Court Opinion

ID: 7806865
Source: CourtListenerOpinion
Date Created: 2022-09-07 13:02:48.620395+00
Date Added: 2024-06-11T16:30:19.083008
License: Public Domain

NOTICE: This opinion is subject to modification resulting from motions for reconsideration under Supreme Court
  Rule 27, the Court’s reconsideration, and editorial revisions by the Reporter of Decisions. The version of the
  opinion published in the Advance Sheets for the Georgia Reports, designated as the “Final Copy,” will replace any
  prior version on the Court’s website and docket. A bound volume of the Georgia Reports will contain the final and
  official text of the opinion.

In the Supreme Court of Georgia

                                                   Decided: September 7, 2022

           S21G1250. COE et al. v. PROSKAUER ROSE, LLP.

       MCMILLIAN, Justice.

       In 2002, Douglas Coe, Jacqueline Coe, and GFLIRB, LLC

(collectively the “Coes”) were involved in the sale of a company in

which they held a substantial interest, and their accountants, BDO

Seidman, LLP (“BDO”), 1 advised them of a proposed tax strategy in

which the Coes could invest in distressed debt from a foreign

company in order to offset their tax obligations. In connection with

the proposed tax strategy, BDO advised the Coes to obtain a legal

opinion from an independent law firm, Proskauer Rose LLP

(“Proskauer”). The Coes followed BDO’s advice, obtained a legal

opinion from Proskauer, and claimed losses on their tax returns as

       1BDO Seidman, LLP and its partners Kurt Huntzinger, Michael Whitacre,
Denis Field, Charles Bee, Adrian Dicker, Robert Greisman, and Michael Kerekes are
referred to collectively as “BDO.”
a result. But in 2005, the Internal Revenue Service (“IRS”) initiated

an audit, which ultimately led to a settlement in 2012.

     After settling with the IRS, the Coes filed suit against

Proskauer in December 2015, asserting legal malpractice, breach of

fiduciary duty, fraud, negligent misrepresentation, and other

claims. After limited discovery on whether the statute of limitation

barred the Coes’ claims, the trial court concluded that it did and

granted summary judgment in favor of Proskauer, and the Court of

Appeals affirmed. See Coe v. Proskauer Rose LLP, 360 Ga. App. 68

(860 SE2d 630) (2021). We granted the Coes’ petition for certiorari

to address whether that holding was correct and conclude that it was

not. 2 For the reasons set forth below, we reverse the judgment of the

Court of Appeals and remand the case with instructions to reverse

     2   We are aided by amicus curiae briefs filed by (1) Georgia-based
accounting firms Amici Aprio, LLP; Bennett Thrasher, LLP; Frazier & Deeter,
LLC; Hancock Askew & Co.; Mauldin & Jenkins LLC; and Nichols Cauley &
Associates, LLC and (2) Georgia law firms Alston & Bird LLP; Coleman Talley
LLP; DLA Piper (US) LLP; Drew Eckl & Farnham, LLP; Fisher & Phillips LLP;
FordHarrison LLP; Hawkins Parnell & Young LLP; Hunter, Maclean, Exley &
Dunn, P.C.; King & Spalding LLP; Maynard Cooper & Gale LLP; Miller &
Martin PLLC; McGuireWoods LLP; and Morris, Manning & Martin LLP
(joined by seven former presidents of the State Bar of Georgia).

                                    2
the trial court’s order and remand the case for further proceedings

consistent with this opinion.

      1. Background and Procedural History.

      Construed in the light most favorable to the Coes as the non-

moving party on summary judgment, 3 the record shows that in

October 2001, the Coes were approached by BDO regarding a

proposed tax strategy in connection with the sale of a company in

which the Coes held a substantial interest. BDO had been Douglas

Coe’s accounting firm since 1985, and the Coes “placed a tremendous

amount of trust and faith in [it].”

      BDO advised the Coes that adopting a distressed-debt strategy

(the “Strategy”) would result in a higher-than-average return on

their investment while providing the Coes with legal tax benefits

that they could use to offset the capital gains tax from the sale of the

company. The Strategy involved investments in distressed debt with

      3 See Doctors Hosp. of Augusta v. Alicea, 299 Ga. 315, 315 (1) (788 SE2d
392) (2016) (when reviewing a motion for summary judgment, courts “construe
the evidence most favorably towards the nonmoving party, who is given the
benefit of all reasonable doubts and possible inferences” (citation omitted)).

                                      3
Gramercy, 4 an experienced investment advisory company. BDO

assured the Coes that the Strategy was legal and would be

supported by a legal opinion letter (the “Opinion”) from Proskauer,

an independent law firm, and that the Opinion would satisfy the IRS

that the Strategy complied with all applicable tax laws. BDO and

Gramercy emphasized that the Opinion would allow the Coes to

prevail in the event of an IRS audit and would provide protection

from IRS penalties against the Coes.5 Following BDO’s and

Gramercy’s assurances about the Opinion and Proskauer’s expertise

in tax law and the Strategy, the Coes agreed to engage Proskauer to

issue the Opinion.

