NFGTV, Inc. v Lutz & Carr Certified Pub. Accountants, LLP 2023 NY Slip Op 50849(U) [79 Misc 3d 1241(A)] Decided on August 9, 2023 Supreme Court, New York County
Borrok, J. is the rare summary judgment win by a plaintiff. In this case, defendants’ own application to the IRS doomed the defense.

“NFGTV’s motion (Mtn. Seq. No. 001) for summary judgment is granted because it is undisputed that L&C advised both Two Franks and NFGTV that it was necessary to file an IRS Form 3115 and then filed it for Two Franks but failed to file it for NFGTV. Subsequently, when L&C acknowledged their mistake, they themselves told the IRS that the individual plaintiffs would be entitled to a refund and the amount of such proposed refund (i.e., that there was sufficient basis for such refund). Lastly, to the extent that L&C argues that this should have been picked up by the accountants doing the taxes for tax years following the 2016 tax year, it was L&C who completed the tax returns for the 2017 tax year and they did not in fact pick up the 2016 error that they had made. As such, L&C does not raise an issue of fact warranting denial of the motion or a trial on the issue of their liability (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Damages are referred to a JHO/Special Referee to hear and determine.”

“In their opposition papers, L&C argues that there are material issues of fact as to whether (i) whether their failure to prepare and file the IRS Form 3115 for NFGTV was a departure from the accepted standards of accounting practice such that it can constitute malpractice, (ii) whether Messrs. Barraud and Springman would have been able to deduct flow-through losses from NFGTV to their individual tax returns to offset their taxable income, such that they were damaged, and (iii) whether the accountants that were hired by the plaintiffs after L&C was terminated failed to correct the 2016 tax returns before the statute of limitations closed, such that their actions constitute an intervening cause. The arguments fail.

A court can find malpractice absent expert testimony where the ordinary experience of the fact finder provides a sufficient basis for judging the adequacy of the professional service (Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282, 283 [1st Dept 1999]; cf. Gertler v Sol Masch & Co., 40 AD2d 282, 282 [1st Dept 2007]).

As discussed above, it is undisputed that L&C both advised that filing the IRS Form 3115 was required and they did in fact file it for one of the plaintiffs’ companies (Two Franks) but not for the other (NFGTV) for the 2016 tax year. Stated differently, L&C established the standard of [*3]care required and their own breach by advising that the Form 3115 was required and by admitting that they had made a mistake in not filing it (NYSCEF Doc. No. 71, at 2-3). Additionally, L&C themselves submitted papers to the IRS indicating that as a result of their mistake, the plaintiffs were damaged and that the plaintiffs substantially overpaid their taxes and the individual plaintiffs were entitled to take these deductions on their individual tax returns (NYSCEF Doc. Nos. 71-73). This isn’t a question of the plaintiffs’ word against the defendant’s, it is a question of the defendant’s word against the defendant. As such, there are no material issues of fact for trial that the defendant committed professional malpractice.[FN1] Finally the Court notes that the work done by other accounting firms for subsequent years does not constitute an intervening superseding cause to the work done by L&C for the 2016 tax year because it was L&C that completed the tax returns for the 2017 tax year (Bachmann, Schwartz & Abramson v Advance Intl., 251 AD2d 252, 253 [1st Dept 1998]; cf. Pyne v Block & Assoc., 305 AD2d 213 [1st Dept 2003] and Golden v Cascione, Chechanover & Purcigliotti, 286 AD2d 281 [1st Dept 2001]).”

Email this postTweet this postLike this postShare this post on LinkedIn
Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened…

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.