Carolyn Ackerman, et al., Respondents, v. Price Waterhouse, Appellant
(and another action and third-party action.)
84 N.Y.2d 535, 64 N.E.2d 1009, 620 N.Y.S.2d 318 (1994).
December 6, 1994
1 No. 210 (1994 NY Int. 198) Decided December 6, 1994
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This opinion is uncorrected and subject to revision before publication
in the New York Reports.
David W. Rivkin, for appellant.
Richard J. Schager, Jr., for respondents.
American Institute of Certified Public Accountants; and New York State
Society of Certified Public Accountants, amici curiae.
CIPARICK, J.:
In a malpractice action against an accountant, the statute of
limitations begins to run on the date the accountant's work product is
received by the client since this is the first time the client can
rely on the alleged negligent work product. Therefore, in this case,
we conclude that only those claims relating to defendant's negligence
in connection with its advice and preparation of plaintiffs' limited
partnerships' financial statements and tax returns, including
Schedules K-1, arising in the three years prior to the commencement of
this action are timely under CPLR 214(6).
I.
By complaint dated April 10, 1990, plaintiffs, individuals who
purchased limited partnership tax shelters in real property
partnerships sponsored by Commercial Properties Group, Inc. (CPG),
instituted this action against defendant, an accounting partnership,
alleging negligence and professional malpractice in the preparation of
annual returns for the tax years 1980-1987 for their limited
partnership interests. CPG engaged defendant to render annual
accounting services and prepare the partnerships' tax returns and
Schedules K-1, which reported each limited partner's pro-rata share of
partnership income and expenses. Defendant transmitted the annual tax
returns to CPG, and was aware that each limited partner received the
federal and state tax documents, including Schedules K-1 for income
tax filing.
Plaintiffs assert that since 1979 they relied on defendant's advice
SNIPPETS:
This opinion is uncorrected and subject to revision before publication in the New York
In a malpractice action against an accountant, the statute of limitations begins to run on
Therefore, in this case, we conclude that only those claims relating to defendant's
CPG engaged defendant to render annual accounting services and prepare the partnerships' tax
Plaintiffs assert that since 1979 they relied on defendant's advice regarding the
Plaintiffs contend that defendant's use of the Rule of 78's caused each limited partner to
Plaintiffs allege that from the outset, defendant knew, or reasonably should have known, that
Indeed, plaintiffs claim that, in 1983, after the IRS released Revenue Ruling 83-84, which
Nevertheless, plaintiffs allege that defendant, in breach of "its duty to exercise the skill
In 1984, plaintiffs began receiving 30 or 60 day letters, advising them of tax deficiencies
the IRS instituted the last phase in the deficiency assessment process and issued 90 day
Some plaintiffs filed petitions in the United States Tax Court, while others stayed the
In an interim order, Supreme Court, inter alia, directed the parties to consider application
The Appellate Division affirmed on the decisions below, with one Justice dissenting (see,
Corp., 12 NY2d 212, 216 & 218;
Accordingly, the order of the Appellate Division should be reversed, with costs, defendant's
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