      In its March 22, 2002 engagement letter, Proskauer stated that

it was “asked to represent [the Coes] in connection with rendering

      4 Gramercy Advisors LLC; Gramercy Financial Services, LLC; Gramercy
Capital Markets Recovery Fund, LLC; Gramercy Emerging Markets Recovery Fund,
LLC; KSHER AA, LLC; Marc Helie; and Jay Johnston are collectively referred to
“Gramercy.”
      5  The parties agree that a taxpayer’s reliance on an independent legal
opinion is a critical element of a “reasonable cause and good faith” defense to
IRS penalties. See Neonatology Assoc. v. Commr., 115 T.C. 43, 98 (7) (2000),
aff’d, 299 F3d 221 (3d Cir. 2002) (“The good faith reliance on the advice of an
independent, competent professional as to the tax treatment of an item may
meet this requirement.”).
                                      4
tax advice in connection with certain investment transactions that

[the Coes] conducted in 2001” and that, in connection with the

investment transactions, Proskauer would charge $30,000, payable

upon execution of the engagement letter. Also, the letter provided:

     We have advised you that we also represent BDO
     Seidman, LLP and Gramercy Advisors and their affiliated
     entities in connection with various matters. You
     acknowledged and expressly agreed that we would be free
     to continue to represent BDO Seidman, LLP and
     Gramercy Advisors and you waived any conflict resulting
     from or attributable to such representation.[6]

     On April 15, 2002, Proskauer issued the Opinion to the Coes.

In the Opinion, Proskauer first outlined the various entities

involved in the Strategy, the representations made by those entities,

and the agreements documenting the various transactions.

Proskauer then rendered a number of opinions on discrete issues

regarding the Strategy, ultimately concluding that there was a

     6   Douglas Coe averred that other than a brief conversation with Ira
Akselrad at Proskauer, in which Akselrad asked Coe to sign the engagement
letter, he had no other conversations with anyone from Proskauer and that
Akselrad did not provide any details about Proskauer’s relationship with BDO
and Gramercy.

                                     5
“greater than fifty percent likelihood that the tax treatment of the

[Strategy] would be upheld if challenged by the [IRS]” and that the

investor “should not be subject to a penalty” under multiple code

sections. 7 The Opinion also provided a substantial, over-70-page

legal analysis supporting the various opinions provided therein.

Relying on the Opinion, the Coes then included the losses generated

by the Strategy on their tax return for the 2001 tax year.

        The IRS initiated an audit of the Coes’ 2001 tax return on

January 11, 2005, and the Coes retained the law firm of

Chamberlain Hrdlicka (“Chamberlain”) 8 to represent them during

the audit. Eventually, the Coes entered into a settlement agreement

with the IRS in January 2012. During that time period, a number of

news reports publicized the IRS’s investigations of similar tax

strategies. In 2005, a United States Senate subcommittee report

        7   The same day, BDO issued an almost identical opinion letter to the
Coes.
       Proskauer characterizes Chamberlain as “sophisticated tax counsel.”
        8

Douglas Coe averred that “[i]t was not within the scope of Chamberlain
Hrdlicka’s agency relationship with [Coe] to apprise [Coe] of all publicly
available facts that might bear upon claims against my former professional
advisors.” No other evidence of the scope of Chamberlain’s services, such as an
engagement letter, appears in the record.
                                        6
concluded that tax avoidance transactions like the Strategy

“required close collaboration between accounting firms, law firms,

investment advisory firms, and banks,” and in 2008, an IRS notice

identified similar distressed-debt transactions as improper tax

avoidance strategies subject to penalties. Also, beginning in 2009,

several BDO partners entered guilty pleas to counts of conspiracy to

defraud the United States and to tax evasion in connection with tax

shelters similar to the Strategy that they promoted to other clients.

In June 2012, BDO entered into a deferred-prosecution agreement

with the United States Department of Justice relating to the

fraudulent marketing and selling of illegal tax shelters.9

     After their settlement with the IRS, the Coes retained separate

counsel, Loewinsohn Flegle Deary Simon LLP (“Deary”), to pursue

their claims against Proskauer. In December 2015, the Coes filed

suit against Proskauer, asserting legal malpractice, breach of

fiduciary duty, negligent misrepresentation, fraud, and other

     9Neither the BDO partners’ guilty pleas nor the deferred-prosecution
agreement specifically referenced Proskauer’s involvement.
                                   7
claims. In support of their claims, the Coes alleged that Proskauer

and BDO were not independent, and instead Proskauer, BDO, and

Gramercy jointly designed, promoted, and implemented the

Strategy as part of a conspiracy. 10 Specifically, they alleged that

Proskauer had an illegal business arrangement with BDO and

Gramercy, whereby BDO recommended that Proskauer provide

opinion letters to BDO’s clients in connection with the Strategy, and

that Proskauer knowingly allowed BDO to use their legal opinion

letters to market the Strategy to its clients. According to the Coes,

the Opinion was not tailored to their circumstances, but rather was

      10 In opposition to the motion for summary judgment, the Coes submitted
the affidavit of Charles Bee, a former BDO Vice-Chairman, who had pleaded
guilty to crimes arising out of BDO’s activities in designing and marketing
various tax shelters, including those involving options and distressed debt. As
to BDO’s relationship with Proskauer, Bee averred:

