Iacurci v. Sax

• Decision Date: 04 December 2012
• Docket Number: No. 33318.,33318.
• Citation: 57 A.3d 736,139 Conn.App. 386
• Court: Connecticut Court of Appeals
• Parties: Arthur IACURCI v. Larry SAX et al.

139 Conn.App. 386

57 A.3d 736

Arthur IACURCI

v.Larry SAX et al.

No. 33318.

Appellate Court of Connecticut.

Argued March 19, 2012.

Decided Dec. 4, 2012.

Gary A. Mastronardi, Bridgeport, for the appellant (plaintiff).

Kerry R. Callahan, with whom, on the brief, was David R. Makarewicz, Hartford, for the appellees (defendants).

LAVINE, ALVORD and ESPINOSA, Js.

ESPINOSA, J.

The plaintiff, Arthur Iacurci, appeals from the summary judgment rendered by the trial court in favor of the defendants, Larry Sax and Cohen, Burger, Schwartz and Sax, LLC (accounting firm). The plaintiff claims that the court improperly allocated to him the burden of proof with regard to his allegation that the statute of limitations was tolled by operation of the fraudulent concealment statute. We affirm the judgment of the trial court.

The following procedural history underlies this appeal. On November 10, 2009, the plaintiff commenced an action against Sax and the accounting firm by virtue of a four count complaint. Counts one and two, sounding in professional malpractice and negligence, respectively, were brought against Sax. Counts three and four, sounding in professional malpractice and negligence, respectively, were brought against the accounting firm.

In relevant part, the plaintiff alleged that Sax was a licensed certified public accountant who, for tax years 1999 through 2005, prepared federal and state income tax returns, on behalf of the accounting firm, for the plaintiff and Barbara Iacurci. The accounting firm's primary business was to provide certified accounting services. The plaintiff alleged that, for tax years 1999 through 2002, Sax “portrayed the [p]laintiff [on tax returns] as a real estate investor.” The plaintiff alleged that, for tax years 2003 through 2005, Sax “portrayed the [p]laintiff [on tax returns] as an individual engaged in the business of real estate,” and that this arbitrary change in the plaintiff's tax filing status description resulted in adverse tax consequences for the plaintiff. In 2007, the plaintiff alleged, he “disassociated professionally” from Sax and the accounting firm, and hired a different accounting firm to prepare his federal and state tax returns. His newly hired firm noticed the change Sax had made to his client's tax status and, in February, 2007, the successor firm filed amended tax returns for tax years 2003, 2004 and 2005, which portrayed him as a real estate investor. The plaintiff alleged that the Internal Revenue Service (IRS) conducted an audit for the tax years at issue and upheld his tax status as a real estate investor.

In count one, the plaintiff alleged that Sax failed “to exercise that degree of care and skill ordinarily and customarily provided by [c]ertified [p]ublic [a]ccountants” by modifying his tax status in the manner that he did, not advising him of the tax ramifications of changing his tax status and not advising him as to the potential for an audit by the IRS as a result of the change in tax status. In count two, the plaintiff alleged that Sax “owed a duty to the [p] laintiff to provide tax preparation services” and that he breached that duty in the manner set forth previously. The plaintiff alleged that Sax's conduct caused him monetary damages.

In count three, the plaintiff alleged that the accounting firm failed “to exercise that degree of care and skill ordinarily and customarily provided by [c]ertified [p]ublic [a]ccountant firms in monitoring, reviewing, approving, and issuing tax returns under the firm name,” and committed professional malpractice by allowing the modification in his tax status and by not ensuring that this modification was fully and frankly discussed with him. In count four, the plaintiff alleged that the accounting firm owed him “a duty to ... provide tax preparation services,” and that it breached that duty by modifying his tax status and not discussing with him the potential that the modification would lead to an audit by the IRS. The plaintiff alleged that the accounting firm's conduct caused him monetary damages.

In December, 2009, the defendants filed an answer and special defense, alleging, in relevant part, that the plaintiff's claims were time barred by operation of the applicable statute of limitations, General Statutes § 52–577. In January, 2010, the plaintiff filed a reply in which he summarily denied the special defense. In June, 2010, the defendants filed a motion for summary judgment, in which they asserted that the last act upon which the plaintiff's claims were based was the completion and filing of a tax return on April 17, 2006, the plaintiff did not commence suit until November 10, 2009, and the action was untimely under § 52–577. Attached to their memorandum of law in support of the motion for summary judgment, the defendants filed several exhibits as well as an affidavit of Sax. In his affidavit, Sax averred that he prepared and filed the plaintiff's 2005 federal and state tax returns by April 17, 2006. In July, 2010, absent objection, the plaintiff amended his reply, thereby asserting that the statute of limitations was tolled by operation of Connecticut's fraudulent concealment statute, General Statutes § 52–595.

