Court Opinion

ID: 4274614
Source: CourtListenerOpinion
Date Created: 2018-05-11 16:09:42.510799+00
Date Added: 2024-06-11T14:33:45.316371
License: Public Domain

IN THE SUPREME COURT OF NORTH CAROLINA

                                      No. 27A17

                                  Filed 11 May 2018

 KAREN HEAD

              v.
 GOULD KILLIAN CPA GROUP, P.A. and G. EDWARD TOWSON, II, CPA

      Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of

the Court of Appeals, ___ N.C. App. ___, 795 S.E.2d 142 (2016), affirming in part and

reversing in part and remanding an order granting partial summary judgment

entered on 31 December 2015 by Judge William H. Coward in Superior Court,

Buncombe County. On 16 March 2017, the Supreme Court allowed plaintiff’s petition

for discretionary review of additional issues. Heard in the Supreme Court on 5

February 2018.

      Erwin, Bishop, Capitano & Moss, PA, by J. Daniel Bishop, for plaintiff-
      appellant/appellee.

      Sharpless & Stavola, P.A., by Brenda S. McClearn, for defendant-
      appellants/appellees.

      NEWBY, Justice.

      In this case we address a claim for fraudulent concealment and the application

of the statute of repose to a claim of professional negligence in the context of summary

judgment. Summary judgment is proper if no genuine issue of material fact exists

when viewed in the light most favorable to the nonmoving party. The record here,

when viewed in that light, presents genuine issues of material fact regarding
                           HEAD V. GOULD KILLIAN CPA GRP.

                                     Opinion of the Court

plaintiff’s fraudulent concealment claim and the scope and timing of defendants’

duties to plaintiff, thus making summary judgment improper in both instances.

Accordingly, we affirm in part and reverse in part the decision of the Court of Appeals.

       This case is currently in the summary judgment stage; thus, we review the

facts in the light most favorable to plaintiff, the nonmoving party. Plaintiff Karen

Head must annually file her federal tax return as well as several returns for different

states. Plaintiff first hired G. Edward Towson, II, CPA (Towson) and his firm Gould

Killian CPA Group, P.A. (collectively, defendants)1 to prepare her 2005 tax returns.

Defendants prepared and timely filed plaintiff’s 2005 tax returns after plaintiff had

provided the necessary information and signatures. Plaintiff subsequently engaged

defendants for tax years 2006 through 2010. Plaintiff’s federal and state tax returns

for 2006, 2007, 2008, and 2009 were not filed with the various taxing authorities until

2012, however, giving rise to the present case.

       On 11 and 12 August 2011, plaintiff received two notices from the Internal

Revenue Service (IRS) stating that she had not filed her 2006 and 2007 tax returns.

Plaintiff forwarded the notices to Towson, who responded, “I need to roll up my

sleeves and sort out this mess.” Towson later stated that he believed the IRS had

       1  The record reflects that Towson, as a principal at Gould Killian, was the primary
actor in the pertinent events.

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                          HEAD V. GOULD KILLIAN CPA GRP.

                                   Opinion of the Court

made an error because he had provided the completed returns and filing instructions

to plaintiff.

       On 27 September 2011, plaintiff informed Towson that she was “leaving

[Towson’s] accounting firm. Shortly you will be receiving information from Wayne

Roddy [plaintiff’s newly hired CPA] to begin the transfer of information.”

Nevertheless, Towson responded by expressing his intent to keep working on

plaintiff’s behalf: “We are almost finished with the 2010 income tax returns . . . . I

will/should have them ready early next week and will call to coordinate the signing.

After that, I will be happy to provide whatever is needed for Wayne Roddy.” During

his deposition, Towson stated that he understood this exchange to mean that plaintiff

terminated him, but he continued to take action for the next twelve months in

connection with plaintiff’s tax matters because “[w]e were trying merely to assist with

resolving the question . . . . [W]e were not her engaged CPA firm at that point.”

Towson did not have the 2010 returns ready as promised but did file electronically

the federal return on 21 November 2011.