      During the time period that the BDO Tax Solutions Group was
      functioning, one of the law firms with whom the BDO Tax
      Solutions Group had a significant relationship was the Proskauer
      Rose law firm from New York; the lead attorney there on tax
      shelter matters was an attorney named Ira Akselrad. Proskauer
      was involved both in writing opinion letters for clients of BDO and
      also in providing direct legal advice to BDO regarding these
      shelters. I would characterize Proskauer as one of the “go to” law
      firms that BDO used and on whom it relied for advice about these
      transactions, including the distressed debt transactions that BDO
      promoted to its clients.
                                      8
a boilerplate opinion letter that was part of this pre-planned scheme.

And although Proskauer represented and advised the Coes that the

Strategy was a legal investment strategy, Proskauer had knowledge

that federal authorities were investigating the legality of similar tax

shelters and that the IRS was auditing and disallowing similar tax

strategies.

     Furthermore, the Coes alleged that there was an undisclosed

fee-splitting arrangement between Proskauer, BDO, and Gramercy

wherein they would split substantial fees based on the size of the

distressed debt rather than an hourly rate. Proskauer never

informed the Coes that Proskauer represented and advised BDO on

the Strategy specifically. However, in the spring of 2002, as BDO’s

counsel, Proskauer advised BDO that any taxpayer claiming

Strategy losses on a tax return would face a 100% chance of an IRS

audit. But Proskauer never informed the Coes that it represented

BDO on the Strategy, that it gave BDO materially different advice

regarding the Coes’ chance of an IRS audit, or that the IRS

considered the Strategy an illegal tax shelter. Despite this

                                  9
knowledge, Proskauer maintained in its Opinion that the Coes

“should not” incur IRS penalties.

      The Coes have asserted that they had no knowledge that

Proskauer was not independent from BDO; that Proskauer was

participating in any improper conduct; that certain BDO partners

were convicted in 2009; of news coverage of the same or similar tax

strategies as the Strategy; or of the litigation against accounting and

law firms regarding the same or similar transactions as the

Strategy.

      Proskauer filed a motion to dismiss the complaint on several

grounds, including that the Coes’ claims were barred by the

applicable statute of limitation because they were on notice of their

claims no later than February 13, 2009, when the first of four BDO

partners pleaded guilty to crimes associated with similar tax

avoidance strategies and that tolling based on alleged fraudulent

concealment did not apply.11 After the Coes responded to the motion

      11OCGA § 9-3-96 provides: “If the defendant or those under whom he
claims are guilty of a fraud by which the plaintiff has been debarred or deterred

                                       10
to dismiss, the trial judge converted the motion into a motion for

summary judgment and ordered the parties to simultaneously

submit evidence pertinent to the motion, which was subsequently

supplemented following discovery limited to the issues raised in the

motion to dismiss.

      Following a hearing, the court granted Proskauer’s motion for

summary judgment. The trial court reasoned that the four-year

statute of limitation for each of the Coes’ claims began to run in

2002, when the Coes undertook the underlying Strategy or

alternatively in 2009, when the first of the BDO partners entered

his criminal guilty pleas. As for tolling under OCGA § 9-3-96, the

trial court concluded that it did not apply because the fraud alleged

to have tolled their claims was the same fraud about which the Coes

were suing and because failure to disclose one’s alleged malpractice

is not fraud.

      The Coes appealed, arguing that the statutes of limitation had

from bringing an action, the period of limitation shall run only from the time
of the plaintiff’s discovery of the fraud.”
                                     11
not begun to run on their claims and that, alternatively, the trial

court erred in finding that the applicable statutes of limitation for

their causes of action were not tolled by Proskauer’s fraud. The

Court of Appeals affirmed the trial court’s grant of summary

judgment to Proskauer but on somewhat different grounds. The

Court of Appeals analyzed the legal malpractice, fraud, negligent

misrepresentation, and breach of fiduciary duty claims jointly,

concluding that a four-year statute of limitation applied to those

claims and that they accrued in 2002 when the alleged breach and

malpractice occurred. As for tolling, the Court of Appeals concluded

that the Coes had failed to meet their burden of showing that the

statute of limitation was tolled because the Coes, exercising

ordinary care, should have been on notice of their claims based on

news reports about similar tax shelters promoted by BDO, which

had been determined to be illegal, and that the Coes were aware

through the engagement letter that Proskauer was doing some work

for BDO. See Coe, 360 Ga. App. at 73 (2).

     We granted the Coes’ petition for certiorari and posed the

                                 12
following questions:

     1. Were the [Coes]’ claims of fraud and negligent
     misrepresentation barred by the four year statute of
     limitations period applicable to legal malpractice claims?
     2. Did the [Coes] fail, as a matter of law, to exercise
     ordinary care to discover [Proskauer’s] allegedly
     fraudulent acts?