In July, 2010, the plaintiff filed an objection to the defendants' motion for summary judgment. Essentially, the plaintiff argued that summary judgment was inappropriate because issues of material fact existed as to whether the fraudulent concealment statute applied and tolled the statute of limitations. In his memorandum of law, the plaintiff argued, inter alia, that the parties were in a fiduciary relationship and that the defendants owed the plaintiff a fiduciary duty to disclose the tax information on which the action was based. The plaintiff submitted his own affidavit in which he averred, in relevant part, that he had trust and confidence in the defendants; in tax matters, the defendants had superior knowledge, skill and expertise; and “[he] believed, at all times, that, in preparing [his] tax returns, they were proceeding in [his] best interests.” Also, the plaintiff submitted the affidavit of Robert Walsh, a financial planner licensed in Connecticut.

In October, 2010, the defendants filed a memorandum of law in reply to the plaintiff's objection to their motion for summary judgment. The defendants argued that the fraudulent concealment statute was “completely inapplicable in this matter.” The defendants also argued that they were not aware of the plaintiff's cause of action, they did not conceal anything from the plaintiff and they did not play any role in the plaintiff's late filing of the complaint. Addressing the plaintiff's argument that a fiduciary relationship existed between the parties, the defendants asserted that the case law relied on by the plaintiff for this proposition was “ wholly inapplicable to accounting malpractice cases.” (Emphasis in original.)

In January, 2011, the court heard arguments on the motion for summary judgment, and the fiduciary relationship issue was hotly debated at the hearing. The defendants argued that the plaintiff could not demonstrate any of the elements of fraudulent concealment. The defendants contended that insofar as the plaintiff relied upon the existence of a fiduciary relationship between the parties to demonstrate nondisclosure under the fraudulent concealment statute, the plaintiff was unable to demonstrate that the defendants, who merely were tax preparers, were fiduciaries. The plaintiff replied that there was a genuine issue of material fact as to whether he and the defendants were in a fiduciary relationship and, thus, whether the defendants' nondisclosure of facts related to the plaintiff's cause of action satisfied the fraudulent concealment statute, thereby tolling the statute of limitations.

On March 25, 2011, the court issued its memorandum of decision granting the defendants' motion for summary judgment. Over the defendants' objection, the court relied on Walsh's affidavit, including his expert opinion as a licensed financial planner that the defendants, certified public accountants, breached a fiduciary duty owed to the plaintiff.¹ The court determined, first, that the plaintiff had not refuted the fact that the latest date on which the defendants rendered professional services for the plaintiff was April 17, 2006, and that the plaintiff commenced the present action on November 10, 2009. The court determined that the plaintiff had not demonstrated that a genuine issue of material fact existed as to whether the plaintiff's claims were time barred. The court then shifted the burden to the plaintiff to demonstrate that a genuine issue of material fact existed as to whether the fraudulent concealment statute applied and tolled the statute of limitations.

The court correctly observed that § 52–595 provides: “If any person, liable to an action by another, fraudulently conceals from him the existence of the cause of such action, such cause of action shall be deemed to accrue against such person so liable therefor at the time when the person entitled to sue thereon first discovers its existence.” General Statutes § 52–595. Also, the court correctly set forth the well established elements of fraudulent concealment: “To prove fraudulent concealment, a plaintiff must prove that the person concealing an action ‘(1) had actual awareness, rather than imputed knowledge, of the facts necessary to establish the plaintiff['s] cause of action; (2) intentionally concealed these facts from the [plaintiff]; and (3) concealed the facts for the purpose of obtaining delay on the plaintiff['s] part in filing a complaint on [the] cause of action.’ Falls Church Group, Ltd. v. Tyler, Cooper & Alcorn, LLP, 281 Conn. 84, 105, 912 A.2d 1019 (2007).”

Addressing the first element, the court readily concluded that “there is no evidence that the defendants had actual knowledge that [the change in the plaintiff's tax status made by the defendants] was...