       In response to repeated requests to transfer the information to Roddy in

October and November 2011, Towson responded that they were working on

“amendments” to the 2008 and 2009 tax returns, which they would complete before

transferring since “it would be more difficult for [Roddy] to step into these.” Later

plaintiff received additional notices from the IRS for failing to file her 2006 and 2007

tax returns. Towson informed plaintiff that they would respond to and “rebut” these

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                                   Opinion of the Court

tax assessments and would “keep [plaintiff] up to date on the progress.” Towson

stated during his deposition, however, that he knew he could not speak directly with

an IRS agent on plaintiff’s behalf because he did not have a power of attorney from

plaintiff at that point, which the IRS required.

      Following more IRS notices in March 2012, Roddy directly contacted Towson,

specifically noting that “[t]hese notices seem to be saying that a return was never

filed for these years. . . . [W]ould it be possible to get a copy of the tax returns that

were filed for these years?” In response, Towson did not acknowledge that the returns

had not been filed. Instead, Towson stated that he would work with the IRS’s

Taxpayer Advocate Service to “personally see to it that they get the account

straightened out.” Additionally, Towson affirmed that they would provide copies of

the 2006 and 2007 tax returns to Roddy; defendants did not provide these copies.

      Throughout April 2012, Towson represented to plaintiff that he was

communicating with the Taxpayer Advocate Service and working on a resolution.

Towson nevertheless stated during his deposition that defendants did not have direct

communication at any point with anyone at the Taxpayer Advocate Service, and that

organization likewise has no record of communications with Towson.

      In July 2012, the IRS sent plaintiff a final notice of intent to levy. Towson

requested that plaintiff provide a power of attorney to allow him to communicate with

the IRS on her behalf, and plaintiff obliged. During August 2012, Towson used this

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                                  Opinion of the Court

power of attorney to communicate with the assigned revenue officer at the IRS, but

Towson consistently misrepresented these communications to plaintiff. Pertinently,

Towson asserted that the revenue officer had “put a hold on collection efforts” and

would “help to get the account corrected” once Towson provided additional

information; however, the IRS records show that the revenue officer instead

communicated the IRS would seek a lien on plaintiff if the returns were not filed by

17 August 2012. On 17 August 2012, Towson requested an extension, which the IRS

granted, to “re-prepare” the returns. Towson did not notify plaintiff of this extension

but instead implied that the IRS needed more time to complete the necessary

corrections.

      On 4 September 2012, the IRS filed a lien against plaintiff. On 27 September

2012, plaintiff contacted Towson declaring her intention to “retain[ ] [legal] counsel

to help resolve this matter.” The same day, Towson responded: “I actually [met] with

[the IRS revenue officer] today and I think the administrative remedies will resolve

this.” Furthermore, Towson asked that plaintiff sign 2006 and 2007 tax return

signature pages, without the whole returns, “to facilitate the proper processing.”

Plaintiff provided the signatures on 27 September 2012. Towson replied that the

revenue officer would now have everything she needed to “correct the account by re-

imputing [sic] the tax return data.” Again, Towson did not mention that he had not

yet filed the returns nor that he intended to file the returns. Towson filed the 2006

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                                  Opinion of the Court

and 2007 tax returns with the IRS on 28 September 2012. Towson later filed the

2008 and 2009 tax returns on 18 October 2012.

      On 4 November 2013, plaintiff filed her complaint asserting claims against

defendants for professional negligence and fraudulent concealment, and seeking

compensatory and punitive damages. Plaintiff alleged defendants failed to properly

prepare and file her delinquent tax returns for tax years 2006 through 2009 and

intentionally deceived her about the status of the returns.         On 2 May 2014,

defendants unsuccessfully moved to dismiss all claims under Rules 9(b) and 12(b)(6)

of the North Carolina Rules of Civil Procedure.

      On 7 December 2015, defendants filed an amended motion for partial summary

judgment, contending that plaintiff could not satisfy the elements of fraudulent

concealment regarding the 2006 to 2009 tax returns and that the statute of repose

bars the professional negligence claim for the 2006 and 2007 tax returns.2 Regarding

the fraud claim, defendants argued that plaintiff did not reasonably rely on the

alleged concealment because plaintiff could have “learned the true facts by exercise

of reasonable diligence,” such as reading the filing instructions provided by

defendants, asking if defendants had filed the returns, contacting the IRS directly, or

hiring another CPA. As for the professional negligence claim, defendants argued that

the four-year statute of repose began to run upon defendants’ last act, which occurred

      2  Defendants did not move for summary judgment on plaintiff’s professional
negligence claim relating to her 2008 and 2009 tax returns.