     2. Statutes of Limitation Applicable to Fraud and Negligent
        Misrepresentation Claims.

     It is well settled that the statute of limitation for fraud and

negligent misrepresentation claims is found in OCGA § 9-3-31,12

while the statute of limitation for legal malpractice claims is set out

in OCGA § 9-3-25. 13 See Armstrong v. Cuffie, 311 Ga. 791, 793 (1)

n.4 (860 SE2d 504) (2021) (“It has long been the law in this state

that a cause of action for legal malpractice, alleging negligence or

unskillfulness, is subject to the four-year statute of limitation in

OCGA § 9-3-25.” (citation and punctuation omitted)); Anthony v.

     12 OCGA § 9-3-31 provides: “Actions for injuries to personalty shall be
brought within four years after the right of action accrues.”
     13 OCGA § 9-3-25 provides in relevant part: “All actions upon open

account, or for the breach of any contract not under the hand of the party
sought to be charged, or upon any implied promise or undertaking shall be
brought within four years after the right of action accrues.”
                                    13
American Gen. Financial Svcs., 287 Ga. 448, 461 (4) (697 SE2d 166)

(2010) (applying four-year statute of limitation provided in OCGA §

9-3-31 to plaintiffs’ claim for fraud arising from economic loss);

Hardaway Co. v. Parsons, Brinckerhoff, Quade & Douglas, 267 Ga.

424, 426 (1) (479 SE2d 727) (1997) (applying four-year limitation

period for negligent misrepresentation action claiming injury to

personalty as set forth in OCGA § 9-3-31).

      Here, the Court of Appeals focused its analysis on the Coes’

legal malpractice claim, determining that the limitations period

began to run “from the date of the breach of the duty and not from

the time when the extent of the resulting injury is ascertained nor

from the date of the client’s discovery of the error.” Coe, 360 Ga. App.

at 71 (1). In so doing, the court rejected the Coes’ assertion that

malpractice claims involving pending proceedings such as the IRS

audit do not accrue until the termination of the administrative

proceeding. 14 See id. at 72.

       This issue does not fall within the scope of the questions that we posed
      14

on granting the Coes’ petition for certiorari. Therefore, we decline to address

                                      14
        However, the Court of Appeals erred by failing to separately

analyze the Coes’ fraud and negligent misrepresentation claims.

Although both statutes of limitation include the same language –

that the relevant action must be brought within four years “after the

right of action accrues” – fraud, negligent misrepresentation, and

legal    malpractice    claims    each    requires    different   elements.

Therefore, even though the Coes’ claims arose from the same series

of transactions with BDO and Proskauer, each claim should have

been analyzed separately to determine when the right of action

accrued for that particular claim. See Daniel v. Ga. R. Bank & Trust

Co., 255 Ga. 29, 30 (334 SE2d 659) (1985) (“Various causes of action

in tort arising from the same set of facts may commence running at

different times depending on the nature of the several causes of

action involved, and the fact that the statute has run as to one does

not necessarily mean that the statute has run as to all.”). See also

Green v. White, 229 Ga. App. 776 (494 SE2d 681) (1997) (separately

the Coes’ arguments to this Court that their malpractice claims did not accrue
until the Coes paid penalties to the IRS. See Supreme Court Rule 45.
                                     15
analyzing the timeliness of a legal malpractice and fraud claims

based on the same representation).

     Turning to the Coes’ claims as alleged in their second amended

complaint, 15 the essential elements for a claim of negligent

misrepresentation are:

     (1) the defendant’s negligent supply of false information
     to foreseeable persons, known or unknown; (2) such
     persons’ reasonable reliance upon that false information;
     and (3) economic injury proximately resulting from such
     reliance.

Hardaway, 267 Ga. at 426 (1) (citation omitted). “Because the

resulting loss must necessarily occur after the negligent act and

reliance thereon, the statute of limitation runs from that point.” Id.

at 427 (1) (emphasis supplied). Accordingly, until economic loss is

actually sustained by a plaintiff, he does not have a cause of action,

and the statute of limitation “cannot commence until such loss is

sustained with certainty.” Id. at 427-28 (1) (acknowledging that

     15  In moving for summary judgment on the issue of when these claims
accrued, Proskauer focused its arguments on when the Coes suffered damages
and has not disputed the merits of the Coes’ claims. Thus, we treat these
allegations as undisputed for purposes of this analysis.
                                   16
“[w]ith the benefit of hindsight, we can see now that at the time [the

plaintiff] signed the contract, it may have been foreseeable, or even

likely, that it would lose money due to delays caused by apparent

errors in the initial designs,” but holding nonetheless that “the

statute of limitation begins to run when the plaintiff suffers

pecuniary loss with certainty, and not as a matter of pure

speculation” (emphasis in original)).16

     16  In Count III of their second amended complaint, the Coes alleged that
during the course of its representation, Proskauer “negligently made numerous
affirmative representations that were improper, incorrect and/or false;
negligently omitted material facts; and negligently gave numerous improper,
inaccurate, and wrong recommendations, advice, instructions, and opinions to
[the Coes.]” The Coes further alleged that they reasonably relied on
Proskauer’s representations that Proskauer either knew or reasonably should
have known were improper, inaccurate, or wrong. And the Coes alleged that,
but for this reliance, they would not have failed to pursue amnesty programs
that the IRS was offering for participants in similar tax shelters.
      The Coes identified the following injuries proximately caused by
Proskauer’s alleged negligent misrepresentation:

