Opinion ID: 1281126
Heading Depth: 2
Heading Rank: 2

Heading: Bosse's Relationship With Accountants Within Doctrine.

Text: As this court held in Kurylas, the burden to establish the continuous representation doctrine falls on the party requesting its benefit. [I]n summary judgment proceedings where the defendant asserts the statute of limitations as a bar to the action, and presumptively establishes the defense by showing the case was instituted beyond the statutory period, the burden then shifts to the plaintiff to establish the existence of material facts in avoidance of the statute of limitations, e.g., fraudulent concealment of the cause of action. 452 N.W.2d at 117 (citations omitted). This applies to the continuous representation doctrine as well. Id. Bosse therefore has the burden to prove an existence of material facts to invoke the exception to SDCL 15-2-14.4. We believe the facts of this case fall within this exception. Continuity means quality or state of continuing without essential change: uninterrupted persistence of a particular quality. Webster's Third New International Dictionary, Unabridged, 493 (1976). Continuous means stretching on without break or interruption. Id. The record reflects Accountants' involvement with the 1988 returns was continuous and did not end when the returns were filed. Testimony by Martin and Accountants shows that Accountants represented Bosse in the IRS audit of the 1988 returns. [2] Accountants' representation involved significant review and recalculation of the 1988 returns. A summary of Martin's deposition testimony is as follows: In June 1991, Martin received notification of the impending IRS audit of the 1988 excise tax returns. He immediately informed Accountants. Within a few days of receiving this notice, accountant Berglin reviewed the returns and informed Martin he had discovered a substantial underpayment. Berglin obtained a power of attorney from Martin for the purpose of representing Bosse during the audit process. Berglin and Bosse collected all available documentation for review by the IRS auditor. The auditor reviewed Bosse's tax information in Accountants' offices and periodically conferred with Berglin regarding the 1988 returns. During the course of the audit, Martin and Berglin went over the fuel tickets together to determine what mathematical or clerical errors could have been made and to ascertain what was actually owed to the IRS. After the tax deficiency had been determined, Berglin attended a meeting with Martin and several IRS agents in November, 1991. The purpose of this meeting was to set a schedule for payment of all taxes owing. Berglin retained a former IRS agent, who attended the meeting to assist him and Martin in dealing with the IRS agents. At this meeting, Martin agreed to prompt repayment of the deficiency. Accountants' representation obviously involved significant review and recalculation of the 1988 returns subsequent to filing. Consistent with Martin's testimony, Accountant Berglin admitted that he represented Bosse throughout the audit. A summary of Berglin's statements provides: Normally, he accompanies clients to audit proceedings if the client requests his assistance, and considers that part of his services. When an IRS agent notified Berglin of a $50,000 excise tax deficiency, Berglin and Martin reviewed the fuel tickets together to determine if there were mathematical or clerical errors which might reduce the amount owed to the IRS. Berglin admitted that Martin gave him a power of attorney to represent Bosse in the IRS audit. He never billed Bosse for this representation. Berglin met with IRS agents during the course of the audit and answered questions regarding Bosse's tax returns. Berglin and Martin recalculated the amount of excise tax due, and submitted that figure to the IRS for approval. Berglin also participated in the repayment negotiations with the IRS. Accountants cannot rise above this testimony to claim a better version of the facts than what was previously given. Parsons v. Dacy, 502 N.W.2d 108, 111 (S.D.1993). Unfortunately, the trial court was denied the opportunity to consider this testimony, since Bosse failed to set forth Accountants' continued representation until the completion of the audit. However, our scope of review on review of summary judgment extends to the entire record. Piner v. Jensen, 519 N.W.2d 337, 339 (S.D.1994). We are not bound by the factual findings of the trial court and must conduct an independent review of the record. Id. (citations omitted). Accountants' testimony comports with case law establishing the continuing representation doctrine. In Boone v. C. Arthur Weaver Co., Inc., 235 Va. 157, 365 S.E.2d 764 (1988), the Virginia Supreme Court held that the accountants representation of a client during an audit tolled the statute of limitations. Boone presented facts where, in March 1976, the accounting firm recommended the acquisition and liquidation of an asset and advised its client the transaction would be tax free. The client followed the advice. In March and April 1977, the firm prepared the client's tax return to reflect this tax-free transaction. After the return was filed, the client and the firm learned that mistakes were made in preparing the return. However, the firm informed the client that the transaction fell within a gray area of tax law and no amended return was necessary. The IRS audited the return. The accounting firm in Boone represented the client during the audit and defended the handling of the transaction. The IRS assessed additional taxes, interest and penalties arising out of the transaction. After the audit was completed in August 1980, the accountants performed no further accounting services for the client. The client brought a negligence suit on June 24, 1981, over three years after the erroneous filing. The firm argued that the client's claim in Boone was barred by the three-year statute of limitations. It noted the faulty advice was given in 1976, the erroneous return was filed in 1977, yet suit was not filed until 1981. The court rejected this argument and delayed the commencement of the statute of limitations period until after the audit. Id. 365 S.E.2d at 766. It held that a continuing relationship existed between the accountant and client throughout the audit. Id. at 766-67. The court wrote: [T]he defendants [the accounting firm] gave continuing or recurring attention to the matter in question over a period of time. During that time. the client relied on the defendants' advice and on the defendants' efforts to extricate the client or to avert or minimize the damage. The defendants' remedial services, while not requested or anticipated at the beginning of the undertaking, were all related to the original matter for which the defendants' services had been engaged. The undertaking occurred within a larger professional relationship wherein the defendants rendered other services to the client. Because [defendants were] engaged in the defense of [the client] throughout the course of the audit proceedings, which terminated in August 1980, the particular undertaking which forms the basis of this action did not end until that month and only then did the statute of limitations begin to run. Id. at 767. Boone instructs that the statute is tolled when the professional's ongoing services relate to the same underlying subject matter for which services were rendered. This ruling coincides with our writings on the continuous relationship doctrine. In Schoenrock, we opined: [U]nder the continuous representation doctrine, the accrual of a malpractice cause of action will be tolled until the representation (or treatment in medical malpractice cases) terminates ... [T]he continuous representation doctrine applies only to malpractice actions when there is a clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney.... This relationship is one which is not sporadic but developing and involves a continuity of the professional services from which the alleged malpractice stems.  Furthermore, the application of this doctrine should only be applied where the professional's involvement after the alleged malpractice is for the performance of the same or related services and is not merely continuity of a general professional relationship. 419 N.W.2d at 200-01 (citations omitted). See also Keegan v. First Bank of Sioux Falls, 519 N.W.2d 607 (S.D.1994); Kurylas, 452 N.W.2d 111. Here, Accountants certainly maintained a continuity of the professional services from which the alleged malpractice stems. When the IRS announced its intention to audit the 1988 fuel returns, Accountants immediately proceeded to review these returns and to advise Bosse of the anticipated tax deficiency. They assisted Bosse in collecting the relevant tax information for submission to the IRS. They communicated with the IRS as Bosse's agent. While their assistance was not anticipated when the returns were filed, their involvement during the audit directly relates to their preparation of the 1988 fuel tax returns. As in Boone, Accountants' representation of Bosse was intended to avoid or minimize any damages resulting from the erroneous 1988 returns. Accountants' continued representation of Bosse throughout the audit process effectively tolled the statute of limitations for accountant malpractice until November, 1991. At this point, the audit was completed and Accountants' representation of Bosse ceased. Bosse therefore satisfied the four-year limitations period in filing its complaint one year later, in December, 1992. Summary judgment was inappropriate and we reverse and remand for trial. MILLER, C.J., and KONENKAMP, J., concur. WUEST, Retired J., and SABERS, J., dissent. GILBERTSON, J., not having been a member of the Court at the time this case was submitted, did not participate.