Orban v. Krull

• Decision Date: 30 March 2004
• Docket Number: No. 43A05-0307-CV-366.,43A05-0307-CV-366.
• Parties: Richard ORBAN and Janet Orban, Appellants-Plaintiffs, v. Dana KRULL and Dana Krull, Inc., Appellees-Defendants.
• Court: Indiana Appellate Court

805 N.E.2d 450

Richard ORBAN and Janet Orban, Appellants-Plaintiffs, v. Dana KRULL and Dana Krull, Inc., Appellees-Defendants.

No. 43A05-0307-CV-366.

Court of Appeals of Indiana.

March 30, 2004.

George E. Horn, Jr., Michael V. Knight, Barnes & Thornburg, South Bend, IN, Attorneys for Appellants.

James H. Milstone, Kopka, Pinkus & Dolin, P.C., South Bend, IN, Attorney for Appellees.

OPINION

MATHIAS, Judge.

Richard and Janet Orban filed an accountant malpractice and a tortious interference with contract complaint against Dana Krull ("Krull") in Kosciusko Circuit Court. Krull moved for summary judgment, and the Orbans moved for partial summary judgment. The trial court granted Krull's motion and denied the Orbans' motion.¹ The Orbans appeal, presenting the following restated issues for review:

I. Whether an accountant may be held civilly liable for releasing client information pursuant to an Indiana Department of Revenue ("IDR") subpoena;

II. Whether the undisputed facts of the case establish Krull's actions were not the proximate cause of the Orbans' alleged injuries;

III. Whether there was a contractual relationship for the Orbans to base their tortious interference with contract claim upon; and

IV. Whether the only factually-disputed issue regarding the Orbans' malpractice claim is the amount of damages.

We conclude both parties have failed to meet their burden of establishing they are entitled to summary judgment. Accordingly, we reverse the trial court's decision to grant Krull's Motion for Summary Judgment, affirm the trial court's decision to deny the Orbans' Motion for Partial Summary Judgment, and remand the case to the trial court for further proceedings.

Facts and Procedural History²

In 1997, Richard Orban ("Richard") began working for a business venture called Carpet Express. In early 1998, Richard joined David Melching ("Melching") in this venture and formed an Indiana limited liability partnership. Krull, who had been the Orbans' personal accountant since 1989, performed professional accountant services for Carpet Express.

In June of 1999, Melching informed Krull he believed Richard was stealing from Carpet Express and that law enforcement would soon contact Krull regarding the alleged theft. Melching also filed a criminal complaint against Richard and obtained a protective order prohibiting Richard from entering Carpet Express.

After Richard learned of Melching's protective order, he sought the protection of a receiver. Accordingly, Carpet Express went into receivership and ceased doing business roughly three months thereafter.

On August 30, 1999, Special Agent Rick Albrecht ("Agent Albrecht") of the IDR subpoenaed Krull for Richard's accounting information, and Krull gave Agent Albrecht the documents in his possession related to the Orbans.³ Though the Orbans' checked the box on their tax returns indicating they authorized "the [IDR] to discuss [their] return with [their] preparer," they never gave Krull specific permission to release their information. Appellants' App. pp. 162, 272-75.

Agent Albrecht issued a probable cause affidavit for the Orbans, and several criminal charges were filed against the Orbans. These charges were eventually dismissed following an evidentiary ruling adverse to the State, which stated in part:

[The] documents were released from the personal files of the [Orbans] by their accountant, Dana Krull without [the Orbans' waiver] of the privilege afforded under I.C. 25-2.1-14 et seq. [and] the information provided by Dana Krull from the personal files of the [Orbans] should be suppressed.

Appellants' App. p. 306.

On June 6, 2003, the Orbans filed a two-count complaint against Krull, alleging accountant malpractice and tortious interference with contract. On February 28, 2003, Krull moved for summary judgment. On March 19, 2003, the Orbans moved for partial summary judgment. On June 18, 2003, the trial court granted Krull's motion and denied the Orbans' motion. The Orbans now appeal.

I. Summary Judgment

Summary judgment is appropriate only where the moving party demonstrates there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Thayer v. OrRico, 792 N.E.2d 919, 923 (Ind.Ct.App.2003), trans. denied. All facts and reasonable inferences drawn therefrom are construed liberally and in the light most favorable to the non-moving party. Id.

A fact is material if it bears upon the ultimate resolution of the relevant issues. Yin v. Soc'y Nat'l Bank Ind., 665 N.E.2d 58, 64 (Ind.Ct.App.1996), trans. denied. Any doubts as to the existence of an issue of material fact must be resolved in favor of the non-moving party. Am. Mgmt., Inc. v. MIF Realty, L.P., 666 N.E.2d 424, 428 (Ind.Ct.App.1996). Even if it appears the non-moving party will not succeed at trial, summary judgment is inappropriate where material facts conflict or lead to conflicting inferences. Link v. Breen, 649 N.E.2d 126, 128 (Ind.Ct.App.1995), trans. denied.

