Watson v. Dimke, 2004-226
| Decision Date | 03 March 2005 |
| Docket Number | No. 2004-226,2004-226 |
| Citation | 872 A.2d 337 |
| Court | Vermont Supreme Court |
| Parties | Gerald Watson, Kay Watson, New England Graphic Machine and Engineering, Inc., and Security Maintenance, Inc. v. Robert Dimke, David Feiden, and Feiden & Greenberg |
ENTRY ORDER
In the above-entitled cause, the Clerk will enter:
¶ 1. Plaintiffs Gerald Watson, Kay Watson, New England Graphic Machine and Engineering, Inc., and Security Maintenance, Inc., appeal from the trial court's order granting summary judgment to defendants Robert Dimke, David Feiden, and Feiden & Greenberg, on their negligence complaint. Plaintiffs alleged that defendants had negligently disclosed subpoenaed copies of their financial records. The trial court granted summary judgment after finding that defendants did not owe plaintiffs a legal duty, and defendants' actions were not the proximate cause of any injury suffered by plaintiffs. Plaintiffs argue that the trial court erred because: (1) accountants owe a professional duty to their clients to ascertain the validity of a subpoena before disclosing financial information without client consent; and (2) accountants are under a duty to maintain the confidentiality of client information under 26 V.S.A. § 82(a) unless a court orders otherwise. We affirm.
¶ 2. The following facts are undisputed. Defendants performed accounting services for plaintiffs. In 1995, North Bennington Industrial Buildings, Inc. (NBIB) commenced an ejectment action against plaintiffs. Plaintiffs cross-claimed and counterclaimed for money damages. As part of the discovery process, NBIB requested certain financial records from plaintiffs under V.R.C.P. 34. Plaintiffs did not object to the production of these documents, and produced some of the requested information themselves. When plaintiffs did not produce all of the requested documents, NBIB issued subpoenas to defendants Dimke and Feiden to compel production of plaintiffs' financial records.
¶ 3. Upon receiving the subpoena, defendant Feiden called his attorney, who advised him to produce the requested documents. Feiden directed defendant Dimke to disclose the documents. Dimke's personal attorney also advised him to produce the records. Although Mr. Watson objected to the disclosure, Dimke complied with the subpoena, and informed Mr. Watson of his actions. Mr. Watson objected in writing, although his attorney did not move to quash the subpoenas, nor did he move for a protective order. The underlying case was eventually settled for $300,000 in favor of the Watsons.
¶ 4. In December 2001, plaintiffs filed suit against defendants, alleging, among other claims, that defendants had been professionally negligent in disclosing the subpoenaed financial records, and that they had suffered damages as a direct and proximate result. The parties filed cross-motions for summary judgment. In an April 2004 entry order, the court granted summary judgment to defendants. The court found that the disclosed information was not privileged because an accountant-client privilege did not exist in Vermont or under federal law. The court rejected plaintiffs' assertion that accountants were nonetheless under a duty to resist subpoenas when their clients did not consent to disclosure. The court explained that the closest equivalent to a privilege could be found in 26 V.S.A. § 82(a), which prohibited public accountants from disclosing confidential information "except with the consent of the client. . . or as disclosure may be required by law, legal process or the standards of the profession." Even assuming that at least part of the information that defendants held was confidential and thereby covered under 26 V.S.A. § 82, the court explained that the receipt of a subpoena by a litigant in a civil suit constituted a requirement to disclose under legal process. Thus, defendants' compliance with this legal requirement did not violate any duty that they may have owed plaintiffs.
¶ 5. The court also rejected plaintiffs' contention that the subpoenas had not been properly executed. The court found no evidence to show that service of the subpoenas had been incomplete. Additionally, the court explained, although plaintiffs could have raised such arguments in support of a motion to quash at the time of service, the standards set forth in 26 V.S.A. § 82 did not support such an attack against the facial validity of a subpoena in support of a liability claim. The court found that the undisputed facts showed that defendants had received a subpoena, sought legal consultation, were aware that they were required to provide material within a legal process, and complied. Because there was neither a statutory nor common law duty for accountants to fend off subpoenas, the court concluded that defendants did not violate any duty by complying with the subpoena.
¶ 6. Even if defendants did owe plaintiffs some legal duty, the court explained, plaintiffs had not demonstrated that defendants' disclosure was the proximate cause of any injury that they suffered. The court found no evidence that defendants' compliance with the subpoenas had undercut plaintiffs' ability to recover a larger settlement amount. Plaintiffs' decision to settle, the court explained, while potentially a result of the disclosure, was a tactical decision, rather than a necessary result of defendants' actions. The court found that without additional evidence, it would be speculative to conclude that "but for" the release of unprivileged information, plaintiffs would have recovered a larger sum. Thus, because there was no proof of a legal duty owed, nor proof of harm, the court granted defendants' motion for summary judgment, and dismissed plaintiffs' claims against defendants. This appeal followed.
¶ 7. Plaintiffs maintain that the trial court erred in finding the absence of a legal duty. They argue...
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Kane v. Lamothe
...that a breach of that duty was a proximate cause of harm, and that she suffered actual damages. Watson v. Dimke, 2005 VT 29, ¶ 9, 178 Vt. 504, 872 A.2d 337 (mem.). In this case, as in most cases of negligence against the State, the decisive element is duty. See, e.g., Denis Bail Bonds, 159 ......