Opinion ID: 176236
Heading Depth: 3
Heading Rank: 3

Heading: Count II: Aiding and abetting the breach of a fiduciary duty

Text: Turning now to Count II, Gold alleged that by knowingly failing to disclose the nature of the related-party transactions and by improperly issuing unqualified opinions, Deloitte aided and abetted Winget in his breach of his fiduciary duty owed to Venture. The district court held that this claim was covered by the residual three-year statute of limitations for tort claims contained in Mich. Comp. Laws Ann. § 600.5805(10), which states that [t]he period of limitations is 3 years after the time of the death or injury for all other actions to recover damages for the death of a person, or for injury to a person or property. It further concluded that the claim accrued when Venture filed for bankruptcy on March 28, 2003. Because Gold did not file suit against Deloitte until March 31, 2006, the claim was held to be time-barred. In so holding, the court reasoned that the statute of limitations for professional-negligence actions did not apply because the type of interest harmed in such an action was different: [I]n Gold's claim that Deloitte aided and abetted Winget's breach ..., the interest harmed was Venture's interest in Winget's performance of his fiduciary duties.... Gold is not claiming that it was harmed due to Deloitte violating some duty it owed to Venture itself, which would be required for a negligence or malpractice claim. Gold contends that this conclusion is erroneous. He argues instead that the two-year statute of limitations in Mich. Comp. Laws Ann. § 600.5805(6), which applies to an action charging malpractice, governs Count II. Although the statute of limitations period is shorter for a malpractice claim, the action would not accrue until Deloitte discontinue[d] serving [Venture] in a professional ... capacity. See Mich. Comp. Laws Ann. § 600.5838(1). Gold contends that because Deloitte did not discontinue its service to Venture until May 4, 2004 (at the earliest), his aiding-and-abetting claim is not time-barred. He reasons that the aiding-and-abetting claim sounds in malpractice regardless of the label attached to the claim, and that Deloitte's duty to not aid and abet Winget[ ] ... [is] the subject of the aiding and abetting claim. Winget's breaches of his duties are not the source of Deloitte's liability. Deloitte, on the other hand, contends that the district court was correct in its application of the three-year statute of limitations to Count II. It reasons that the elements of an aiding-and-abetting claim go well beyond the elements of a professional-negligence claim, making the two claims separate and distinct. In Michigan, [t]he type of interest allegedly harmed is the focal point in determining which limitation period controls. Aldred v. O'Hara-Bruce, 184 Mich.App. 488, 458 N.W.2d 671, 672 (1990); see id. at 673 (holding that the plaintiff's claim was one of attorney malpractice, not breach of contract, because damages flowed not from defendant's failure to represent their son, but from her failure to do so adequately). There are at least two potential interests that could have been harmed if Deloitte aided and abetted Winget. First, Venture had an interest in having Deloitte adequately perform the audits. Venture had a second interest in having Winget properly perform his fiduciary duty by not looting the company. The interest that was ultimately harmed by Deloitte's alleged aiding and abetting was the interest that Venture had in having Winget properly perform his fiduciary duties. This is different from the interest harmed in a professional-negligence claimthe interest that a client has in receiving adequate performance by the outside professional. Moreover, the nature of an aiding-and-abetting claim is different. See Tenneco Inc. v. Amerisure Mut. Ins. Co., 281 Mich. App. 429, 761 N.W.2d 846, 864 (2008) (The true nature of a plaintiff's claim must be examined to determine the applicable statute of limitations.). In an aiding-and-abetting claim, the defendant is helping someone else commit the primary wrong. This is fundamentally different from a malpractice claim, in which the primary wrong is committed by the defendant itself. The elements of the cause of action are also different. In order to establish a claim of aiding and abetting the breach of a fiduciary duty, Gold would need to prove that (1) Winget breached his duty to Venture, (2) Deloitte knew that Winget's conduct constituted a breach of his duty to Venture, and (3) Deloitte gave substantial assistance or encouragement to Winget so to conduct himself. See Restatement (Second) of Torts § 876(b), cited in Carson Fischer, PLC v. Standard Fed. Bank, Nos. 248125, 248167, 2005 WL 292343, at  (Mich.Ct.App.2005), reversed on other grounds by 475 Mich. 851, 713 N.W.2d 265 (2006). The differences between an aiding-and-abetting claim and a professional-negligence claim are thus substantial. For the former cause of action, there is no requirement that Deloitte owed any duty to Venture. But Gold would need to establish that Deloitte provided substantial assistance or encouragement to Winget in breaching the latter's fiduciary duty to the company. Most importantly, an aiding-and-abetting claim requires proof that Deloitte acted knowingly, whereas a professional-negligence claim requires proof of only negligent behavior. Given the differences in the interests harmed, as well as the differences in the nature and elements of these two types of claims, the district court did not err in holding that the residual statute of limitations applied to Gold's aiding-and-abetting claim. Gold has also failed to cite a single case where a Michigan court has applied the professional-negligence statute of limitations to an aiding-and-abetting claim. The primary case cited by Gold on this issue, Alken-Ziegler, Inc. v. George Bearup, Smith, Haughey, Rice & Roegge, P.C., No. 264513, 2006 WL 572571 (Mich.Ct.App. 2006), is easily distinguishable. The corporate plaintiff in Alken-Ziegler filed suit against its former attorneys, arguing that they committed malpractice by failing to appeal an order and committed breach of contract where the contract provided that the attorneys would appeal. Id. at . The court first concluded that the corporation's malpractice claim was time-barred. Id. at . Although the corporation then argued that its breach-of-contract claim was distinct from its malpractice claim, and thus subject to a separate statute of limitations, the court disagreed: [C]laims against attorneys brought on the basis of inadequate representation sound in tort and are governed by the malpractice statute of limitations, even though a plaintiff may assert that the attorney's actions breached a contract. Attorneys may be held liable under a contract theory, but only when it is shown that the attorney breached a special agreement rather than a general agreement to provide requisite skill or adequate legal services. A special agreement is a contract to perform a specific act, as opposed to a general agreement to exercise appropriate legal skill in providing representation in a lawsuit. Id. at  (citations and internal quotation marks omitted). Alken-Ziegler does not support Gold's argument. The primary thrust behind the court's opinion in Alken-Ziegler was that both of the corporation's claims were based on allegations of inadequate representation. Id. Both were deemed similar enough to fall within the malpractice statute of limitations. Here, Gold's aiding-and-abetting claim is not based on an allegation that Deloitte breached its duty to Venture, but rather that Winget breached his duty to Venture and that Deloitte knowingly provided substantial assistance to help him do so. Gold's claim of aiding and abetting is therefore significantly different from his claim of professional negligence, thus warranting the application of a different statute of limitations.