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                                   Opinion of the Court

six years before plaintiff filed the complaint, when defendants allegedly provided

plaintiff with the filing instructions and copies of the prepared returns.

      In opposition, plaintiff argued that several genuine issues of material fact

existed, including the scope of the relationship, the delivery and receipt of the filing

instructions and prepared returns, and whether plaintiff reasonably relied on

Towson’s representations. Regarding the statute of repose, plaintiff argued that the

operative date for the 2006 return was 15 October 2010, the last day plaintiff could

have filed the tax returns and still receive a refund. Plaintiff submitted that Towson

continued to represent her in communicating with the IRS about the 2006 and 2007

tax returns and did not actually file the returns until September 2012. Because the

timing and nature of the duties of the relationship remained at issue, plaintiff argued

her claims related to the years 2006 and 2007 cannot be time-barred. Likewise,

plaintiff claimed to present sufficient evidence of fraudulent concealment arising out

of an ongoing professional relationship to create genuine issues of material fact.

      On 31 December 2015, the trial court allowed defendants’ motion for partial

summary judgment regarding the fraudulent concealment claim for tax years 2006

through 2009, the corresponding claim for punitive damages, and defendants’ statute

of repose defense for professional negligence for tax years 2006 and 2007. Plaintiff

appealed.

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                         HEAD V. GOULD KILLIAN CPA GRP.

                                  Opinion of the Court

      A divided panel of the Court of Appeals affirmed in part and reversed in part

the trial court’s order on partial summary judgment. Head v. Gould Killian CPA

Grp., ___ N.C. App. ___, ___, 795 S.E.2d 142, 150-51 (2016). First, the majority

reversed the trial court’s decision regarding the statute of repose, concluding that

“whether Defendants were responsible for delivering, mailing, or providing Plaintiff

with her tax returns, and whether and when they did so” determined when the

statute of repose began to run, and thus constituted genuine issues of material fact.

Id. at ___, 795 S.E.2d at 148. Next, the court affirmed the trial court’s dismissal of

plaintiff’s claim for fraudulent concealment because plaintiff failed to show

defendants had an ongoing relationship with her and that defendants had a

corresponding duty to honestly disclose information. Id. at ___, 795 S.E.2d at 150.

      The court based its finding that defendant owed no duty to plaintiff on its view

that the misrepresentations occurred “after Plaintiff had already terminated her

employment of Defendants on 27 September 2011.” Id. at ___, 795 S.E.2d at 150. The

court explained:

             Defendants owed no per se fiduciary duty to Plaintiff at the
             time the emails were sent because Defendants had already
             been terminated by Plaintiff and replaced by another
             accountant. Furthermore, Defendants and Plaintiff were
             in no way “negotiating at arm’s length” about “the subject
             matter of [a] negotiation[ ]” at the time the emails were
             sent.

                   No relationship, fiduciary or otherwise, existed
             between the parties at that point in time, as Plaintiff had
             already terminated her relationship with Defendants,

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                          HEAD V. GOULD KILLIAN CPA GRP.

                                   Opinion of the Court

             hired a new CPA, and was not attempting to hire or pay
             Defendants for any new work engagement.

Id. at ___, 795 S.E.2d at 150 (first brackets in original) (quoting Harton v. Harton, 81

N.C. App. 295, 298, 344 S.E.2d 117, 119, disc. rev. denied, 317 N.C. 703, 347 S.E.2d

41 (1986). Affirming the trial court’s grant of summary judgment on plaintiff’s

fraudulent concealment claim, the court likewise affirmed the grant of summary

judgment on plaintiff’s related claim for punitive damages. Id. at ___, 795 S.E.2d at

150.

       The dissent rejected the majority’s statute of repose analysis, instead

concluding that the last act or omission regarding the “2006 and 2007 tax returns

occurred on 12 December 2008, when Defendants hand delivered Plaintiff her 2007

prepared returns.” Id. at ___, 795 S.E.2d at 151 (Enochs, J., concurring in part and

dissenting in part). Thus, the four-year statute of repose barred plaintiff’s claims

related to these returns. Id. at ___, 795 S.E.2d at 152-54. Defendants filed notice of

appeal based on the dissenting opinion, and plaintiff sought discretionary review as

to her fraudulent concealment claim, which we allowed.

                                            I.

       Summary judgment is proper if “there is no genuine issue as to any material

fact and . . . any party is entitled to a judgment as a matter of law.” N.C.G.S. § 1A-1,

Rule 56(c) (2017). “The movant is entitled to summary judgment . . . when only a

question of law arises based on undisputed facts.” Ussery v. Branch Banking & Tr.,

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                          HEAD V. GOULD KILLIAN CPA GRP.

                                    Opinion of the Court

368 N.C. 325, 334, 777 S.E.2d 272, 278 (2015) (citation omitted). “All facts asserted

by the [nonmoving] party are taken as true and . . . viewed in the light most favorable

to that party.” Dobson v. Harris, 352 N.C. 77, 83, 530 S.E.2d 829, 835 (2000) (citations

omitted). “This Court reviews appeals from summary judgment de novo.” Ussery,

368 N.C. at 334-35, 777 S.E.2d at 278 (citation omitted). “A genuine issue of material

fact ‘is one that can be maintained by substantial evidence.’ ” Id. at 335, 777 S.E.2d

at 278 (quoting Dobson, 352 N.C. at 83, 530 S.E.2d at 835). “ ‘Substantial evidence is

such relevant evidence as a reasonable mind might accept as adequate to support a

conclusion’ and means ‘more than a scintilla or a permissible inference.’ ” Id. at 335,

777 S.E.2d at 278-79 (quoting Thompson v. Wake Cty. Bd. of Educ., 292 N.C. 406,

414, 233 S.E.2d 538, 544 (1977)).

      Plaintiff and defendants disagree about which party should have filed the 2006

and 2007 tax returns. Defendants produced documents allegedly demonstrating that

they provided plaintiff the completed 2006 and 2007 returns as well as personalized

instructions on how to file those returns. The documents contain handwritten notes

by defendants indicating that defendants hand-delivered the forms to plaintiff.

Defendants maintain that they only file their clients’ returns when specifically

requested to do so, as plaintiff did for the 2005 tax returns. Plaintiff, on the other

hand, stated in her deposition that she never received the completed returns or

instructions from defendants. Because defendants had filed her 2005 tax return and

plaintiff trusted that, as paid professionals, defendants would inform her when she

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                          HEAD V. GOULD KILLIAN CPA GRP.

                                   Opinion of the Court

needed to act, plaintiff believed defendants were likewise filing her tax returns for

2006 through 2009.

      Furthermore, Towson’s ongoing work for, and communication with, plaintiff

throughout the disputed period of representation until the tax returns were actually

filed raise genuine issues of material fact regarding the nature of the relationship

between plaintiff and Towson and the corresponding duty.          Thus, the claim for

fraudulent concealment survives summary judgment. The parties dispute the scope

of defendants’ contracted-for services and what constitutes defendants’ last act that

triggered the running of the statute of repose. Thus, summary judgment on the

application of the statute of repose under the circumstances presented here is

improper as well.

                                           II.

      “Fraud can . . . be broken into two categories, actual and constructive. Actual

fraud is the more common type, arising from arm’s length transactions.” Terry v.

Terry, 302 N.C. 77, 82, 273 S.E.2d 674, 677 (1981).         Arm’s-length transactions

encompass “dealings between two parties who are not related or not on close terms

and who are presumed to have roughly equal bargaining power; not involving a

confidential relationship.” [A]rm’s-length, Black’s Law Dictionary 116 (8th ed. 2007).

“Transaction” read broadly encompasses an “act or an instance of conducting business

or other dealings,” especially “the formation, performance, or discharge of a contract.”

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                                   Opinion of the Court

Transaction, id. at 1535. To successfully assert an allegation of actual fraud, the

plaintiff must plead five elements: “(1) False representation or concealment of a

material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4)

which does in fact deceive, (5) resulting in damage to the injured party.” Watts v.

Cumberland Cty. Hosp. Sys., Inc., 317 N.C. 110, 116-17, 343 S.E.2d 879, 884 (1986)

(quoting Terry, 302 N.C. at 83, 273 S.E.2d at 677). “Additionally, any reliance on the

allegedly false representations must be reasonable.” Forbis v. Neal, 361 N.C. 519,

527, 649 S.E.2d 382, 387 (2007) (citation omitted). Whether each of the elements of

actual fraud and reasonable reliance are met are ordinarily questions for the jury

“unless the facts are so clear that they support only one conclusion.” See id. at 527,

649 S.E.2d at 387 (citation omitted).

      “Constructive fraud arises where a confidential or fiduciary relationship exists,

and its proof is less ‘exacting’ than that required for actual fraud.” Watts, 317 N.C.

at 115-16, 343 S.E.2d at 884 (quoting Terry, 302 N.C. at 83, 273 S.E.2d at 677). “When

a fiduciary relation exists between parties to a transaction, equity raises a

presumption of fraud when the superior party obtains a possible benefit.” Id. at 116,

343 S.E.2d at 884 (citation omitted). To assert a cause of action for constructive fraud,

the plaintiff must allege facts and circumstances “(1) which created the relation of

trust and confidence, and (2) led up to and surrounded the consummation of the

transaction in which defendant is alleged to have taken advantage of his position of

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                                   Opinion of the Court

trust to the hurt of plaintiff.” Rhodes v. Jones, 232 N.C. 547, 549, 61 S.E.2d 725, 726

(1950).

          “Though difficult to define in precise terms, a fiduciary relationship is

generally described as arising when ‘there has been a special confidence reposed in

one who in equity and good conscience is bound to act in good faith and with due

regard to the interests of the one reposing confidence.’ ” Dallaire v. Bank of Am., 367

N.C. 363, 367, 760 S.E.2d 263, 266 (2014) (quoting Green v. Freeman, 367 N.C. 136,

141, 749 S.E.2d 262, 268 (2013) (citations omitted)). All fiduciary relationships are

characterized by “a heightened level of trust and the duty of the fiduciary to act in

the best interests of the other party.” Dallaire, 367 N.C. at 367, 760 S.E.2d at 266.

Specifically, a fiduciary relationship arises whenever “there is confidence reposed on

one side[ ], and resulting domination and influence on the other.” Abbitt v. Gregory,

201 N.C. 577, 598, 160 S.E. 896, 906 (1931) (quoting 25 C.J. Fiduciary § 9, at 1119

(1921)).

      Here plaintiff’s evidence, viewed in the light most favorable to plaintiff, raises

genuine issues of material fact regarding the fraudulent concealment claim based on

theories of both actual and constructive fraud. The record is replete with evidence

that indicates an ongoing professional relationship between plaintiff and defendants

until the tax returns were actually filed in September and October 2012. Despite the

continued requests and inquiries from plaintiff and Roddy, defendants failed to

provide the completed 2006 or 2007 tax returns for a year. Even after plaintiff

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                          HEAD V. GOULD KILLIAN CPA GRP.

                                  Opinion of the Court

notified Towson of her intent to change accountants, at Towson’s request, plaintiff

and Towson proceeded as if the relationship were unchanged regarding the disputed

tax returns. Significantly, Towson electronically filed plaintiff’s 2010 federal return

on 21 November 2011, well after 27 September 2011 when plaintiff informed him she

was leaving the accounting firm. Towson even requested that plaintiff execute a

power of attorney to facilitate the continued representation, which she did.

Furthermore, at Towson’s request, plaintiff signed signature pages for the 2006 and

2007 tax returns so Towson could file them. Moreover, for months, Towson engaged

in communications with the IRS on plaintiff’s behalf, but falsely represented to

plaintiff and Roddy the nature, frequency, and content of those conversations. Yet

throughout these communications, Towson never informed plaintiff that the 2006 and

2007 tax returns were never filed, maintaining until the end that IRS processing

errors caused the problems. Plaintiff continued to place trust in Towson to work with

the IRS on her behalf to resolve the problems. Absent these misrepresentations,

plaintiff may have been able to resolve the failure to file the returns sooner and

without injury.

      Taking the facts in the light most favorable to her, plaintiff has presented

adequate evidence of both actual and constructive fraud to survive summary

judgment. Plaintiff had an ongoing professional relationship with defendant related

to the preparation and filing of her delinquent tax returns. Defendants knowingly

misrepresented the status of the returns and negotiations with the IRS. The evidence

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                                  Opinion of the Court

could support a heightened relationship of trust needed for constructive fraud. At a

minimum, even if the parties’ dealings were determined to be at “arm’s-length,”

plaintiff has presented evidence to support her actual fraud claim. Her evidence

shows she reasonably relied on Towson to perform and complete his professional

services. Thus, taking the evidence in the light most favorable to the nonmoving

party, genuine issues of material fact exist. Because plaintiff’s claim for fraudulent

concealment survives summary judgment so does her claim for punitive damages.

