Professionals in the Middle of Legal Malpractice

Gardner v Leitgeb & Vitelli, LLP ;2012 NY Slip Op 50282(U) ;Decided on February 17, 2012 ;Supreme Court, Suffolk County ;Emerson, J. presents an interesting story of parents v. children, with professionals in the middle. More interesting, fraud, associations with organized crime, and a pizza location are all added in the mix of ingredients.
 

"This matter involves a dispute between the plaintiffs, Robert and Carmela Gardner, and their son, the defendant James Gardner, over the ownership of the corporate plaintiff, CJEFA Pizza, Inc.("CJEFA"), which operated an Italian restaurant and pizzeria in Fort Salonga, New York. The plaintiffs claim that they were the sole shareholders and officers of CJEFA from 1984 until its dissolution in 2009. The defendant James Gardner claims that he became the sole shareholder and president of CJEFA in 1997 and that he managed the restaurant until the last quarter of 2001, when his parents took over the business illegally. The plaintiffs agree that James was the manager of the business at one time until that relationship was terminated in November 2001 and he no longer had any authority to conduct CJEFA's affairs. "

"Robert and Carmela commenced this action against James and the Vitelli defendants on or about September 30, 2004. The gravamen of the complaint is that the plaintiffs were damaged by the Vitelli defendants' failure to prepare and file CJEFA's federal and state income tax returns for the years 2001 and 2002 and by the Vitelli defendants' returning CJEFA's corporate documents to James. The plaintiffs allege that, as a result, they incurred fines and penalties because they were unable to prepare and file CJEFA's tax returns in subsequent years and because they were unable to properly defend against and cooperate with the sales-tax audit by the [*3]New York State Department of Taxation. The complaint contains causes of action for malpractice, breach of contract, and breach of fiduciary duty against the Vitelli defendants and for conversion against both James and the Vitelli defendants."

"Each of the parties has produced copies of documents, including stock certificates, that purports to prove that party as the lawful owner of the corporation. However, the parties have disputed the authenticity of the produced documents, and the proceedings are rife with allegations of fraud, forgery and associations with organized crime. It is impossible for the Court at this time to determine the authenticity of the documents and the veracity of the various affidavits submitted, which are wildly divergent in their recitation of the facts."
 

"The first and second causes of action for malpractice and breach of contract, respectively, are based on the Vitelli defendants' purported failure to prepare and file CJEFA's federal and state income tax returns for the years 2001 and 2002. The unambiguous written engagement letters between CJEFA and the Vitelli defendants required the Vitelli defendants to prepare federal and state income tax returns for CJEFA for the year 2001. There was no agreement to prepare CJEFA's federal or state income tax return for the year 2002, nor was there an agreement to file any tax returns. The plaintiffs contend that the Vitelli defendants continued to perform accounting work on the sales-and-use tax returns through mid-2003 and that there was an oral agreement between Robert and the Vitelli defendants to file the income tax returns for the year 2001. The clear engagement letters govern the terms of the parties' relationship and, as a matter of law, cannot be altered by alleged parol or extrinsic evidence (see, Italia Imports, Inc. v Weisberg & Lesk, 220 AD2d 226, 227). It is undisputed that the Vitelli defendants prepared CJEFA's federal and state income tax returns for the year 2001. They were under no obligation to file those returns or to prepare income tax returns for any other year. Unlike their obligation to prepare CJEFA's sales-and-use tax returns, their obligation to prepare income tax returns was limited to one year and was not open-ended. Moreover, it is the taxpayer's nondelegable duty to file timely tax returns (see, Penner v Hoffberg Oberfest Burger & Burger, 303 AD2d 249). Accordingly, the first and second causes of action are dismissed."
 

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