Sato v. Van Denburgh

Decision Date28 June 1979
Docket NumberNo. 14169,14169
Citation123 Ariz. 225,599 P.2d 181
PartiesCarl K. SATO and Susie S. Sato, his wife, Appellants, v. Robert P. VAN DENBURGH, Conn and Candlin, Certified Public Accountants, Green& Van Denburgh, Certified Public Accountants, and Main Lafrentz & Co., Certified Public Accountants, Appellees.
CourtArizona Supreme Court

Wade Nelson & Andersen, Ltd. by E. Gene Wade, Mesa, for appellants.

Renaud, Cook & Videan, P. A. by James M. Videan, Phoenix, for appellees.

CAMERON, Chief Justice.

Carl and Susie Sato appeal from a summary judgment entered against them and in favor of Robert P. Van Denburgh and three accounting firms with which he had been associated. We have jurisdiction of this appeal pursuant to Rule 19(e), Rules of Civil Appellate Procedure, 17A A.R.S.

We must address only one question on appeal: Was Sato's cause of action barred by the statute of limitations?

The facts necessary for a resolution of this appeal and presented in a light most favorable to appellants Sato, Western Asbestos Co. v. Cal-Zona, 121 Ariz. 388, 590 P.2d 927 (1979), are as follows. In the early 1960's, Carl Sato and Noby Yamakoshi formed a partnership for the purpose of investing in Arizona land. They hired Robert Van Denburgh, a certified public accountant, to perform accounting services for the partnership. From time to time, Sato borrowed money from the Sato-Yamakoshi partnership. In the annual accounting of 1965 or 1966, Van Denburgh determined that Sato owed a considerable sum of money to the Sato-Yamakoshi partnership. Sato, at this time, consulted with his attorney with regard to the accounting and was advised by his attorney, who was also a certified public accountant, that the accounting was negligently performed. Nothing was done by Sato at that time. Later Sato signed two notes in favor of Yamakoshi, one for $45,954.64 dated 27 May 1968 and secured by a mortgage, and a second for $50,000 dated 10 January 1969 and payable on demand.

Yamakoshi brought suit to foreclose the mortgage on 11 November 1971. After numerous pleadings and motions, Sato filed an answer on 18 June 1973 claiming breach of oral trust, threats and duress in the signing. Finally, on 20 February 1975, Sato filed a third party complaint against Van Denburgh claiming that Van Denburgh had, since 1960 "up to and including the present," "maintained books of account * * * inconsistently, negligently, slothfully, inaccurately and mistakenly." All of the accounting services claimed to have been negligently performed were allegedly done by Robert Van Denburgh.

Summary judgment was entered in favor of Van Denburgh, et al., on 25 May 1977, on the theory that the statute of limitations barred the action. Sato appealed.

WHICH STATUTE APPLIES?

We must first determine which statute of limitations applies to the facts in the instant case. There are, we believe, three statutes which might apply: A.R.S. § 12-542 which is the tort or negligence statute and provides for a two year statute of limitations; A.R.S. § 12-543, oral debt, three years; and A.R.S. § 12-550, the general limitation where "no limitation is otherwise prescribed," four years. While some states have held that an action against an accountant for damages as a result of negligent performance of his professional services state a cause of action for breach of contract, see L. B. Laboratories, Inc. v. Mitchell, 39 Cal.2d 56, 244 P.2d 385 (1952), we believe that the essence of a complaint for the negligent performance of professional services by an accountant sounds in tort. See Atkins v. Crosland, 417 S.W.2d 150 (Tex.1967); Carr v. Lipshie, 9 N.Y.2d 983, 218 N.Y.S.2d 62, 176 N.E.2d 512 (1961). Even though we will apply the longer statute when in doubt as to which statute to apply, San Manuel Copper Corp. v. Redmond, 8 Ariz.App. 214, 445 P.2d 162 (1968), from the facts as alleged in the instant case, we believe that Sato's cause of action sounds in negligence or tort, and that the two year statute limitations, A.R.S. § 12-542, will apply.

WHEN DOES THE CAUSE OF ACTION ACCRUE?

The statute reads:

"There shall be commenced and prosecuted within two years after the cause of action accrues, and not afterward, the following actions * * *." A.R.S. § 12-542.

As to when the action accrues, some states have held in the case of accountants that the statute commences to run from the time the accountant's client is injured or damaged, Atkins v. Crosland, supra, while other states have held that the time of the discovery of the negligent act or the time when the negligent act should have been discovered is the time from which the statute of limitations commences to run. Isaacson, Stolper & Co. v. Artisan's Savings Bank, 330 A.2d 130 (Del.1974); Moonie v. Lynch, 256 Cal.App.2d 361, 64 Cal.Rptr. 55 (1967).

Arizona has long followed the rule that the cause of action accrues when the plaintiff knows, or in the exercise of reasonable diligence should have known, of the defendant's negligent conduct, Morrison v. Acton, 68 Ariz. 27, 198 P.2d 590 (1948); Nielson v. Arizona Title Insurance and Trust Co., 15 Ariz.App. 29, 485 P.2d 853 (1971), or when the plaintiff...

To continue reading

Request your trial
83 cases
  • City of Tucson v. Clear Channel Outdoor
    • United States
    • Arizona Court of Appeals
    • April 2, 2008
    ...of action accrues." See Gust, Rosenfeld, 182 Ariz. at 588, 898 P.2d at 966 (interpreting A.R.S. § 12-548); Sato v. Van Denburgh, 123 Ariz. 225, 227, 599 P.2d 181, 183 (1979) (interpreting A.R.S. § 12-542); see also Mayer v. Good Samaritan Hosp., 14 Ariz.App. 248, 252, 482 P.2d 497, 501 (197......
  • Kenyon v. Hammer
    • United States
    • Arizona Supreme Court
    • September 19, 1984
    ...on tort claims can be tolled by plaintiff's reasonable failure to discover the facts giving rise to those claims); Sato v. Van Denburgh, 123 Ariz. 225, 599 P.2d 181 (1979) (action against an accountant); Long v. Buckley, 129 Ariz. 141, 629 P.2d 557 (App.1981) (claim against a lawyer); Russo......
  • Taylor v. State Farm Mut. Auto. Ins. Co.
    • United States
    • Arizona Supreme Court
    • April 11, 1996
    ...knows, or through the exercise of reasonable diligence should know, of the defendant's wrongful conduct. Sato v. Van Denburgh, 123 Ariz. 225, 227, 599 P.2d 181, 183 (1979). Applying this principle, and citing Henderson, the court of appeals held that the two-year statute of limitations bega......
  • State v. Jackson
    • United States
    • Arizona Court of Appeals
    • May 28, 2004
    ...claim, i.e., the conduct constituting the sexual abuse and the identity of the abuser.") (citation omitted); Sato v. Van Denburgh, 123 Ariz. 225, 227, 599 P.2d 181, 183 (1979) (cause of action accrues when plaintiff knows or reasonably should know of "defendant's negligent conduct" or "when......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT