Source: http://www.donovanhatem.com/2016/11/01/the-accountantattorney-liability-reporter-november-2016/
Timestamp: 2020-08-07 18:15:46
Document Index: 396676957

Matched Legal Cases: ['§ 340', '§ 339', '§ 339', '§ 337', '§ 337', '§ 6200', '§ 6206', '§ 340', '§ 6203', '§ 338']

The Accountant/Attorney Liability Reporter: November 2016 | Donovan Hatem
The Accountant/Attorney Liability Reporter: November 2016
Punitive Damages Claims Against an Accounting Professional May Be Allowed to Proceed Based on Gross Negligence
California Ruling Indicates MFAA Fee Arbitrations Now Subject to One-Year Statute of Limitations Defense
In Tax Scheme Case, Fraud Claim Against Attorney Allowed to Proceed
New York Dismisses Breach of Fiduciary Duty Claim Against Accountants Based Upon Statute of Limitations
In Neblett v. Clairmont Paciello & CO., P.C., 2016 U.S. Dist. LEXIS 74483, (M.D. Pa. June 8, 2016), a corporation asserted professional malpractice claims against its accountants seeking to recover over $50 million based on allegations that the accountants failed to detect the CEO’s international money laundering scheme. The corporation sought punitive damages from the accountants based on allegations of gross negligence and did not allege intentional fraudulent conduct on the part of the accountants. The United States District Court for the Middle District of Pennsylvania allowed the corporation’s demand for punitive damages to proceed past the accountants’ Motions to Dismiss. The Court held that the corporation’s complaint alleged sufficient facts to plausibly suggest that the accountants were grossly negligent and/or made wanton and reckless misstatements in their provision of professional services so that the accountants may be liable for punitive damages despite a failure by the corporation to prove that the accountants acted intentionally.
The Neblett case arose after the subject corporation was dissolved in bankruptcy in the wake of its CEO pleading guilty to charges that he used the corporation to further an illicit international money laundering scheme. More specifically, the corporation’s CEO publicly reported contracts for the sale of certain corporate products, even though no such contracts existed, to conceal the fact that, for five years, the corporation profited solely from the export of over $37 million worth of military semiconductors known as “rad chips” to Hong Kong in violation of the International Traffic in Arms Regulations. While the illegal scheme was underway, the corporation realized no profit from the sale of its primary, legal corporate products, which the CEO sold through a separate corporation that he set up overseas without informing the corporation.
Subsequently, the corporation (through a bankruptcy trustee) filed lawsuits against various parties, including an independent registered public accounting firm that the corporation had retained to audit the corporation’s financial records and assist with public filings. The corporation claimed, in relevant part, that the accounting professionals that provided services during the time that the CEO’s scheme was underway failed to fulfill their duty of reasonable care to the company and its shareholders. More specifically, the corporation claimed that through reasonable care and due diligence in reviewing sales spreadsheets and financial records, the accountants should have identified the existence of the illegal scheme. Instead, the accounting firm overlooked the clear evidence of illegal activity and published financial statements with material misstatements that reported numerous contracts that did not actually exist and that endorsed the corporate financial records as fair and accurate even though the reported cash flows were attributed to products that were never actually sold, and which were clearly earmarked to the sale of the rad chips. Among other things, the accounting firm also failed to identify multiple bank accounts that were opened to process the illicit funds and a $400,000 payment that the CEO transmitted to himself from the corporation, purportedly to pay off a personal loan.
The accountants moved to dismiss the corporation’s claims for punitive damages on the grounds that the complaint did not allege sufficient facts to support a claim for punitive damages which, it argued, requires allegations of intentional fraud. The Court denied the accountants’ Motions to Dismiss.[1]
In explaining its ruling that the corporation could proceed to seek punitive damages from the accounting professionals, the Court reasoned that a plaintiff’s assertion of plausible allegations of gross negligence is sufficient to hold a defendant accountant liable for fraud, and therefore punitive damages. In addition, if a plaintiff is seeking punitive damages and its proof fails to make a plausible case for fraud but does make a plausible case for wanton and reckless misstatement, then a defendant accountant may be subject to liability even though all of the strict elements of proof of intentional fraudulent conduct are not sufficiently shown.
Here, the corporation alleged gross negligence, which is defined as a wanton and reckless disregard for the lives, safety, or property of others. The gross negligence claim was based, in part, on the alleged wanton and reckless misstatements made in the corporation’s public filings. Because the corporation’s allegations of gross negligence are akin to, and based on, an allegation of wanton and reckless misstatements, which are sufficient to support a claim against an accountant for punitive damages, the accountants may be held accountable for punitive damages even though the elements of intentional fraud are not met by the plaintiff.
Moreover, the Court stated that the threshold for the award of punitive damages is not whether the injury was intentionally or negligently inflicted but, instead, whether the alleged misconduct was outrageous in character. Based on the facts of the case, the Court opined that the fact that an alleged fraud of the extent purported by the CEO went undetected was difficult to fathom and so outrageous as to support a finding of sufficient facts to permit the gross negligence allegations to support a claim for punitive damages and to survive the motion to dismiss stage.
As a result of this ruling, accounting professionals should be aware that, even if an accountant does not intentionally participate in a fraudulent scheme or prepare fraudulent filings, they may be held accountable for their clients’ fraudulent conduct if they overlook available information that could alert the professional of the fraudulent scheme underway.
[1] However, the Court noted that upon conducting further discovery, the accountants may be able to present their arguments for dismissal again in a Motion for Summary Judgment.
California’s legal malpractice statute of limitations is a complex area of law resulting in confusion as to which statute of limitations[1] applies to fee disputes brought under the State’s Mandatory Fee Arbitration Act (“MFAA”).[2] Under the MFAA, arbitration is disallowed if a civil action seeking the same relief would be barred by the applicable statute of limitations.[3] For example, with the exception of actual fraud there is a one-year limitation under California law for any claim against an attorney, including fee disputes, arising out of the performance of professional services.[4] Even so, the California State Bar has long maintained that the four-year statute of limitations for breach of written contract, or the two-year statute of limitations for breach of an oral contract applies to a fee dispute brought under the MFAA.[5] However, a recent decision by the California Supreme Court sheds light on the scope of Code of Civil Procedure Section 340.6 indicating when and if a fee dispute may be subject to the one-year statute of limitations defense under the MFAA.[6]
In Lee v. Hanley (2015) 61 Cal. 4th 1225, the California Supreme Court addressed the question of whether Section 340.6 applied to a Client’s claim for the return of unearned fees held by the Attorney after the representation terminated. In Lee, the Client advanced $110,000 to the Attorney to cover fees and costs in litigation as well as $10,000 to be used for expert witness fees. After the case settled, the Attorney sent the Client a letter and an invoice for legal services, both of which indicated the Client had a credit balance of $46,321.85.
However, when the Client requested a final billing statement and refund of the credit balance, the Attorney responded by stating that the Client did not have a credit balance and would not receive a refund. As a result, the Client retained another attorney who sent a letter terminating the Attorney’s services and demanding a refund of the unearned fees and unused expert witness fees. The Attorney later returned $9,725 in the unused expert witness fees to the Client, but refused to return any of the unearned attorney’s fees.
Over a year after the demand for refund was sent, the Client filed suit against the Attorney seeking return of the unearned fees. The Attorney demurred on grounds that the suit was time-barred under CCP § 340.6(a). Before the trial court could rule on the demurrer, the Client filed a first amended complaint making the demurrer moot. The Attorney then demurred to the first amended complaint on the same basis as the original demurrer which was sustained by the trial court, with leave to amend, on grounds that Section 340.6 barred all claims.
Thereafter, the Client filed a second amended complaint alleging that the Attorney “provided appropriate legal services” and that no injuries had been suffered from the services provided by the Attorney. However, the second amended complaint further alleged that the Attorney’s last billing informed the Client that there was a credit balance after all professional services were completed. The Client further alleged that the Attorney should have refunded the Client’s credit balance within a reasonable time after the last billing, but did not and was thus, unjustly enriched by failure to return the unearned fees and costs. The trial court again sustained the Attorney’s demurrer, holding the Client’s claims were barred by Section 340.6 but again granting leave to amend to allege a fraud claim.
When the Client did not file a further amended complaint, the trial court dismissed the action with prejudice. The Client appealed arguing that Section 340.6(a) did not apply to the claims. The Court of Appeal reversed by holding that legal malpractice statute of limitations is inapplicable to garden variety theft or conversion of client funds, and that the Attorney’s failure to refund unearned attorney fees was a fact issue not suitable to resolution on demurrer.
