Douglas Coe v. Proskauer, LLP.
A21A0142
| Ga. Ct. App. | Jun 30, 2021Background:
- Appellants (Douglas and Jacqueline Coe and GFLIRB, LLC) invested in a 2001 "distressed debt" tax strategy marketed by BDO and Gramercy and obtained a legal opinion letter from Proskauer dated April 15, 2002, predicting >50% likelihood the tax treatment would be upheld.
- Appellants allege Proskauer had advised BDO and Gramercy, participated in a fee‑sharing arrangement, and failed to disclose it had told BDO the strategy would almost certainly trigger IRS audits.
- The IRS audited the 2001 return in 2005; Appellants retained other counsel and ultimately settled with the IRS in 2012. Several former BDO partners pled guilty to charges related to tax shelters in 2009; BDO entered a deferred prosecution agreement in 2012.
- Appellants sued Proskauer in December 2015 (refiled 2017); trial court converted Proskauer’s dismissal motion to summary judgment, allowed limited discovery, and granted summary judgment for Proskauer.
- Trial court also denied appellants’ motion to strike the summary‑judgment motion as untimely and admitted an affidavit from a Proskauer partner referencing publicly available reporting about BDO and the shelters.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accrual / statute of limitations for malpractice and related claims | Claim did not accrue in 2002 because underlying IRS proceeding was pending / injury not yet ascertainable | Cause of action accrued when Proskauer issued the opinion in 2002; suit filed 2015 is time‑barred | Accrual occurred at issuance of opinion in 2002; claims are barred by the statute of limitations |
| Tolling / fraudulent concealment / fiduciary silence | Fiduciary relationship and Proskauer’s silence during the audit tolled the limitations period until the audit’s conclusion | Plaintiffs had public and firm‑specific indicia (guilty pleas, press) putting them on inquiry notice; they failed to exercise reasonable diligence | No tolling; plaintiffs failed to show concealment or reasonable diligence sufficient to delay accrual |
| Protective order limiting discovery | Protective order prevented discovery necessary to oppose summary judgment | Court still permitted discovery into Proskauer’s knowledge about the strategy; discovery rulings are discretionary | Court did not abuse its broad discretion; allowed discovery covered key issues |
| Motions to strike and affidavit admissibility | Motion to strike SJ and partner affidavit should have been allowed (affidavit lacks personal knowledge / is hearsay) | Motion to strike was untimely; affidavit relied on public materials offered to show notice, not the truth | Motion to strike was properly denied as untimely; affidavit admissible to show publicly available information and personal‑knowledge matters |
Key Cases Cited
- Jankowski v. Taylor, Bishop & Lee, 246 Ga. 804 (establishes accrual at date of wrongful act in malpractice actions)
- Hyman v. Jordan, 201 Ga. App. 852 (malpractice statute runs from date of alleged malpractice, not discovery of injury)
- Mauldin v. Weinstock, 201 Ga. App. 514 (discusses tolling where an underlying viable action remains pending / facts concerning waiver vs. pending proceedings)
- Godwin v. Mizpah Farms, 330 Ga. App. 31 (standard for tolling via fraudulent concealment and burden shifting once defendant shows claim is time‑barred)
- Cochran Mill Assocs. v. Stephens, 286 Ga. App. 241 (elements required to establish fraudulent concealment to toll limitations)
- Smith v. Suntrust Bank, 325 Ga. App. 531 (duty of diligence reduced but not eliminated in confidential/fiduciary relationships)
- Exxon Corp. v. Thomason, 269 Ga. 761 (trial court has broad discretion over discovery)
- Roberson v. Ocwen Fed. Bank FSB, 250 Ga. App. 350 (affidavits must be based on personal knowledge and only admissible portions may be considered)