      (1) they paid substantial fees/monies to [Proskauer] and the
      Strategy Participants, (2) they unnecessarily purchased the
      [Strategy] and made other investments to effectuate the
      [Strategy], (3) they made additional investments in Gramercy’s
      investment fund as part of the [Strategy], (4) they have been
      assessed and owe substantial back-taxes, interest and penalties
      and will be assessed additional such amounts, (5) they paid
      substantial money/fees to lawyers and accountants and incurred
      other expenses in connection with [the audit], (6) they have and
      will continue to incur substantial additional costs in hiring new

                                     17
     “The tort of fraud has five elements: a false representation by

a defendant, scienter, intention to induce the plaintiff to act or

refrain from acting, justifiable reliance by plaintiff, and damage to

plaintiff.” Bowden v. The Medical Center, Inc., 309 Ga. 188, 199 (2)

(a) n.10 (845 SE2d 555) (2020) (citation and punctuation omitted).

See also Holmes v. Grubman, 286 Ga. 636, 640-41 (1) (691 SE2d 196)

(2010) (explaining that “the same principles apply to both fraud and

negligent misrepresentation cases and that the only real distinction

between [the two claims] is the absence of the element of knowledge

of the falsity of the information disclosed” (citation and punctuation

omitted)). As with negligent misrepresentation, “[t]o establish a

cause of action for fraud, a plaintiff must show that actual damages,

not simply nominal damages, flowed from the fraud alleged.” Glynn

County Fed. Employees Credit Union v. Peagler, 256 Ga. 342, 344 (2)

     tax and legal advisors to rectify the situation, [and] (7) . . . they lost
     the opportunity to avail themselves [of] other legitimate tax-
     savings opportunities.

                                        18
(348 SE2d 628) (1986) (emphasis supplied).17

     17 In Count IV of their second amended complaint, the Coes alleged that
Proskauer “made numerous knowingly false affirmative representations and
intentionally omitted numerous material facts to [the Coes,]” reciting 78
paragraphs enumerating the alleged fraud, including:

     (3) Failing to disclose in the [Opinion] or otherwise the actual roles
     and relationships of the Strategy Participants (e.g., the conspiracy)
     in the . . . Strategy;
     ...
     (4) Failing to disclose in the [Opinion] or otherwise that Proskauer
     . . . and the Strategy Participants were splitting and/or sharing
     fees;
     ...
     (8) Failing to advise [the Coes] in the [Opinion] or otherwise that
     the [Opinion] was not an “independent” legal opinion from an
     “independent” law firm;
     ...
     (10) Failing to advise [the Coes] that the [Opinion] could not be
     relied upon by [the Coes] to protect [the Coes] from incurring
     penalties if audited;
     ...
     (18) Failing to advise [the Coes] that Proskauer . . . had already
     prepared a “form” opinion letter approving the . . . Strategy and
     needed to only fill in several blanks for each of the many clients to
     which it rendered such opinion letter;
     ...
     (42) Failing to advise [the Coes] in the [Opinion] or otherwise that
     the purchase, sale, and/or exchange of the distressed debt
     investments were not arms-length transactions;
     ...
     (46) Failing to advise [the Coes] in the [Opinion] or otherwise that
     Gramercy would not perform collection efforts on the distressed
     debt investments;
     ...
     (53) Failing to advise [the Coes] that the purpose of the [Opinion]
     was to induce clients to purchase tax shelters; [and]

                                      19
      Thus, to maintain their negligent misrepresentation and fraud

claims, the Coes were required to have sustained actual damages

with certainty. See Hardaway, 267 Ga. at 427-28 (1); Peagler, 256

Ga. at 344 (2). On appeal, the Coes argue that they did not suffer an

actual injury until the IRS rejected Proskauer’s faulty tax advice

and imposed penalties in 2012 because the parties had contemplated

that the Coes would incur fees for the Opinion and potential audit

expenses, but not that they would incur IRS penalties. However, this

argument is belied by the Coes’ complaint. The damages that the

Coes alleged with respect to their negligent misrepresentation and

fraud claims include the fees that they paid in reliance on what the

     ...
     (57) Failing to advise [the Coes] that Proskauer Rose and its co-
     conspirators unlawfully, willfully, and knowingly devised and
     intended to devise a scheme and artifice to defraud, and for
     obtaining money and property by means of false and fraudulent
     pretenses, representations, and promises, to wit, a scheme to
     defraud the IRS through the design, marketing, and
     implementation of fraudulent tax shelter transactions[.]

      The Coes identified the same injuries proximately caused by Proskauer’s
alleged fraud as they did for their negligent misrepresentation claim.

