them for the Barrister investment for the 1982 and 1983 tax years were being disallowed. On May 17, 1989, plaintiffs signed the IRS Offers of Settlement agreeing to pay additional taxes, penalties and interest resulting from the disallowed tax benefits related to the Barrister investment.

On October 2, 1990, plaintiffs filed suit against Giffin and DHH & M for damages allegedly caused by these defendants' role in plaintiffs' investment in the Barrister partnership. Plaintiffs subsequently supplemented and amended their petition several times. In these various amendments, plaintiffs added as defendants Kurtz, Hogan, Brooks, Stamm, Erath, O'Rourke, DHH & M, L.L.P. ¹ and International Surplus Lines Insurance Company, DHH & M's liability insurer. In their petition, as supplemented and amended, plaintiffs alleged several causes of action including accounting malpractice, violations of the Louisiana Blue Sky Laws, LSA-R.S. 51:701 et seq., civil conspiracy under LSA-C.C. art. 2324 and breach of fiduciary duty. ²

Defendants Giffin and DHH & M filed a motion for summary judgment based on a defense of prescription/peremption. In support of that motion, they argued that the provisions of LSA-R.S. 9:5604, which establish a one and three year [96-0361 La.App. 4 Cir. 3] peremptive period in an action for professional accounting liability, was applicable. Giffin and DHH & M urged that all four of plaintiffs' theories against them arise out of plaintiffs' engagement of DHH & M to provide professional accounting services. According to Giffin and DHH & M, the plaintiffs had knowledge, more than one year prior to the filing of the instant suit, that a sizable portion of the tax benefits claimed in connection with their Barrister partnership interest was being disallowed by the IRS and thus all of their claims were prescribed.

Plaintiffs opposed the summary judgment motion arguing: (1) material issues of fact remained; (2) R.S. 9:5604(B) exempts claims occurring before September 7, 1990 and thus contra non valentem was applicable; (3) their breach of fiduciary duty and Blue Sky Law allegations against the accountants are not included "claims" under R.S. 9:5604(C) because that subsection was not enacted until 1992; (4) the continuous tort doctrine suspended the prescriptive toll; (5) fraud precludes the application of R.S. 9:5604; and (6) the 1992 amendment to R.S. 9:5604 is unconstitutional because it impairs vested rights. In addition plaintiffs also filed a cross-motion for summary judgment on their Blue Sky and Civil Code article 2324 (conspiracy) claims.

Kurtz also filed a motion for summary judgment on the Blue Sky Law claim against him arguing it had prescribed.

On June 30, 1995, the trial judge granted the motions of Giffin, DHH & M and Kurtz, dismissing plaintiffs' claims against those defendants as prescribed. Plaintiffs' cross-motion was denied. The trial judge reasoned that the claims against the accountants were subject to a one year prescriptive period. He found that the plaintiffs knew, at the latest, on May 17, 1989, that the tax benefits from the Barrister partnership were disallowed by the IRS, and hence the [96-0361 La.App. 4 Cir. 4] prescriptive toll commenced. Citing Rhoden v. Wegmann, 569 So.2d 35 (La.App. 4th Cir.1990), writ denied, 572 So.2d 66 (La.1991), the court concluded that plaintiffs were bound to have known sufficient facts to put them on notice of any alleged malpractice by the accountants, and thus the suit filed in October of 1990 was not timely.

With regard to defendant Kurtz, the trial judge reasoned that any cause of action against Kurtz under the Louisiana Blue Sky Laws would have prescribed two years after the sale of the Barrister partnership in December, 1982. Because no suit was filed against Kurtz by December, 1984, plaintiffs' claims against him were also prescribed. The judge concluded that plaintiffs' 1990 suit against their accounting firm could not revive their previously prescribed claims against Kurtz.

After the June 30, 1995, trial court judgment was rendered, a motion for summary judgment was filed by the remaining accountant defendants, Hogan, Brooks, Stamm, Erath, O'Rourke, and DHH & M, L.L.P., and their liability insurer, International Surplus. The remaining accountant defendants argued that their alleged liability in this case was solely derivative of the alleged liability of Giffin and DHH & M who had been dismissed. International Surplus argued that if the claims against all of the insured accountants are dismissed, then the claims against their malpractice insurer should also be dismissed. Plaintiffs filed a motion for new trial as well as an opposition to the additional motions for summary judgment.

On November 10, 1995, the trial judge denied plaintiffs' motion for new trial and granted summary judgment in favor of the remaining defendants. [96-0361 La.App. 4 Cir. 5] Plaintiffs now appeal the trial court judgments of June 30, 1995 and November 10, 1995. ³

Summary judgments are reviewed on appeal de novo. Smith v. Our Lady of the Lake Hospital, 93-2512 (La. 7/5/94), 639 So.2d 730. The summary judgment article, LSA-C.C.P. art. 966, was amended by the Louisiana Legislature in 1996. See, 1996 La.Acts, No. 9. The amended version of article 966 became effective on May 1, 1996 ⁴ and instructs that the summary judgment procedure is favored and "shall be construed to accomplish these ends." We interpret the [96-0361 La.App. 4 Cir. 6] amended version of C.C.P. art. 966 to be procedural in nature and, therefore, subject to retroactive application. LSA-C.C. art. 6.

However, even though legislative intent is to favor summary judgments, the amended version of C.C.P. art. 966 does not change the law regarding the burden of proof in a summary judgment proceeding. The burden of proof remains on the mover to show "that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law." LSA-C.C.P. art. 966C. Only after the mover has met this burden may summary judgment be rendered against "an adverse party who fails to make a showing sufficient to establish the existence of proof of an element essential to his claim, action, or defense and on which he will bear the burden of proof at trial." LSA-C.C.P. art. 966C. Thus, even under the amended version of article 966, if genuine issues of fact remain, this Court must still reject summary judgment.

Plaintiffs argue that their action against the accountant defendants was timely filed under all four theories of recovery alleged: 1) accounting malpractice, 2) breach of fiduciary duty, 3) violations of the Louisiana Blue Sky Laws, R.S. 51:712 and 714, and 4) civil conspiracy under C.C. art. 2324. Their argument is simply that the petition seeks damages for both tort and breach of fiduciary duty.

The same acts or omissions may constitute breach of both general duties and contractual duties and may give rise to actions both in tort and in contract. Succession of Dubos, 453 So.2d 323 (La.App. 4th Cir.1984); United Gas Pipe Line Company v. Cargill, Inc., 612 So.2d 783 (La.App. 1st Cir.1992). However, in such cases, the allegations of the petition and character of the pleadings determine the true nature of the action and the appropriate prescriptive [96-0361 La.App. 4 Cir. 7] period. Id. See also, Fontaine v. Roman Catholic Church, 625 So.2d 548 (La.App. 4th Cir.1993).

Plaintiffs allege breach of fiduciary duty by the accountant defendants and also allege that ...