The California Supreme Court granted review to decide “whether an attorney’s refusal to return a former client’s money after the client terminated the representation was a ‘wrongful act or omission . . . arising in the performance of professional services’ under Section 340.6(a).”[7] In holding that “[S]ection 340.6’s time bar applies to claims whose merits necessarily depend on proof that an attorney violated a professional obligation[8] in the course of providing professional services,”[9] the Court analyzed the legislative history of Section 340.6 explaining that it drew two conclusions therefrom.[10]
First, the Court noted that the California Legislature sought to eliminate the former limitations scheme’s dependence on the way a plaintiff styled his or her complaint so that the applicable limitations period would instead turn on the conduct alleged and proven. Second, the Legislature sought a broader sweep so that the Statute would apply to not only claims for professional negligence, but to any action involving wrongful conduct, other than actual fraud, arising in the performance of professional services.
Accordingly, the Court concluded, that Section 340.6 does not bar “garden-variety” theft or a claim that does not require proof that the attorney violated a professional obligation; nor does Section 340.6 bar a claim arising from an attorney’s performance of services that are not “professional services.”[11] Against this backdrop, the Court’s ultimate holding in Lee was that the trial court erred in sustaining the attorney’s demurrer on the basis of Section 340.6 because it could not be determined from the allegations of the Complaint whether it necessarily depended on proof that the Attorney violated a professional obligation.[12]
Although the Lee decision makes no reference to fee arbitration or the MFAA, the California Supreme Court’s analysis strongly suggests that the one-year limitations period under Section 340.6 will apply to attorney-client fee disputes brought under the MFAA where the essence of the dispute in any way involves the nature and propriety of the attorney’s legal services. Accordingly, the question of whether a one, two, three, or four-year statute of limitations applies in a client fee dispute brought under the MFAA will most likely depend on proof that an attorney violated a professional obligation in the course of providing professional services including, but not limited to:
Breach of contract[13]
Professional negligence and/or professional misconduct based on an attorney’s ethical obligations under the Rules of Professional Conduct[14]
Charging an unconscionable fee for professional services[15]
Breaches of fiduciary duties[16]
Wrongful retention of settlement funds[17]
Negligent misrepresentation[18]
Constructive fraud[19]
Failure to refund an unearned fee or retainer deposit, unless the failure to refund constitutes a conversion or theft of client funds[20]
Trust accounting issues regarding client funds.[21]
Within this framework it thus appears that the Lee decision stands for the proposition that Section 340.6 is broader than a professional negligence statute. However, the California Supreme Court also makes clear in Lee that not every wrong committed by an attorney against a client is a wrongful act in the performance of professional services to which Section 340.6 applies.[22] The take-away from this decision, which in some ways creates further confusion as to the applicability of statutes of limitations under the MFAA, is that an attorney defending a fee dispute where arbitration is unavoidable is well advised to be prepared to argue whether the nature of the claim involves the propriety of the legal services provided or alternatively does not require proof that a professional obligation was violated.
A dispute over legal fees is a serious problem and one that should be avoided. While this advice may seem obvious, the fact is that disputes with clients over fees can, and do, arise. In the absence of further direction by the California Supreme Court or the State’s Legislature, attorneys involved in attorney-client fee disputes under the MFAA must thus recognize that based on the Lee holding a prudent arbitrator or panel is likely to allow a fee arbitration to proceed even if a client’s request for arbitration may be potentially time barred. This decision is a reminder that a working familiarity with the applicable statutes of limitations, now likely to be recognized in a MFAA arbitration given the Lee holding, will be critical to the successful resolution of a difficult fee dispute that cannot be avoided.
[1] Like civil actions, disputes regarding attorney fees, costs or both under the MFAA are subject to various statutes of limitations. Traditionally, attorney-client fee disputes were considered subject to the same statutes of limitations as other types of contractual disputes: two years for breach of oral contract (Cal. Code Civ. Proc., § 339(1); two years for money had and received (Id. at § 339(a); four years for breach of written contract (Id. at § 337(a); and four years for an account stated or open book account (Id. at § 337(2)).
[2] As codified in California’s Business and Professions Code, § 6200, et. seq.
[3] See Business and Professions Code, § 6206.