                                     20
Coes   now     contend    are   misrepresentations     and    material

nondisclosures in the Opinion and engagement letter, and it is

undisputed that the Coes paid Proskauer’s fees. We recognize that,

oftentimes, it is only with the benefit of hindsight that a plaintiff is

able to ascertain that he has not received the benefit of his bargain

as a result of fraud or negligent misrepresentation. Nonetheless,

because the Coes could have maintained their claims for negligent

misrepresentation and fraud at the point when they relied on those

representations and paid those fees in 2002, their claims for

negligent misrepresentation and fraud began to accrue at that time.

See Hardaway, 267 Ga. at 426 (1); Peagler, 256 Ga. at 344 (2). That

the Coes also alleged additional, later economic damages arising

from Proskauer’s actions does not change the fact that the statutes

of limitation for their negligent misrepresentation and fraud claims

began to run on the date that they first could have successfully

maintained those actions. See Colormatch Exteriors v. Hickey, 275

Ga. 249, 251 (1) (569 SE2d 495) (2002) (“The true test to determine

when a cause of action accrues is to ascertain the time when the

                                  21
plaintiff could have first maintained his or her action to a successful

result.” (citation and punctuation omitted)).

     Proskauer argues that the Coes should not be able to

circumvent the malpractice limitation period by asserting fraud and

negligent misrepresentation claims where “the duties arose from the

same source (that is, the attorney-client relationship), were

allegedly breached by the same conduct, and allegedly caused the

same damages.” Anderson v. Jones, 323 Ga. App. 311, 318 (2) (745

SE2d 787) (2013). See Griffin v. Fowler, 260 Ga. App. 443, 450 (2)

(579 SE2d 848) (2003) (“[T]he damages flowing from [the plaintiff’s]

separate claim that [the defendant] fraudulently misrepresented his

expertise or experience to induce employment are no different from

the damages flowing from the alleged legal malpractice. Therefore .

. . there [would be] no separate cause of action for fraud apart from

the malpractice claim[.]”). As an initial matter, neither Anderson nor

Griffin involved a grant of summary judgment based on a statute of

limitation and are not applicable here, and Anderson addressed

overlapping breach of fiduciary duty and legal malpractice claims,

                                  22
which is not at issue in this appeal. However, to the extent that the

language in these cases can be construed to support that fraud and

negligent misrepresentation claims are always duplicative of legal

malpractice claims if based on the same facts and that those fraud

and negligent misrepresentation claims will fail on statute of

limitation grounds in the same way as the legal malpractice claim,

these cases are disapproved.18 See Daniel, 255 Ga. at 32 (explaining

that tort claims may have different elements and must be analyzed

separately to determine when each claim has accrued).

      3. Whether the Coes Failed to Exercise Reasonable Diligence as
         a Matter of Law.

      Having determined that the Coes’ fraud and negligent

misrepresentation claims accrued in 2002, more than four years

before the Coes filed their lawsuit in 2015, we must now turn to the

question of whether the Court of Appeals correctly determined that

      18 We note an additional case with similar language that is not cited by
Proskauer. See Stewart v. McDonald, 347 Ga. App. 40, 50 (3) (815 SE2d 665)
(2018) (“[The plaintiff’s] claims for damages for fraud and breach of fiduciary
duty are factually based upon [the defendant’s] breach of his fiduciary duties
to [the plaintiff] in the performance of his duties as a lawyer, so the claims are
duplicative of [the plaintiff’s] legal malpractice claim.”).
                                       23
the statutes of limitation for the Coes’ claims were not tolled because

“there was sufficient evidence that the [Coes], exercising ordinary

care, should have been on notice regarding the issues surrounding

the distressed debt strategy.” Coe, 360 Ga. App. at 73 (2).

     OCGA § 9-3-96 provides that when a defendant is “guilty of a

fraud by which the plaintiff has been debarred or deterred from

bringing an action, the period of limitation shall run only from the

time of the plaintiff’s discovery of the fraud.” As we recently

explained, in order to toll a limitation period under this statute, a

plaintiff must make three showings:

     first, that the defendant committed actual fraud; second,
     that the fraud concealed the cause of action from the
     plaintiff, such that the plaintiff was debarred or deterred
     from bringing an action; and third, that the plaintiff
     exercised reasonable diligence to discover his cause of
     action despite his failure to do so within the statute of
     limitation.

Doe v. St. Joseph’s Catholic Church, 313 Ga. 558, 561 (2) (870 SE2d

365) (2022) (citation and punctuation omitted).

