Firefighters' Ret. Sys. v. Grant Thornton, L.L.P.
894 F.3d 665
5th Cir.2018Background
- Plaintiffs (three Louisiana public pension funds) invested in a fund audited by Grant Thornton (GT); GT issued 2007–2008 audits, later restated and withdrawn after SEC investigation; fund later bankrupt.
- Plaintiffs sued GT in Louisiana state court in Jan 2014 for accounting malpractice; suit removed to federal district court.
- Louisiana law (La. R.S. § 37:102/105) requires claims against accountants be submitted to a public accountant review panel before suit may be maintained.
- GT moved to dismiss as premature for failure to use the review panel; district court adopted the magistrate judge’s recommendation and dismissed without prejudice; Plaintiffs appealed and GT cross-appealed on peremption (time-bar) grounds.
- Fifth Circuit affirmed dismissal as premature and held Plaintiffs’ claims are perempted (extinguished) because they failed to seek panel review within the statutory peremptive period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether suit was premature for failure to submit claims to an accountant review panel | GT is estopped/waived panel right by earlier litigation conduct and delay | LAA requires mandatory panel review before suit; GT may raise prematurity | Suit was premature; panel review is mandatory and GT may invoke it |
| Whether GT is judicially estopped from asserting right to panel because it earlier contested personal jurisdiction | GT previously argued no specific jurisdiction; Plaintiffs say this is inconsistent with invoking panel requirement | GT says positions are not inconsistent and district court never accepted the earlier jurisdictional stance | Judicial estoppel does not apply (district court did not accept inconsistent prior position) |
| Whether GT waived the panel requirement by litigating three years before raising it | Plaintiffs rely on state-court precedents (Moon Ventures) to say participation = waiver | GT says waiver requires written agreement under statute; it raised prematurity in a motion to dismiss | No waiver: statute requires written waiver; Moon Ventures distinguishable; GT did not waive the panel right |
| Whether claims are time-barred (perempted) despite dismissal as premature; and whether contra non valentum or post-malpractice fraud tolls/suspends peremption | Plaintiffs: peremption not addressed below; factual issues exist; contra non valentum or fraudulent concealment suspend peremption | GT: peremptive periods in La. R.S. § 9:5604 are absolute; plaintiffs failed to timely file panel request within one/three year peremptive windows | Claims are perempted. Contra non valentum does not apply to peremption; plaintiffs failed to plead specific intent required for fraud/concealment exception, so peremption bars the claims |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for federal pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must show plausible entitlement to relief)
- In re Superior Crewboats, Inc., 374 F.3d 330 (5th Cir.) (standard of review on Rule 12 dismissal)
- Hines v. Alldredge, 783 F.3d 197 (5th Cir.) (quotation of pleading standard)
- Lomont v. Bennett, 172 So.3d 620 (La. 2015) (post-malpractice fraudulent concealment can toll prescriptive periods where specific intent is pleaded)
- Bernard, Cassisa, Elliott & Davis v. Estate of LaPorte, 113 So.3d 397 (La. App. 5 Cir.) (premature suit does not interrupt peremptive period; timely panel request required)
- Moon Ventures, L.L.C. v. KPMG, L.L.P., 964 So.2d 446 (La. App. 3 Cir.) (accountant may waive prematurity defense by dilatory exception missteps; discussed and distinguished)