[4] Cal. Code Civ. Proc., § 340.64; see Levin v. Graham & James (1995) 37 Cal. App. 4th 798, 803-805.
[5] See Arbitration Advisory No. 2011-02. Since (1) MFAA arbitrations do not provide the same relief as a legal malpractice claim or an action for malpractice plead as a breach of contract; (2) evidence of professional misconduct or negligence may only be received in MFAA arbitrations for the limited purpose of determining the fees and/or costs to which the attorney is entitled (Bus. & Prof. Code, § 6203(a)); and (3) MFAA arbitrators are specifically precluded from awarding affirmative relief in the form of damages or offset based on alleged malpractice or professional misconduct (Ibid.), Section 340.6 appeared inapplicable until the Lee decision was issued.
[6] See Arbitration Advisory No. 2016-01.
[7] Lee v. Hanley, supra, 61 Cal. 4th at 1229.
[8] In the context of Section 340.6, a “professional obligation” is defined as one in which an attorney has “by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform the services contemplated in the legal services contract in to which an attorney has entered, and the obligations embodied in the Rules of Professional Conduct.” Id. at 1237.
[9] “Professional services” are defined as those “services performed by an attorney which can be judged against the skill, prudence, and
diligence commonly possessed by other attorneys.” Ibid.
[10] Id. at 1235-1237.
[11] Id. at 1237.
[12] Id. at 1240.
[13] See Southland Mechanical Constructors Corp. v. Nixen (1981) 119 Cal. App. 3d 417.
[14] See Lee v. Hanley, supra, at 1237-1240.
[15] See Levin v. Graham & James (1995) 35 Cal. App. 4th 798.
[16] See Stoll v. Superior Court (1992) 9 Cal. App. 4th 1362; Pompilio v. Kosmo, Cho & Brown (1995) 39 Cal. App. 4th 1324; Radovich v. Locke-Paddon (1995) 35 Cal. App. 4th 946.
[17] See Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal. App. 4th 1105.
[18] See Quintilliani v. Mannerino (1998) 62 Cal. App. 4th 54.
[19] See Stueve Bros. Farms, LLC v. Berger Kahn (2013) 222 Cal. App. 4th 303.
[20] See Lee v. Hanley, supra at 1239-1240.
[21] See Lee v. Hanley, supra at 1237.
[22] For example, since conversion claims can be intertwined with fee disputes, a three year limitation could also apply in some MFAA arbitrations. See, Cal. Code. Civ. Proc., § 338 (c); see also, Bufano v. San Francisco (1965) 233 Cal. App. 2d 61, 70.
In Johnson v. Proskauer Rose, LLP, the Supreme Court of New York, Appellate Division, First Department, held that the claim by the Plaintiffs, individual heirs to the Johnson & Johnson (J&J) fortune, for legal malpractice against the defendant law firm, Proskauer Rose, LLP (Rose), was time-barred under the statute of limitations. The Court further held the Plaintiffs’ fraud claim was sufficiently distinct from the malpractice claim, and the trial court below properly did not invoke the duplicative claims doctrine, so the fraud claim was allowed to proceed. The legal malpractice and fraud claims arose out of a tax shelter plan recommended by Rose. One of the trustee Plaintiffs, Robert Matthews (Matthews), a certified public accountant, prepared the tax returns that were challenged by the IRS which eventually led to the lawsuit against Rose. Although the Court was silent as to liability of Matthews, this case raises an interesting issue for accountants regarding their potential exposure in relying on a proposed tax plan from an established law firm specializing in tax law.