     Proskauer does not dispute that the Coes carried their burden

to show fraud for purposes of summary judgment; thus, consistent

                                  24
with the second question posed in granting certiorari, our inquiry is

focused on the third requirement. 19 “Fraud will toll the limitation

period only until the fraud is discovered or by reasonable diligence

should have been discovered.” Doe, 313 Ga. at 568 (2) (citation and

punctuation omitted). “Reasonable diligence cannot be measured by

a subjective standard, but, rather, must be measured by the prudent

man standard, which is an objective one.” Id. (citation and

punctuation       omitted).      However,       “[w]here      a    confidential

relationship[ 20] exists, a plaintiff does not have to exercise the degree

      19  While Proskauer does not dispute that the Coes carried their burden
to show fraud, it does argue in the alternative that the Coes failed to establish
that Proskauer’s alleged fraud “debarred or deterred” them from discovering
their causes of action after they retained new counsel in 2005 because the Coes
were “no longer deterred from learning the true facts.” However, because this
issue is outside the scope of the questions posed in granting certiorari, we
decline to address it. See Supreme Court Rule 45.
       20 “A ‘confidential’ relationship exists ‘where one party is so situated as

to exercise a controlling influence over the will, conduct, and interest of
another, or where, from a similar relationship of mutual confidence, the law
requires the utmost good faith.’” Doe, 313 Ga. at 562 (2) (quoting OCGA § 23-
2-58). The parties do not dispute that a confidential relationship existed
between Proskauer and the Coes, at a minimum, during the period of time
when Proskauer was actively representing the Coes in drafting the Opinion.
However, after that point in time, the parties diverge in their views of the duty
Proskauer retained to the Coes and the concomitant degree of care that the
Coes were required to exercise. We need not parse this issue at this time
because, as we explain below, even assuming that Proskauer’s heightened duty

                                       25
of care to discover fraud that would otherwise be required, and a

defendant is under a heightened duty to reveal fraud where it is

known to exist.” Hunter, Maclean, Exley & Dunn, P.C. v. Frame, 269

Ga. 844, 848 (1) (507 SE2d 411) (1998). “Put another way, a

confidential relationship imposes a greater duty on a defendant to

reveal what should be revealed, and a lessened duty on the part of a

plaintiff to discover what should be discoverable through the

exercise of ordinary care.” Id.

      Also, in resolving this question, it is important to keep in mind

the procedural posture of this case – that we are reviewing the grant

of a motion for summary judgment. “On appeal from the grant of

summary judgment, we construe the evidence most favorably

towards the nonmoving party, who is given the benefit of all

reasonable doubts and possible inferences” and is “only required to

present evidence that raises a genuine issue of material fact.”

Nguyen v. Southwestern Emergency Physicians, 298 Ga. 75, 82 (3)

to the Coes expired upon release of the Opinion, genuine issues of material fact
exist as to whether the Coes exercised reasonable diligence to discover their
causes of action.
                                      26
(779 SE2d 334) (2015) (citation and punctuation omitted).

     With these principles in mind, we turn to Proskauer’s theories

as to why the Coes could have discovered their claims with

reasonable diligence no later than 2009. First, Proskauer argues

that as of March 2002, the Coes had actual notice that Proskauer

was not an independent law firm based on the information provided

in Proskauer’s engagement letter. Second, Proskauer argues that

the Coes had constructive knowledge by 2009 of Proskauer’s alleged

misrepresentations in the Opinion when it became “widely known”

that the IRS was pursuing entities involved in tax avoidance

schemes like the Strategy.

     As for the claims that Proskauer failed to disclose that it was

not an independent law firm, Douglas Coe submitted an affidavit

that he was unaware that Proskauer advised BDO on the Strategy

and thus was not an independent law firm. Moreover, the

engagement letter only vaguely referred to matters in which

Proskauer represented BDO and did not disclose Proskauer’s role in

crafting the Strategy and sharing in fees earned. And it is

                                27
undisputed that this failure to disclose was made during

Proskauer’s active representation of the Coes such that Proskauer

had a higher duty to disclose material facts. See Hunter, 269 Ga. at

848 (1). We fail to see why a person exercising reasonable diligence

would not be entitled to rely on the disclosure or lack thereof made

by his or her attorney even after the legal engagement was

completed, at least until other facts come to light that would cause

a reasonably diligent person to revisit the issue. Thus, a genuine

issue of material fact exists as to whether the Coes had actual

knowledge about Proskauer’s lack of independence, and we cannot

say that, as a matter of law, the Coes had knowledge that Proskauer

was not an independent law firm based solely on the language in the

engagement letter.

     As for its argument that the Coes had constructive notice of the

alleged misrepresentations and material omissions made in the

Opinion, Proskauer submitted an excerpt of 98 selected sources to

the trial court as evidence that the Coes should have been on notice

of their claims against Proskauer well before 2011. These sources

                                 28
included an episode of CBS 60 Minutes, two congressional reports,

and publications from various news outlets, which emphasized

BDO’s role and related claims against law firms arising from faulty

tax advice.

