Waugh v. Kelley
| Decision Date | 28 June 1990 |
| Docket Number | No. 66A048912CV557,66A048912CV557 |
| Citation | 555 N.E.2d 857 |
| Parties | Juanita K. WAUGH, Appellant (Defendant Below), v. Harold E. KELLEY, Appellee (Plaintiff Below). |
| Court | Indiana Appellate Court |
John C. Duffey, Stuart & Branigin, Lafayette, for appellant.
John M. Guy, Monticello, William N. Ivers, Stewart & Irwin, Indianapolis, for appellee.
Defendant-Appellant Juanita K. Waugh (Waugh) appeals the trial court's $11,400 judgment in favor of Plaintiff-Appellee Harold E. Kelley (Kelley) for services rendered.
We affirm.
This appeal presents the following issues:
whether the trial court erred by entering a judgment favoring Kelley when:
(a) he failed to prove he was an attorney duly admitted to practice law in Indiana, and
(b) he failed to prove his fees were reasonable under the circumstances.
Waugh owns and operates several large farms in Indiana and Oklahoma. When she was audited by the Internal Revenue Service (IRS), she retained Indianapolis counsel to resolve the matter, but it dragged on for several years without resolution. When Waugh became impatient with Indianapolis counsel for not getting the matter resolved, she called a friend in Kentucky who recommended she talk to Kelley, a certified public accountant and lawyer from Ashland, Kentucky. Over lunch in Indianapolis, Kelley heard out Ms. Waugh, then told her he thought her Indianapolis counsel was on the verge of settling things with the IRS. Kelley advised Waugh to stay with her Indianapolis counsel, and she did. Later, the matter was still not resolved. Waugh, dissatisfied, retained Kelley and discharged Indianapolis counsel. Kelley satisfactorily resolved the audit by revamping Waugh's archaic bookkeeping system and recovered in excess of $300,000 in refunds from the IRS. He also was paid $62,400 at the rate of $150 per hour without complaint from Waugh.
She then asked Kelley to prepare her current federal, state, and corporate returns. Kelley agreed but advised Waugh to have a local CPA prepare her state returns, as it would be difficult for him to do so from Ashland. However, she insisted he do them. Kelley prepared the returns and rendered her a bill at the previous hourly rate. He did not bill for some of his services, as a friend of the family, and reduced his bill from $16,000 to $11,400 for these services. When Waugh refused to pay, Kelley filed suit.
From a judgment favoring Kelley, Waugh appeals.
Waugh first contends the trial court erred by granting Kelley attorney fees for the services he performed in Indiana because he was not admitted to the practice of law in this state at the time. Waugh specifically points to portions of Kelley's complaint as being a judicial admission he was seeking to collect attorney fees. In this regard, the complaint reads, in part:
1. That [Kelley] is an attorney and tax consultant.
2. That [Waugh] employed [Kelley] in his capacity as such attorney and tax consultant for the purpose of providing such services in the preparation and filing of Federal, State of Indiana and State of Oklahoma income tax returns for 1987 ...
5. That [Kelley] is entitled to compensation for his said legal and tax consultant services in the sum of $11,400.00....
(R. 8). Because Kelley had the burden to prove at trial he was admitted to practice law in Indiana and did not do so, he is precluded from recovering attorney fees in this state for the services he rendered, Waugh claims, citing Harris v. Clark (1924), 81 Ind.App. 494, 142 N.E. 881, 882 [], and in accord, Rose Acre Farms, Inc. v. Greemann Real Estate (1987), Ind.App., 516 N.E.2d 1095, 1097 []. Coupled with Kelley's testimony he was not licensed in this state, and that his professional practice was "solely as a tax and probate lawyer" (R. 207-208), Waugh earnestly contends Kelley cannot collect the fees he seeks because he has failed to prove an essential element of his cause of action, namely, he was admitted to practice in Indiana at the time he rendered his services to Waugh.
To the contrary, while admitting a person who performs legal services in this state may not collect a fee for their rendition unless admitted to practice in Indiana, Kelley asserts he prepared and filed Federal, state and corporate income taxes for Waugh and did not perform legal services. Therefore, Kelley claims he has not engaged in the unauthorized practice of law in this state and is entitled to be compensated for the services he has rendered.
This is a case of first impression.
Titles aside, the simple question here is whether or not the preparation and filing of federal and state income tax returns for Indiana residents constitutes the rendition of legal services to be performed only by those persons admitted to the practice of law in this state.
In Groninger v. Fletcher Trust Co. (1942), 220 Ind. 202, 41 N.E.2d 140, appellee furnished:
... to its customers pamphlets descriptive of tax laws, state and national, with illustrations indicating tax liability under given circumstances, and the proper method of making tax returns. It sometimes acts through its employees who are not lawyers, in arriving at proper computations and agreements with ministerial taxing officers. It cannot seriously be contended that these activities constitute an unlawful practice of law.
We find nothing in the facts stipulated to justify a conclusion that the appellee is practicing law. (Emphasis supplied).
Groninger, 41 N.E.2d at 142, citing several cases in support reaching the same conclusion. The preparation and filing of income tax returns involves substantially the same activity, and does not constitute the practice of law.
Also, in Miller v. Vance (1984), Ind., 463 N.E.2d 250, the question was whether laymen bank employees engaged in the unlawful practice of law by filling in blanks in real estate mortgages as an integral part of their employers' business. The court answered that question in the negative. It said:
Our finding here is consistent with the majority of other jurisdictions where this issue has been considered. Our rule here comports with the general rule that the drafting of documents, when it is incidental to the work of a specific occupation, is not generally considered to be the practice of law. (Citing cases). (Emphasis supplied).
Miller, 463 N.E.2d at 253. Without doubt, the preparation and filing of federal and state income tax returns are tasks incidental to the business of a certified public accountant, as was Kelley here.
Waugh insists, however, Kelley is irrevocably bound by his complaint's "judicial admission" and...
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