Halla Nursery, Inc. v. Baumann-Furrie & Co.
| Decision Date | 11 April 1989 |
| Docket Number | No. C9-88-2119,BAUMANN-FURRIE,C9-88-2119 |
| Court | Minnesota Court of Appeals |
| Parties | HALLA NURSERY, INC., Respondent, v.& CO., et al., Appellants. |
Syllabus by the Court
1. The negligence of an accountant's client should be considered only if the client's negligence contributed to the accountant's failure to perform its contractual duties in accordance with generally accepted accounting standards.
2. The district court did not abuse its discretion by granting a new trial because it inadvertently failed to inform the jury of the effect of its answers to the comparative fault question as required by Minn.R.Civ.P. 49.01(2).
3. This court cannot consider or decide an issue if the absence of a transcript renders meaningful review impossible.
Keith A. Hanson, Fetterly & Gordon, P.A., Minneapolis, for respondent.
L.H. May, Jr., Charles E. Lundberg, Bassford, Heckt, Lockhart, Truesdell & Briggs, P.A., Minneapolis, for appellants.
Heard, considered and decided by FOLEY, P.J., and NIERENGARTEN and LESLIE, * JJ.
The district court granted the respondent's motion for a new trial because the court failed to advise the jury of the effect of its answers to comparative fault questions. The appellant asserts the district court abused its discretion by granting the new trial because the respondent did not timely object to the jury instructions and claims the alleged errors do not involve fundamental law or controlling principle. We affirm.
The appellant Baumann-Furrie & Company is an accounting firm which provided accounting services for the respondent Halla Nursery, Inc. Sometime during the period in which Baumann-Furrie performed its accounting services an employee of Halla Nursery embezzled substantial sums of money from the nursery. Halla Nursery sued Baumann-Furrie alleging the firm should have detected or prevented the embezzlement and was negligent in performing its accounting services. Baumann-Furrie denied liability and asserted the embezzlement was not detected because of Halla Nursery's own negligence.
Prior to trial, Halla Nursery filed a motion in limine to exclude any evidence of its own alleged negligence. Halla Nursery asserted its purported negligence could not be considered unless its own actions directly affected Baumann-Furrie's duty to report the truth and perform its tasks in conformance with generally accepted professional standards. The motion apparently was denied. After the jury retired, Halla Nursery noted its exception to the court's decision which allowed the jury to consider any comparative negligence.
By special verdict form, the jury determined that both Halla Nursery and Baumann-Furrie were negligent in failing to detect the embezzlement and that the negligence of both was a direct cause of the nursery's damages. The jury apportioned Baumann-Furrie's negligence at twenty percent and Halla Nursery's negligence at eighty percent. The jury determined Halla Nursery's damages from the embezzlement were $309,761.
The trial court adopted the jury verdict and concluded Halla Nursery was not entitled to recover any damages.
Halla Nursery filed a motion for judgment notwithstanding the verdict or a new trial. Halla Nursery asserted that the jury was improperly instructed and that counsel were improperly precluded from commenting on the effect of the jury's answers to the comparative fault questions. Halla Nursery also claimed that the jury was improperly instructed with respect to the nursery's comparative fault, that evidence of collateral sources was improperly admitted and that the verdict was not justified by the evidence.
The district court granted the motion for a new trial "on the issues of liability only." Baumann-Furrie appeals the district court's order granting a new trial. Halla Nursery filed a notice of review.
1. Did the district court err by allowing the jury to consider the respondent's alleged negligence in apportioning fault?
2. Did the district court abuse its discretion by granting a new trial?
3. Did the district court err by allowing the appellants to introduce evidence of collateral source recoveries?
Halla Nursery claims the district court erred by allowing the jury to consider its negligence and urges this court to apply the rule followed in Lincoln Grain, Inc. v. Coopers & Lybrand, 216 Neb. 433, 345 N.W.2d 300 (1984), which holds accountants are not immune from the consequences of their own negligence merely because those who employ them may have conducted their businesses negligently. See id. at 441-42, 345 N.W.2d at 307. Under the Lincoln Grain rule, client negligence may be raised as a defense "only where it has contributed to the accountant's failure to perform the contract and to report the truth." See id.; see also Shapiro v. Glekel, 380 F.Supp. 1053, 1058 (S.D.N.Y.1974). Baumann-Furrie asserts the comparative fault statute was properly applied to this case.
We believe the Lincoln Grain rule is the appropriate rule to apply in an action against an accountant whose alleged negligent performance of the accounting contract results in damages to the client. An accountant should be liable for damages caused by nonperformance of its contractual duties; a client's negligence should be considered only if the client's negligence contributed to the accountant's failure to perform the contract. Whether a client negligently dealt with its accountant and whether the negligence contributed to the accountant's failure to perform its contract in accordance with generally accepted accounting standards are fact questions for the jury's determination. See Lincoln Grain, 216 Neb. at 442, 345 N.W.2d at 307. If the jury determines contributory negligence questions, it also should be given appropriate instructions on comparative negligence. See Minn.Stat. Sec. 604.01, subd. 1 (1988) ().
"The granting of a motion for a new trial on the ground of erroneous instructions to the jury, * * * rests largely in the sound discretion of the court, and its decision will not be disturbed on appeal unless there has been a clear abuse of that discretion."
Lindstrom v. Yellow Taxi Co. of Minneapolis, 298 Minn. 224, 230, 214 N.W.2d 672, 677 (1974) (quoting Storey v. Weinberg, 226 Minn. 48, 51, 31 N.W.2d 912, 914 (1948)).
The district court concluded it must grant Halla Nursery's motion for a new trial "because it erred in failing to instruct the Jury on the effect of its answers to the percentage of negligence question." A jury cannot be informed of the effect of its answers on the outcome of a case unless the case involves comparative fault issues.
In actions involving Minn.Stat.1971, sec. 604.01, the court shall inform the jury of the effect of its answers to the percentage of negligence question and shall permit counsel to comment thereon, unless the court is of the opinion that doubtful or unresolved questions of law, or complex issues of law or fact are involved, which may render such instruction or comment erroneous, misleading or confusing to the jury.
Minn.R.Civ.P. 49.01(2) (emphasis added).
The court determined it would submit the comparative fault issue to the jury but did not inform the jury how its answers to the comparative fault question would affect Baumann-Furrie's liability to Halla Nursery, even though Rule 49.01(2) states the court "shall" inform the jury of the effect of its answers. There is no indication in the record that the court determined doubtful or unresolved questions of law or complex issues would have rendered instructions or comments on comparative negligence "erroneous, misleading or confusing to the jury." See Minn.R.Civ.P. 49.01(2).
Baumann-Furrie notes that Halla Nursery did not timely object to the court's failure to...
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Halla Nursery, Inc. v. Baumann-Furrie & Co.
...of appeals refused to consider the collateral source recovery issue in the absence of a transcript. Halla Nursery v. Baumann Furrie & Co., 438 N.W.2d 400, 403, 404 (Minn.App.1989). We granted review to consider the issues regarding comparative fault and the granting of a new trial. The coll......
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...fact, to be determined by the trier of fact, the jury. See Rockler, 273 N.W.2d at 650. See generally Halla Nursery, Inc. v. Baumann-Furrie & Co., 438 N.W.2d 400, 402-03 (Minn.Ct.App.1989) (citation omitted) (whether a client negligently dealt with its accountant and whether the negligence c......
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