| Rockman v Bartlett |
| 2008 NY Slip Op 02538 [49 AD3d 1072] |
| March 20, 2008 |
| Appellate Division, Third Department |
| George Rockman, Appellant, v Doris Bartlett, Doing Business asMountain Business Services, et al., Respondents. |
—[*1] Lawrence N. Rogak, Oceanside, for respondents.
Kavanagh, J. Appeal from an order of the Supreme Court (Lynch, J.), entered January 5,2007 in Ulster County, which, among other things, denied plaintiff's motion for partial summaryjudgment.
Plaintiff retained defendants to prepare his 2003 federal and New York State income taxreturns. In that regard, plaintiff provided defendants with documentation establishing that in 2003he incurred a $91,800 loss from the sale of rental property. On the initial tax return prepared bydefendants and subsequently filed with the Internal Revenue Service (hereinafter IRS), only$10,851 of the loss was declared for the 2003 tax year because defendants believed that since theloss was the result of a passive investment, it had to be prorated over a period of years. Later,defendants decided that the entire loss could be declared on the 2003 tax return and prepared anamended return taking the entire loss as a deduction from plaintiff's tax liability for that year. Asa result, plaintiff claimed a refund in the amount of $17,526.
Thereafter, the IRS conducted an audit of plaintiff's 2003 tax return and disallowed thededuction of the entire loss as listed on the amended return. Plaintiff did not appeal thisdetermination, but rather commenced this action alleging that defendants committed professionalmalpractice in their preparation of his tax return and sought as damages the additional expensesthat plaintiff incurred as a result of the audit, as well as the amount of the additional taxes he was[*2]compelled to pay because the IRS disallowed the deduction.Supreme Court denied plaintiff's motion to strike defendants' affirmative defenses as well as hismotion for summary judgment on the issue of liability, prompting this appeal.
To establish that he is entitled to summary judgment, plaintiff bears the initial burden ofpresenting competent, prima facie evidence that the accounting services that defendants renderedon his behalf were negligently performed and that, as a result, he incurred costs and expenses thatwould otherwise have not been sustained (see Kristina Denise Enters., Inc. v Arnold, 41 AD3d 788, 788-789[2007]; Cumis Ins. Socy. v Tooke, 293 AD2d 794 [2002]). Plaintiff claims that haddefendants deducted the entire loss in the first return filed with the IRS, an amended return wouldnot have been filed, and his tax return would not have been audited. Of course, this proposition isbased entirely upon the premise that the only reason the IRS decided to audit plaintiff's taxreturns was because he filed an amended tax return, and not because plaintiff took the entire lossas a deduction in a single tax year. The only evidence that plaintiff offers in support of thisposition is an affidavit from a certified public accountant, Henry Gleich, who opined that the actof filing the amended return, and not the deduction of the entire loss, is why the IRS decided toperform an audit on plaintiff's tax return. Gleich also claimed that had the entire loss beenclaimed as a deduction in the initial return filed on plaintiff's behalf, an audit never would havebeen performed. This affidavit is based entirely upon speculation and, without any other evidenceto corroborate it, it cannot provide a legal basis for plaintiff's claim of professional malpractice(see Brooks v Lewin, 21 AD3d731, 734 [2005], lv denied 6 NY3d 713 [2006]).
Plaintiff's claim that defendants committed malpractice is based upon the proposition that theentire loss he sustained in the sale of his property could be taken as a tax deduction in one year.Given that the IRS has rejected that position—and plaintiff has not appealed thatdetermination—it is clear that at the very least questions of fact exist as to whetherdefendants committed professional malpractice in the preparation of his tax return.[FN*]
As to plaintiff's motion to strike defendants' answer, it is well settled that "a trial court hasbroad discretionary power in controlling discovery and disclosure, and only a clear abuse ofdiscretion will prompt appellate action" (Geary v Hunton & Williams, 245 AD2d 936,938 [1997]). We disagree that Supreme Court erred in denying plaintiff's motion to strike.
Mercure, J.P., Spain, Carpinello and Rose, JJ., concur. Ordered that the order is affirmed,without costs.
Footnote *: Defendants cross-moved forsummary judgment dismissing the complaint. This motion was also denied and defendants didnot appeal that decision, however, at oral argument invited the Court to "search the record" andgrant summary judgment in defendants' favor. Under the circumstances presented, we declinethat invitation.