King v. Neal
| Decision Date | 09 January 2001 |
| Docket Number | No. 93,533.,93,533. |
| Parties | Jackie J. KING and Robin King, Appellees, v. Wylie J. NEAL, Appellant. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Kathryn A. Herwig, Clark & Williams, Tulsa, Oklahoma, for Appellees.
Gerald J. Lovoi, Tulsa, Oklahoma, for Appellant.
Released for Publication by Order of the Court of Civil Appeal of Oklahoma, Division No. 4.
¶ 1 This appeal arises from a malpractice suit that Jackie and Robin King filed against their former tax attorney/tax preparer, Wiley Joseph Neal. The Kings brought this suit following an audit of their 1991 federal tax return which disallowed two deductions. One of the disallowed deductions concerned a "loss" that Mr. Neal concluded the Kings sustained in their 1991 settlement of a multi-year dispute with the Bank of Tulsa. The other disallowed deduction involved legal fees and expenses that the Kings had paid in the course of the Bank of Tulsa dispute prior to 1991. By the time it was determined that the Kings could not take a 1991 deduction for legal fees paid prior to 1991, it was too late for the Kings to file amended returns to take the deductions in the years the legal fees were paid. As a result of the audit, the Kings were assessed additional taxes for 1991, interest, and penalties.
¶ 2 Mr. Neal did not dispute the disallowance of these deductions. Instead, he contended that he based his decision that these were valid deductions on incorrect and incomplete information provided by the Kings. Mr. Neal testified that (1) Mr. King told him legal representation for the Bank of Tulsa dispute was on a contingency or pay-at-the-end basis and (2) Mr. King and his attorney refused to let Mr. Neal examine the settlement agreement. Without seeing the settlement agreement, Mr. Neal contended that other information provided by Mr. King misled him to conclude the Kings had settled a dispute over a banking investment at a loss, as opposed to settling a dispute over the loss of collateral on a loan.
¶ 3 At the conclusion of the evidence, counsel for Mr. Neal moved for a directed verdict. The trial court overruled this motion and proceeded to finalize the instructions for submission of the case to the jury. In the course of finalizing the instructions, counsel for Mr. Neal (1) objected to the court's instruction on punitive damages and (2) tendered a proposed instruction for the jury not to consider additional, actual taxes that were assessed as damages. The trial court rejected the proposed instruction and allowed the jury to consider the "impact" of taxes that were assessed well after the filing of the return for the year in which the taxes were actually due.
¶ 4 On the basis of the court's instructions, the jury returned a verdict finding that the Kings were damaged by having to pay the additional tax, penalties, interest, and other expenses they claimed as a result of the audit. The Kings also recovered the fee paid to Mr. Neal for preparing the 1991 return. However, the jury awarded no punitive damages and fixed the parties' comparative negligence at 70% on the part of Mr. Neal and 30% on the part of the Kings.
¶ 5 On appeal, Mr. Neal contends that the trial court erred in entering judgment on the jury verdict. In essence, Mr. Neal argues that the jury returned an excessive verdict, because the trial court refused his requested instruction that the additional, "actually owed" taxes assessed after the audit could not be considered as damages. Mr. Neal also believes that the jury was prejudiced by the trial court's admission of specific evidence about an error that Mr. Neal admittedly made in another tax return. Mr. Neal confessed liability for this error, and the jury was instructed not to consider this error for purposes of assessing damages. Upon review, we cannot agree that the trial court committed reversible error in either regard.
¶ 6 Under the circumstances of this case, we find no error by the trial court in rejecting Mr. Neal's requested instruction to exclude actual taxes owed from the jury's assessment of damages. According to the Kings' expert witness, the Kings were required to pay some additional tax, because (1) legal fees and expenses that the Kings paid prior to 1991 could not be deducted in 1991, and (2) it was not possible to amend past returns to take the deductions for the years the legal fees and expenses were paid. In other words, the language of the requested instruction was overly broad and would have excluded additional actual taxes owed that clearly were damages. In addition, at least one case recognizes that a taxpayer's damages include the additional, actual taxes that are assessed following an audit of a return that was in error due to negligent tax advice. Bancroft v. Indemnity Insurance Co. of N. Am., 203 F.Supp. 49 (W.D.La. 1962).1
¶ 7 Counsel for Mr. Neal has argued both in the trial court and on appeal that the case of Gantt v. Boone, Wellford, Clark, Langschmidt & Pemberton, 559 F.Supp. 1219 (M.D.La.1983), is more like the instant case than Bancroft and that Gantt supports the requested instruction. We do not agree. Mr. King in the instant case, like the taxpayer in Bancroft, was "a mere layman in the field of tax law, [and] sought advice from [an expert]." 203 F.Supp. at 55. Also in the instant case, like the Bancroft case, "[d]ue to an error by the [expert], [the taxpayer] was subjected to the additional tax." Id. In the Gantt case, the expert was not liable for additional taxes because "[n]o tax advice was sought from [the defendant accountant]." 559 F.Supp. at 1229.
¶ 8 We further note that counsel for Mr. Neal did not submit a specific instruction concerning the measure of damages other than the requested (and rejected) instruction for the jury not to consider any additional taxes as damages. We also observe that the trial court did not give a specific instruction on the measure of damages and counsel for Mr. Neal did not object to this omission.
¶ 9 The jury was left to determine damages from general directions in several different instructions. Instruction No. 7 stated: "A party claiming damages has the burden of proving ... that they have sustained injury." (Emphasis added.) Instruction No. 8 stated that "it is necessary that some injury to a person or to the property of a person in Plaintiff's situation must have been a reasonably foreseeable result of negligence." (Emphasis added.) Instruction No. 13 advised the jury of the distinction between "actual damages" and "punitive damages" and that "[i]n no event should the punitive damages exceed the amount of actual damages awarded." Instruction No. 15 gave the jury directions for using the Blue Verdict Form that specifically provided "the Kings are entitled to recover the full amount of any damages which you may find Plaintiff has sustained as a result of the occurrence." (Emphasis added.) Instruction No. 17 gave the jury the directions for using the White Verdict Form for comparative negligence if "the percentage of negligence of Plaintiff is equal to or smaller than the one you insert as the percentage of negligence of Defendant," and told the jury to enter "the total amount of damages which you find were sustained by Plaintiff" in such case. (Emphasis added.)
¶ 10 Under these general directions concerning damages, the jury could reasonably conclude that the additional taxes assessed after the audit did cause "injury . . . to the property of a person in Plaintiff's situation [that was] a reasonably foreseeable result of negligence" and that they had a sufficiently adverse impact to be included in the "full" or "total" amount of damages. Significantly, the Kings testified that the timing of the additional taxes, interest, and penalties produced an added financial burden that contributed to their filing bankruptcy. By statute, the measure of damages for a tort, such as negligence, is "the amount which will compensate for all detriment proximately caused... whether it could have been anticipated or not." 23 O.S.1991 § 61. (Emphasis added.)
¶ 11 When considering the propriety of instructions on appeal, the appellate court is required to consider the instructions as a whole. Dutsch v. Sea Ray Boats, Inc., 1992 OK 155, ¶ 7, 845 P.2d 187, 189 (citation omitted). The instructions need not be "ideal" but must reflect Oklahoma law regarding the subject at issue. Id. The "salient test" for error in instructions is whether, by submission or omission of an instruction, the jurors were probably misled regarding the legal standards they should apply to the evidence. Myers v. Maxey, 1995 OK CIV APP 148, ¶ 18, 915 P.2d 940, 947 (). "Before the court will reverse a judgment based on the verdict of a jury because of the giving or refusal to give instructions, it must clearly appear that the instructions given or refused have caused a miscarriage of justice." Larkins-Warr Trust v. Watchorn Petroleum Co., 1946 OK 84, ¶ 0, 198 Okla. 12, 174 P.2d 589 (syllabus 2); see also 12 O.S.1991 § 78; 20 O.S.1991 § 3001.1. "This question is to be determined as much by the evidence before the jury as by the abstract accuracy of the language used or refused." Id.
¶ 12 Having examined the instructions as a whole, we hold that (1) the trial court did not err in rejecting Mr. Neal's proposed instruction, and (2) the jurors were not misled regarding the legal standards they should apply to the evidence, even in the absence of an alternative specific instruction on the measure of damages. Under the facts of this case, the trial court properly allowed the jury to determine whether the additional taxes assessed after the audit caused injury in view of the Kings' situation and their complete reliance on Mr. Neal.
¶ 13 In addition, there is little doubt...
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