      Notably, only two of the articles specifically mentioned

Proskauer: one article in Crain’s New York Business and one article

in The New York Times, which stated that evidence of a coordinated

partnership between BDO and Proskauer was lacking. 21 We are not

persuaded by Proskauer’s characterization of this information,

involving highly complex investment and tax transactions, as so

“widely known” as to establish, as a matter of law, that the Coes, in

      21  See Tommy Fernandez, Tax Shelter Crackdown Hits Law Firms,
Crain’s N.Y. Bus. June 14, 2004, 2004 WLNR 1763012 (noting that tax shelter
litigator David Deary “says he will file suits against two other New York firms,
Proskauer Rose and Pryor Cashman Sherman & Flynn” based on their
marketing and selling of the illegal tax shelters); Lynnley Browning, U.S. is
Denied Most Papers Sought from Auditing Firm, N.Y. Times July 7, 2004,
https://www.nytimes.com/2004/07/07/business/us-is-denied-most-papers-
sought-from-auditing-firm.html (discussing a federal judge’s ruling that
“‘evidence of any such coordinated partnership between BDO Seidman and
[Proskauer] is lacking’” and the judge’s conclusion that “the evidence of
favorable opinion letters . . . ‘standing alone, are not enough for this court to
conclude that [Proskauer] and BDO were promoters’”).

                                       29
exercising reasonable diligence, should have discovered their claims

before 2011.22

      And there is no evidence in the record that the Coes were

specifically aware of the reports identified by Proskauer. To the

contrary, Douglas Coe submitted an affidavit that, prior to 2012, he

was not aware of the BDO partners’ convictions, of Proskauer’s

participation in any improper conduct, or of any other allegations in

the Coes’ complaint. And in a subsequent affidavit, he specifically

denied having seen any of the documents, articles, television

broadcasts, or other lawsuits referenced by Proskauer. Thus, a

genuine issue of material fact exists as to whether the Coes had

actual knowledge of, or should have discovered with reasonable

      22 Although in a different procedural posture, we find it instructive that
in Doe we explained that the allegations in that complaint adequately pleaded
tolling under OCGA § 9-3-96 because “[t]his is not a case where the allegations
in the complaint establish as a matter of law that the plaintiff could have easily
discovered the fraud alleged from a readily available public source, that the
plaintiff in fact knew about the alleged fraud when it occurred, or that the
plaintiff was on clear notice that the defendant had defrauded him.” Doe, 313
Ga. at 570 (2) n.10. Likewise, the existence of news reports and other lawsuits
referencing Proskauer and BDO do not establish as a matter of law that the
Coes could have discovered their claims against Proskauer through the
exercise of reasonable diligence.
                                       30
diligence, the news reports and other lawsuits referencing

Proskauer.

     Moreover, we conclude that the Coes produced evidence

sufficient to support that they exercised reasonable diligence to

discover their causes of action within the limitations period. Most

notably, after the IRS initiated its audit in 2005, the Coes did not

simply ignore the problem; they hired independent counsel with an

established reputation in tax matters to assist them in the audit

process. See Scully v. First Magnolia Homes, 279 Ga. 336, 339 (2)

n.11 (614 SE2d 43) (2005) (“questions of reasonable diligence must

often be resolved by the trier of fact”); Sanders v. Looney, 247 Ga.

379, 381 (3) (276 SE2d 569) (1981) (holding that the question of the

plaintiffs’ exercise of proper diligence was for the jury and noting

that the existence of a confidential relationship may justify the

plaintiffs’ reliance on representations and excuse the failure to make

their own determination).

     Proskauer also argues that Chamberlain, as sophisticated tax

counsel, either knew or should have known the basis for all of the

                                 31
Coes’ claims against Proskauer and that in any event, as the Coes’

counsel, Chamberlain’s constructive knowledge was imputed to the

Coes for purposes of determining tolling. Pretermitting whether

constructive knowledge of legal counsel is imputed to the client in

these circumstances, there is no evidence in the record of what

Chamberlain knew about Proskauer’s role in the Strategy, other

than the fact that Proskauer had provided legal and tax advice to

the Coes, or that Chamberlain actually was aware of the IRS’s

efforts against similar tax shelters. Moreover, there is no evidence

in the record showing what Chamberlain should have known, only

Proskauer’s legal argument that Chamberlain should have been on

notice about the IRS’s efforts against similar tax shelters. 23 See

Smith v. Jones, 278 Ga. 661, 662 (2) (604 SE2d 187) (2004)

(conclusory affidavit unsupported by substantiating fact or

circumstances is insufficient to raise a genuine issue of material

fact); Adams v. Carlisle, 278 Ga. App. 777, 785 (3) (a) n.16 (630 SE2d

     23 It does not appear from the record that any discovery has been taken
of Chamberlain’s knowledge about these issues during the relevant time
period.
                                    32
529) (2006) (“Allegations, conclusory facts, and conclusions of law

cannot be utilized to support or defeat motions for summary

judgment.” (citation and punctuation omitted)). Thus, we conclude

that the Court of Appeals erred in determining that the Coes failed,

as a matter of law, to exercise reasonable diligence to discover

Proskauer’s allegedly fraudulent acts. See Sanders, 247 Ga. at 381

(3) (“Ordinarily, questions of whether the plaintiff could have

protected himself by the exercise of proper diligence are, except in

plain and indisputable cases, questions for the jury.” (citation and

punctuation omitted)).

     Accordingly, we reverse the judgment of the Court of Appeals

and remand the case with instruction to reverse the trial court’s

order and remand the case for further proceedings consistent with

this opinion.

     Judgment reversed and case remanded with direction. All the
Justices concur, except Bethel, J., disqualified.

                                33