BDO Seidman v. BRITISH CAR AUCTIONS
| Citation | 745 So.2d 1082 |
| Decision Date | 24 November 1999 |
| Docket Number | No. 98-4036., No. 98-3467, No. 98-3939 |
| Parties | BDO SEIDMAN, LLP, et al., Appellant, v. BRITISH CAR AUCTIONS, INC., Appellee. |
| Court | Court of Appeal of Florida (US) |
Daniel S. Pearson and Christopher N. Bellows of Holland & Knight LLP, Miami, for appellant.
Timothy J. McDermott of Milam, Otero, Larsen, Dawson & Traylor, P.A., Jacksonville, for appellee.
BDO Seidman, an accounting firm, appeals a verdict rendered against it for negligent tax advice it gave to the appellee, British Car Auctions ("BCA"). Seidman contends that under Tennessee law, which controls, the statute of limitations had run. We agree and reverse for entry of a judgment in favor of Seidman.
Tennessee law, which the parties agree applies, is different from Florida law in two respects. First, Tennessee has a one year statute of limitation for accounting malpractice suits. § 28-3-104(a)(2), Tennessee Code Annotated. Second, a cause of action for professional malpractice accrues as soon as plaintiff has suffered some damage and knows or should have known that the damage was caused by the defendant's negligence. Kohl v. Dearborn and Ewing, 977 S.W.2d 528 (Tenn.1998).
In the 1980's, Seidman advised BCA that the sale of a subsidiary would result in favorable tax treatment in regard to investment tax credits. BCA executed the sale based on that representation but, several years later, in early 1992, BCA was formally advised by IRS that an ongoing audit was being expanded to include questioning the investment tax credits. BCA requested Seidman to assist it with the audit of the investment tax credits and Seidman continued to represent plaintiff in that regard as well as other areas. On September 15, 1992, the IRS rejected arguments made on behalf of BCA in regard to the investment tax credits, and on September 18, 1992, BCA sent Seidman a letter which said in part:
Notwithstanding this letter, Seidman continued to represent BCA in regard to the investment tax credits and advised BCA that there were alternative methods for reducing BCA's overall tax liability. Seidman continued to exert efforts on behalf of BCA in that regard until April, 1994, when IRS issued its final report which was unfavorable to BCA.
This malpractice law suit was filed by BCA on September 19, 1994. Seidman contends that the cause of action accrued, at the latest, when the 1992 letter was written, and is therefore barred by the Tennessee Statute of Limitations. BCA responds that the cause of action would not have accrued under Tennessee law until the IRS issued its final report in April, 1994, which would make the suit timely.
Kohl, 977 S.W.2d 528, is the most recent and most significant Tennessee Supreme Court decision explaining how to determine when a cause of action for professional malpractice accrues. In Kohl a law firm negligently advised the clients in 1986 that they could transfer their individual retirement accounts into the profit sharing plan of their business without incurring taxes. In September 1988 the clients received a letter from the IRS informing them that their 1986 tax return was being questioned in regard to the transfer, and on October 19, 1988, the client's accountant wrote a letter to IRS attempting to resolve the problem. Although the matter was not resolved against the clients until later, the Tennessee Supreme Court held that the cause of action accrued, and the statute of limitations therefore began to run, from the date of the October 24, 1988 letter. The court explained:
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BDO Seidman v. British Car Auctions, Inc.
...agreed governed, we held that the malpractice suit was barred by the Tennessee statute of limitations. BDO Seidman, LLP v. British Car Auctions, Inc., 745 So.2d 1082 (Fla. 4th DCA 1999).1 We reversed for entry of judgment in favor of Seidman without reaching the issue of attorney's fees, wh......