II. Accountant—Client Privilege

Indiana recognizes accountant-client privilege. Ind.Code § 25-2.1-14-2 (1993). However, in contrast to attorney-client privilege, accountant-client privilege is not recognized at common law. First Cmty. Bank & Trust v. Kelley, Hardesty, Smith & Co., 663 N.E.2d 218, 221 (Ind.Ct. App.1996) (citing Ernst & Ernst v. Underwriters Nat'l Assurance Co., 178 Ind.App. 77, 381 N.E.2d 897 (1978)). The absence of accountant-client privilege at common law limits the privilege to areas specifically designated by statute. Id at 221-22. The accountant-client privilege belongs to the client. Ernst & Ernst, 381 N.E.2d at 906.

Interpretation of a statute is a question of law reserved for the courts. Spears v. Brennan, 745 N.E.2d 862, 869 (Ind.Ct.App.2001). This court reviews questions of law de novo. Ingram v. City of Indianapolis, 759 N.E.2d 1144, 1146 (Ind.Ct.App.2001), trans. denied. When a statute has not previously been interpreted, the express language of the statute and the rules of statutory construction control the statute's interpretation. Turner v. Bd. of Aviation Comm'rs, 743 N.E.2d 1153, 1161 (Ind.Ct.App.2001), trans. denied. Pursuant to these rules, an unambiguous statute must be construed to mean what it plainly expresses. Ingram, 759 N.E.2d at 1146.

Krull asserts Indiana Code section 25-2.1-14-1 states, "[an accountant] is not required to divulge information" and the statute's use of "is not required" should not be constructed to denote "may not." Br. of Appellee at 13-14. However, Krull's argument is misplaced, as accountant-client privilege derives from Indiana Code section 25-2.1-14-2.

Krull also contends the information he disclosed was not confidential and, therefore, not subject to accountant-client privilege. However, Indiana Code section 25-2.1-14-2 unambiguously states "[t]he information derived from or as the result of professional services is confidential and privileged." Ind.Code section 25-2.1-14-2 (emphasis added). Because Krull clearly obtained the information he disclosed as a result of his professional accounting services, the information "is confidential."

Krull finally contends the Orbans waived his duty by checking the box indicating they "authorized [him] to discuss this matter with the [IDR]." Br. of Appellee at 12. However, this statement mischaracterizes the record, as the waiver reads "I authorize the Department to discuss my return with my tax preparer." Appellants' App. p. 162 (emphasis added).

We note sua sponte that it is irrelevant that Krull released the Orbans' information pursuant to an IDR subpoena. An accountant is not required to divulge information in connection with any professional service as an accountant. Ind.Code § 25-2.1-14-1. Thus, Krull was permitted to refuse to comply with the IDR subpoena. Furthermore, the subpoena issued to Krull specifically stated it was issued pursuant to Indiana Code section 6-8.1-3-12. Appellants' App. p. 188. This statute indicates that, in order to compel Krull's disclosure, the IDR had the burden of bringing Krull to court where he could have shown good cause for non-compliance. Ind.Code § 6-8.1-3-12 (2000).

The information at issue was obtained as a result of Krull's professional services. Accordingly, Krull had a duty to keep the information confidential unless and until he had the Orbans' informed authorization or was ordered to produce the information by a court of competent jurisdiction in spite of the Orbans' refusal to authorize its release.

III. Proximate Cause

When determining whether an act is a proximate cause of an injury, we consider whether the injury was a natural and probable consequence of the act. Guy's Concrete, Inc. v. Crawford, 793 N.E.2d 288, 297-98 (Ind.Ct.App.2003), trans. denied (citing Goldsberry v. Grubbs, 672 N.E.2d 475, 479 (Ind.Ct.App.1996), trans. denied). In general, proximate cause is a question of fact for the jury. Id.

The Orbans complaint alleges Krull's disclosure caused the loss of their interest in Carpet Express and criminal charges to be filed against them. Appellants' App. p. 75. In order to prove Krull's disclosure led to the termination of Melching and Richard's partnership, the Orbans must, as an initial matter, demonstrate that Krull's disclosure gave Melching some incentive to terminate the partnership. Absent such a showing, it is fair to assume the partnership was terminated independent of Krull's disclosure.

In order for the Orbans to prove Krull's actions proximately caused the filing of their criminal charges, they must either prove Agent Albrecht filed criminal charges on the basis of non-incriminating evidence—related to Krull's disclosure—or the documents released by Krull disclosed incriminating information.

Both parties allege the documents disclosed by Krull are unavailable. However, Agent Albrecht's probable cause affidavit stated in part:

[T]he trial balance sheet and partnership tax return of Carpet Express LLP and

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