Iacurci v. Sax
An accountant performing only tax preparation services was not a fiduciary. Arthur Iacurci filed this action alleging professional malpractice and negligence against Larry Sax, a certified public accountant, and his firm, Cohen, Burger, Schwartz and Sax, LLC. The plaintiff essentially alleged that the defendants prepared his tax returns for 17 years with Sax listing the plaintiff as a real estate investor from 1999 through 2002 and as an individual engaged in the business of real estate for tax years 2003 through 2005. This change allegedly resulted in adverse tax consequences discovered in 2007 by another accounting firm which filed amended tax returns. Following an audit, the Internal Revenue Service upheld the plaintiff's real estate investor tax status. The court granted summary judgment to the defendants finding the action untimely under the three year period in C.G.S. §52-577 as the last date of services occurred on April 17, 2006 and suit commenced on Nov. 10, 2009. The court concluded that the plaintiff did not demonstrate a genuine issue of material fact regarding whether the fraudulent concealment statute, C.G.S. §52-595, applied and tolled the statute of limitations as claimed. The court found that the defendants breached a fiduciary duty to the plaintiff but the plaintiff presented no evidence of certain fraudulent concealment elements including affirmative acts of concealment. The plaintiff appealed arguing, based on the 1999 2nd Circuit decision in Martinelli v. Bridgeport Roman Catholic Diocesan Corporation, that after determining that the defendants owed a fiduciary duty, the court was required to shift the burden of proof to the defendants to demonstrate that the elements of fraudulent concealment could not be satisfied. The majority of the Appellate Court affirmed the judgment. The panel disagreed including about the burden shifting analysis. The majority reasoned that the plaintiff, in opposing summary judgment and the application of C.G.S. §52-577, alleged that the fraudulent concealment statute applied and bore the burden of presenting a factual predicate. Pivotally, the majority concluded that the plaintiff's burden shifting argument failed because the evidence did not support a finding that a fiduciary relationship existed. The defendants were hired to prepare tax returns and provide advice concerning tax liability. Despite the long-term relationship, the nature of the services did not give rise to a fiduciary relationship. Judge Lavine vigorously dissented.