Recent Developments

In an unpublished opinion, the Michigan Court of Appeals upheld in B&B v. Maddox, 2014 Mich. App. LEXIS 798 (2014) the lower court’s decision that there was no evidence that the outside CPA, had undertaken a fiduciary duty to “keep an eye” on the client’s controller.   The court pointed out that the relationship between an accountant and client under Michigan common law is contractual and not normally fiduciary.  This opinion also discusses the fine line between contractual claims and tortious claims (e.g., breach of duty).

In Frank v. Lockwood, 749 N.W.2d 443 (Sup. Ct. Neb. 2008), the Nebraska Supreme Court found that the plaintiff had the burden of proof to show that the interest charged by the IRS on a deficiency brought on by the accountant’s negligent act was greater than the value of the use of the money. 

The court in Sahadi v. Scheaffer, 66 Cal.3d 517 (Ct. App. 2007) found that the bright-line date of accrual of a client's cause of action for his or her accountant's negligent preparation of tax returns was the completion of the IRS audit process.