Rose reached out to the Plaintiffs to discuss a method which he told Matthews would permit Plaintiffs to sell J&J stock without being subject to a large tax liability. The parties agreed to meet and the Plaintiffs were introduced to James Haber (Haber), a principal of the Diversified Group, Inc. (TDG). Haber explained to the Plaintiffs that TDG was in the business of developing tax minimization strategies for individuals and families with high net worths. Haber and Rose represented to the Plaintiffs that the plan would obviate the Plaintiffs’ need to pay tax on the gains realized by the sale of J&J stock and would withstand IRS scrutiny since it had a “legitimate and bona fide business and economic purpose.” Even though the Plaintiffs were in no rush to sell their stock, Rose told the Plaintiffs to execute the strategy in the very near future, as it would be “foolish” not to. As a result, on October 2, 2000, the Plaintiffs executed a retainer letter wherein Rose would render tax advice regarding the sale of J&J stock. It further stated Rose represented TDG in the past on “unrelated matters” and would “continue to represent TDG fully in unrelated matters” and that Plaintiffs waived any conflict of interest. Plaintiffs paid TDG a total of $1,379,650 in fees and costs, of which they allege $425,000 was paid by TDG to Rose to cover its legal fee. In June 2001, Rose sent Plaintiffs a 63-page opinion letter dated December 29, 2000, which concluded that “it was more likely than not” that the scheme, already executed, would not generate any gain or loss, or accrue any penalties if it was disallowed by the IRS. Ultimately, the IRS ruled the shelter transaction was not entitled to favorable capital gains tax treatment and assessed the Plaintiffs’ back taxes, penalties and interest amounting to millions of dollars.
In July 2011, Plaintiffs filed suit against Rose asserting causes of action against Rose sounding in fraud, legal malpractice and unjust enrichment, and sought a declaratory judgment and an award of legal fees, which the Plaintiffs claimed were grossly excessive, as well as punitive damages. The fraud claim was based upon Rose not disclosing to Plaintiffs that it was effectively in a business relationship with TDG with a direct financial interest. Plaintiffs allege the fraud was widespread and that Rose issued 380 opinion letters to other clients. Rose subsequently moved to dismiss the Plaintiffs’ first amended verified complaint arguing that the legal malpractice claim was time-barred before the tolling agreement was executed and the other substantive claims must be dismissed on the duplicative claims doctrine. Rose further argued the fraud claim must fail because the Plaintiffs could not have justifiably relied on Rose’s representations or omissions given the Plaintiffs’ relative sophistication. In opposition, the Plaintiffs argued the continuing representation doctrine tolled the accrual of their malpractice claim.
The Court found that the opinion letter expressly disclaimed any obligation by defendants to “update” the opinion, notwithstanding a change in the law or facts, and that no other events served to extend the accrual of the limitations period. There was no concrete task Rose was likely to perform after they delivered the opinion letter. The statute of limitations would have begun to run, at the latest, on June 8, 2001 when Rose delivered the opinion letter. However, the Court declined to dismiss Plaintiffs’ fraud claim as duplicative of the legal malpractice claim since the fraud claim was based upon allegations indicating something more than mere concealment of malpractice. The Court found the fraud claim alleged independent, intentionally tortious conduct, particularly concerning Rose’s failure to disclose its true relationship with TDG, and that such conduct allegedly gave rise to separate and distinct damages from the malpractice claim. The Court further held Rose did not establish the specific backgrounds of the Plaintiffs and their alleged familiarity with the tax code and IRS practices such that Rose could argue that Plaintiffs were not justified in relying on Rose’s advice. If Plaintiffs were truly sophisticated, then why would they need a $425,000 opinion letter from Rose to convince them to move forward with the TDG-Rose strategy?
In conclusion, the “takeaway” for accountants is to perform your due diligence in seeking out competent tax law firms. Even though a law firm may hold itself out as an “expert,” the accountant should always obtain a second opinion from either another tax specialist or another accounting firm before agreeing to such a complex and risky tax shelter plan. Further, when the harm is appreciable, the accountant should endeavor to act swiftly and promptly in order to preserve their clients’ respective rights.
Equitable claims such as fiduciary duty by an accountant may be covered by a longer statute of limitations, increasing the time within which former clients may bring such a claim. In the New York case of Cusimano v. Schnurr, 2016 N.Y. App. Div. LEXIS 1754 (2016), the Court determined that breach of fiduciary duty based on claims of fraud, and not merely incidental to the claim, was governed by a six-year limitations period, rather than a shorter limitations period. In this case, the claims were still barred, even by the longer statute of limitations, because the Plaintiffs had notice of the alleged wrongdoing prior to six years before bringing suit.
Earlier this year, the Supreme Court of New York, Appellate Division, considered a case involving a dispute among family members, owners of real estate businesses. Plaintiffs Dominic and Rita Cusimano, along with Bernard and Bernadette Strianese (Rita’s father and sister), owned certain entities that invested in commercial real estate. Defendants Andrew Schnurr and Michael Norman, certified public accountants, and Norman’s accounting firm Michael Gerard Norman, CPA, P.C. (collectively the “CPAs”), are alleged to have provided accounting and tax services to the Plaintiffs and the various entities.
