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New hearing ordered in lawsuit over accountant's advice Thursday, Sep 14, 2006 By Rob Moritz Arkansas News Bureau LITTLE ROCK - The Arkansas Court of Appeals on Wednesday ordered a new hearing in a lawsuit involving an accountant and tax advice he gave a Benton County business. In the ruling, the court said a Benton County Circuit Court judge erred when he said a counter claim could not be filed because the statute of limitations had run out. In January 2000, Jerry Jackson, an accountant hired by Morrow Cash Heating and Air Inc., advised the company to stop collecting sales taxes on equipment installed on new construction. The company initially did not think the advice was correct and rejected it, according to Wednesday's court ruling. In March of that year, after several meetings and considerable disagreement and reluctance, the company accepted the advice. Jackson later sued the company saying that he had not been paid $15,000 for his accounting services. The company filed a counterclaim alleging Jackson committed malpractice by negligently giving incorrect tax advice. The heating and air business said it sustained more than $600,000 in damages as a result. Benton County Circuit Judge Jay T. Finch barred the company's counterclaim, citing a three-year statute of limitations. He said the incorrect advice was given in January 2000, just over three years before the counterclaim was filed. In Wednesday's 4-2 ruling, the Court of Appeals said Arkansas adheres to the "occurrence rule" in professional malpractice cases. "Here there was evidence that (Morrow Cash Heating & Air) did not accept the advice until after some cajoling that extended into March 2000, during which time (Jackson) repeated the advise and urged them to follow it, (the company) relented, accepted the advice and implemented," Chief Judge John Mauzy Pittman wrote. "Given the evidence that the advice was rejected when initially given in January 2000, was afterward repeatedly urged, and was not accepted until March 2000, we hold the trial court erred in directing a verdict on this issue." Siding with Pittman were Judges John B. Robbins, Sam Bird and David M. Glover. In a dissenting opinion, Judge Karen Baker wrote that the statute of limitations began the first time Jackson advised the company not to collect the taxes. "The occurrence rule provides that an action accrues when the last element essential to the cause of action occurs, unless the wrongdoing is actively concealed," she said. Baker said previous state Supreme Court decisions have held that the limitation period begins to run when the negligence occurs. Siding with Baker in the dissent was Judge Olly Neal. |