Therefore, we reverse the decision of the Court of Appeals affirming the trial court’s

grant of summary judgment to defendants on plaintiff’s claims for fraudulent

concealment and punitive damages.

                                          III.

      We next consider whether the statute of repose bars plaintiff’s professional

negligence claim. We have consistently recognized that a party must initiate an

action within the time frame designated by a statute of repose. E.g., Hargett v.

Holland, 337 N.C. 651, 653, 447 S.E.2d 784, 786 (1994).           “Unlike statutes of

limitations, which run from the time a cause of action accrues, ‘[s]tatutes of repose

. . . create time limitations which are not measured from the date of injury.’ ” Id. at

654, 447 S.E.2d at 787 (alterations in original) (quoting Trs. of Rowan Tech. Coll. v.

J. Hyatt Hammond Assocs., 313 N.C. 230, 234 n.3, 328 S.E.2d 274, 277 n.3 (1985));

accord Christie v. Hartley Constr., Inc., 367 N.C. 534, 539, 766 S.E.2d 283, 287 (2014)

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                          HEAD V. GOULD KILLIAN CPA GRP.

                                       Opinion of the Court

(“The time of the occurrence or discovery of the plaintiff’s injury is not a factor in the

operation of a statute of repose.”).

      A statute of repose establishes “a condition precedent” which must be satisfied

“for a cause of action to be recognized. If the action is not brought within the specified

period, the plaintiff ‘literally has no cause of action. The harm that has been done is

. . . a wrong for which the law affords no redress.’ ” Hargett, 337 N.C. at 655, 447

S.E.2d at 787 (quoting Boudreau v. Baughman, 322 N.C. 331, 340-41, 368 S.E.2d 849,

857 (1988) (quoting Rosenberg v. Town of North Bergen, 61 N.J. 190, 199, 293 A.2d

662, 667 (1972))). “Thus, the repose serves as an unyielding and absolute barrier that

prevents a plaintiff’s right of action even before his cause of action may accrue . . . .”

Hargett, 337 N.C. at 655, 447 S.E.2d at 788 (quoting Black v. Littlejohn, 312 N.C. 626,

633, 325 S.E.2d 469, 475 (1985)). “The plaintiff has the burden of proving that a

statute of repose does not defeat the claim.” Christie, 367 N.C. at 539, 766 S.E.2d at

287 (citing Hargett, 337 N.C. at 654, 447 S.E.2d at 787).

      For professional negligence claims, the statute of repose begins running at “the

last act of the defendant giving rise to the cause of action.” N.C.G.S. § 1-15(c) (2017).

To determine when the last act occurred, we consider the contractual relationship

between the parties and when the contracted-for services were completed.              See

Hargett, 337 N.C. at 658, 447 S.E.2d at 789 (“[T]he contractual arrangement between

attorney and client . . . determine[s] the extent of the attorney’s duty to the client and

the end of the attorney’s professional obligation.”). Compare id. at 655, 657-58, 447

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                                   Opinion of the Court

S.E.2d at 788-89 (Attorney’s contracted-for duty involved simply preparing and

supervising the execution of a will.), with Sunbow Indus., Inc. v. London, 58 N.C.

App. 751, 753, 294 S.E.2d 409, 410, disc. rev. denied, 307 N.C. 272, 299 S.E.2d 219

(1982) (Attorney’s contracted-for services imposed a duty to represent the plaintiff

during closing and a continuing duty to perfect plaintiff’s security interest by filing

the financing statement.).

      Here plaintiff presented substantial evidence raising a genuine issue of

material fact regarding the scope of the parties’ contractual relationship and when

the corresponding last act occurred.      Viewed in the light most favorable to the

nonmoving party, the parties’ agreement included both preparing and filing plaintiff’s

tax returns and negotiations with the IRS. Viewing the evidence of the contracted-

for services in the light most favorable to plaintiff, defendants’ last act did not occur

until September 2012 when Towson filed the 2006 and 2007 returns. Additionally,

plaintiff presented substantial evidence that defendants did not even prepare or

complete the 2006 and 2007 tax returns until defendants filed them. Thus, because

plaintiff presented substantial evidence of genuine issues of material fact regarding

when the statute of repose began to run, plaintiff’s professional negligence claim

survives summary judgment, and we affirm the holding of the Court of Appeals on

that issue.