In September 2011, the Plaintiffs commenced the action against the Defendant CPAs alleging breach of fiduciary duty, accounting malpractice, and aiding and abetting fraud and other misconduct on the part of Bernard and Bernadette Strianese, who were not named as defendants.
In September 2012, the Plaintiffs filed a demand for arbitration and a statement of claim which contained nearly identical allegations, and included Bernard and Bernadette as respondents. The Plaintiffs moved to dismiss the action they commenced in the NY Supreme Court, or in the alternative, moved for a stay pending the arbitration. The CPAs cross moved to dismiss with prejudice, or in the alternative,permanently stay the arbitration, based upon the statute of limitations. The Court found that many of the Plaintiffs’ claims were time barred, and granted a permanent stay of the arbitration based upon the statute of limitations.
In its initial decision, the NY Supreme Court did not render a decision on the issue of the timeliness of the claims, but rather left that issue for the arbitrator to decide. The Court of Appeals disagreed, stating that the issue of timeliness was for the lower court to decide. The matter was sent back down to the lower court to render a decision on the timeliness of the claims.
In their arguments to the lower court, the Plaintiffs did not dispute that Schnurr ceased performing accounting activities for the Cuisimano’s and their various entities in 2003, thus the motion court properly ruled that all claims against Schnurr are time barred under New York’s six-year statute of limitations. However, the court found that the motion court erred in applying a shorter, three-year statute of limitations to the breach of fiduciary duty, and aiding and abetting breach of fiduciary duty, claims against Michael Norman and his firm. The court explained that the applicable statute of limitations for breach of fiduciary duty depends on the nature of the relief sought. For example, if the relief being sought is equitable in nature, a six-year limitations period applies, but when the relief sought is monetary in nature, a three-year limitations period applies. In sum, a cause of action for breach of fiduciary duty based on allegations of fraud is six years.
The Court found that although the complaint sought monetary damages, the six-year period applied because the nature of the claims sounded in fraud. The Plaintiffs alleged that the accountants induced them to sell the property at below market value, conspired with the Strianeses to falsify tax returns, and created fraudulent promissory notes to gut the equity from the various entities. These claims of fraud, according to the court, were not “merely incidental” to the claims of breach of fiduciary duty, and thus, a six-year statute of limitations applied to all claims made by the Plaintiffs.
Subsequently, the Court rejected both of the Plaintiff’s arguments that the six-year statute of limitations had been tolled. The Court found that the six-year statute runs based upon the greater of six years from the date the cause of action accrued, or two years from the time the Plaintiff discovers the fraud, or could have with reasonable diligence discovered it. According to the Court, a Plaintiff will be held to have discovered the fraud when s/he possesses or has knowledge of the facts from which fraud can be reasonably inferred.
Ultimately, the Court found that the Plaintiffs were on “inquiry notice” long before bringing the action. For example, one of the Plaintiffs signed a promissory note in 1999 promising that the business interest would pay Bernard Strianese $485,426 with 10% interest. The court held that such a promissory note was adequate notice to the Plaintiffs that the business was paying the Strianeses. Furthermore, the Plaintiffs admitted that they had received a 1998 Schedule K-1 reflecting an $890,000 distribution from the business entity which was to be paid equally between the Cusimanos and the Strianeses; however, the Cusimanos never received the distribution. As a result, the Plaintiffs’ claims of breach of fiduciary duty were deemed to be untimely.
Accountants generally owe a fiduciary duty to their clients. This means that they must place the interests of the client above their own. When an accountant has multiple individuals or entities as a client, the accountant must maintain its position as fiduciary and not engage in fraudulent dealings such as favoring one partner in a business over another. In order to protect against allegations of breaches of the fiduciary duty, it is recommended that accountants provide written documentation for all transactions, including, but not limited to, accounts, schedules, and payments. According to this New York court, providing such documents places the client on “inquiry notice” to investigate potential fraud relating to those transactions. This “inquiry notice” triggers the shorter two-year statute of limitations, rather than the six-year statute. Finally, accountants should ensure that retention/engagement with a client is terminated in writing after completion of the task. Such a termination will ensure that no causes of action for fraud can be commenced later than six years after the date of termination.