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                                  Opinion of the Court

                                          IV.

      We therefore conclude that genuine issues of material fact exist regarding the

fraudulent concealment claim and the accompanying punitive damages claim, as well

as the triggering event for the running of the statute of repose, and that the trial

court erred in granting defendants’ motion for partial summary judgment.

Accordingly, the decision of the Court of Appeals is reversed in part and affirmed in

part, and this case is remanded to that court for further remand to the trial court for

proceedings consistent with this opinion.

      AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

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                           HEAD V. GOULD KILLIAN CPA GRP.

                     Beasley, J., concurring in part and dissenting in part

      Justice BEASLEY concurring in part and dissenting in part.

      I agree with the holding of the majority that there are genuine issues of

material fact regarding (1) when plaintiff’s professional negligence claim accrued

under the statute of repose and (2) plaintiff’s fraudulent concealment claim under a

theory of actual fraud. Because plaintiff failed to plead a constructive fraud theory

supporting her claim for fraudulent concealment in her complaint, however, I would

hold that plaintiff is procedurally barred from asserting a constructive fraud theory

on remand from this Court.

      While North Carolina is a “notice pleading” jurisdiction, requiring generally

that complaint allegations provide a “short and plain statement of the claim

sufficiently particular to give the court and the parties notice of the transactions,

occurrences, or series of transactions or occurrences, intended to be proved showing

that the pleader is entitled to relief,” N.C.G.S. § 1A-1, Rule 8(a)(1) (2017), plaintiff’s

allegations were insufficient to put defendants on notice of a constructive fraud

theory supporting plaintiff’s fraudulent concealment claim. Pleading standards for

fraud claims under North Carolina law are even more exacting. See id. Rule 9(b)

(2017) (requiring plaintiffs asserting fraud claims to plead “the circumstances

constituting fraud . . . with particularity”). As the majority recognizes, “[t]o assert a

cause of action for constructive fraud, the plaintiff must allege facts and

circumstances ‘(1) which created the relation of trust and confidence, and (2) led up

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                           HEAD V. GOULD KILLIAN CPA GRP.

                     Beasley, J., concurring in part and dissenting in part

to and surrounded the consummation of the transaction in which defendant is

alleged to have taken advantage of his position of trust to the hurt of plaintiff.’ ”

Rhodes v. Jones, 232 N.C. 547, 549, 61 S.E.2d 725, 726 (1950). Here, plaintiff failed

to plead facts with or without particularity supporting the existence of a

relationship of trust and confidence between plaintiff and defendants: she did not

plead the existence of a fiduciary relationship, or that she placed any special trust

or confidence in defendants beyond that which any client places in his or her

accountant, or that defendants owed her an independent duty to disclose that her

returns were not filed. Instead, plaintiff pleaded that defendant Towson “concealed

the fact that [her] 2006 and 2007 federal tax returns had not been filed with the

IRS,” that the “concealment was reasonably calculated to deceive” and “made with

the intent to deceive,” that she actually was deceived, and that, consequently, she

was damaged by defendants’ concealment. These are the classic elements of an

actual fraud theory for fraudulent concealment, but they fall short of putting

defendants on notice that plaintiff was claiming a constructive fraud theory.

      Thus, when defendants moved for summary judgment on the plaintiff’s claim

for fraudulent concealment, plaintiff had no constructive fraud theory properly

before the trial court. Despite defendants’ repeated efforts to extinguish this would-

be claim on grounds of plaintiff’s procedural default, both in their arguments before

the trial court in response to plaintiff’s summary judgment arguments and in their

briefs to the Court of Appeals and this Court, the majority erroneously allows

                                              -2-
                          HEAD V. GOULD KILLIAN CPA GRP.

                    Beasley, J., concurring in part and dissenting in part

plaintiff to raise a new, unpleaded cause of action in response to defendant’s

summary judgment motion. Although I concur with the remainder of the majority’s

reasoning and holding, I dissent from the majority’s holding that plaintiff may

proceed on a constructive fraud theory of fraudulent concealment on remand.

                                             -3-