LEVY v MARTIN
Docket No. 115603
Supreme Court of Michigan
January 3, 2001
463 Mich. 478
Martin I. Levy, D.D.S., brought an action in the Oakland Circuit Court against accountants Mark L. Martin and Gerald Hoskow, alleging that certain taxes, penalties, and interest he was required to pay as a result of a tax audit were the result of the defendants’ malpractice. The court, Deborah G. Tyner, J., held that the claim was not brought in a timely manner and dismissed the complaint. The Court of Appeals, BANDSTRA, C.J., and TALBOT, J. (WHITBECK, J., concurring in part and dissenting in part), affirmed in an unpublished opinion per curiam (Docket No. 207797). The plaintiff seeks leave to appeal.
In an opinion per curiam, signed by Justices KELLY, TAYLOR, CORRIGAN, and YOUNG, the Supreme Court held:
The plaintiff‘s suit was timely.
1. The limitation period for a malpractice claim is two years and accrues at the time the person accused of malpractice discontinues serving the plaintiff in a professional capacity regarding the matters out of which the claim for malpractice arose, regardless of the time the plaintiff discovers or otherwise has knowledge of the claim. Periodic eye examinations by an optometrist in Morgan v Taylor, 434 Mich 180 (1990), were not barred by the statute of limitations where the defendant had not discontinued treating or otherwise serving the plaintiff regarding the matters out of which the claim for malpractice arose.
2. A health professional and a patient are similarly situated to an accountant who provides annual income tax preparation services and the accountant‘s client. A client who entrusts preparation of annual tax returns to an accountant is provided with an assurance of professional preparation of the tax returns that induces the client to take no further action regarding those matters until it is time to prepare the next year‘s tax returns. The touchstone of the analysis is the continuing professional relationship between a professional and the person receiving the professional‘s services with regard to a particular subject matter, not any direct connection
3. In this case, the plaintiff alleges, without any contrary documentary evidence, the existence of a continuing relationship of tax preparer and client. Until the end of that relationship, for purposes of applying the “last treatment” rule of Morgan and thereby ascertaining whether the statute of limitations bars this suit, the plaintiffs had no duty to inquire into the effectiveness of the defendants’ measures until the end of the professional relationship.
Justice CAVANAGH concurred in the result only.
Reversed in part and remanded.
Justice MARKMAN, dissenting, stated that in enacting
An action involving a claim based on professional malpractice other than medical malpractice may be commenced at any time within the applicable period prescribed in
The plaintiffs’ annual tax returns in this case cannot be considered analogous to the plaintiff‘s eye examinations in Morgan. Each successive annual tax return represented the matters out of which
Chief Justice WEAVER would grant leave to appeal.
Poling, McGaw & Poling, P.C. (by Richard B. Poling, Jr. and Shannon M. Acton), for the plaintiffs-appellants.
Morganroth & Morganroth (by Mayer Morganroth and Jeffrey B. Morganroth) for the defendants-appellees.
PER CURIAM. The plaintiffs filed a malpractice action that the circuit court dismissed on the ground that the limitation period had expired. The Court of Appeals affirmed. Because we agree with the plaintiffs that their suit was timely, we reverse in part the judgments of the circuit court and the Court of Appeals.
I
From 1974 until 1996, accountants Mark L. Martin and Gerald Hoskow1 prepared the annual tax returns
In August 1997, Dr. Levy filed in circuit court a complaint in which he alleged that losses exceeding ninety thousand dollars had been caused by the malpractice of Messrs. Martin and Hoskow.5
The 1991 and 1992 tax returns of which Dr. Levy complained were prepared and submitted in 1992 and 1993, respectively. Observing that the limitation period for a malpractice action is two years,6 Messrs. Martin and Hoskow filed a motion to dismiss in lieu of an answer.7 The circuit court agreed that the malpractice claim was not timely, and dismissed the complaint on that basis.8
Dr. Levy has applied to this Court for leave to appeal.
II
As indicated, the limitation period for a malpractice claim is two years.11 The present dispute concerns the date on which Dr. Levy‘s malpractice claim accrued, i.e., the date on which the two-year period began to run.
To resolve this issue, we turn to
In Morgan v Taylor, 434 Mich 180; 451 NW2d 852 (1990), this Court explained this “last treatment rule,” from its development in De Haan v Winter, 258 Mich 293, 296-297; 241 NW 923 (1932), through the subsequent codification in
The plaintiffs in Morgan filed two complaints in 1985, alleging malpractice in connection with a 1981 optometric examination. An examination also had been conducted in 1983, less than two years before the complaints were filed, and the issue in Morgan was whether “routine, periodic examinations” extend the limitation period. Resolving the question, this Court wrote:
In the instant case defendant argues that the rationale underlying the last treatment rule does not apply in the context of routine, periodic examinations. It is contended that there is no air of truthfulness and trust once the examination is concluded. We disagree. It is the doctor‘s assurance upon completion of the periodic examination that the patient is in good health which induces the patient to take
or should have discovered the existence of the claim, whichever is later. The burden of proving that the plaintiff neither discovered nor should have discovered the existence of the claim at least 6 months before the expiration of the period otherwise applicable to the claim shall be on the plaintiff. A malpractice action which is not commenced within the time prescribed by this subsection is barred.
no further action other than scheduling the next periodic examination.
Particularly in light of the contractual arrangement which bound defendant and entitled plaintiff to periodic eye examinations,14 it cannot be said that the relationship between plaintiff and defendant terminated after each visit. The obligation and responsibility of defendant to provide glaucoma testing extended beyond the 1981 examination of plaintiff‘s eyes. We conclude that defendant did not discontinue “treating or otherwise serving”15 plaintiff “as to the matters out of which the claim for malpractice arose” until August 18, 1983. Thus, we hold that the claim of plaintiff is not barred by the statute of limitations.19
Since the facts here are unique, and the Legislature has now repealed the last treatment rule as it applied to medical malpractice,16 we limit our holding to the facts of this case.
[434 Mich 194.]
III
In the present case, the Court of Appeals said that “[t]he preparation of yearly tax returns is not analogous to the periodic eye examinations in Morgan v
Writing in dissent, Judge WHITBECK disagreed about the applicability of Morgan. He countered that its analysis of the statute was “instructive and, in appropriate circumstances, controlling.” He continued with an analysis that we find persuasive, and adopt as our own:
I consider a faithful application of the legal principles enunciated in Morgan to control the issue at hand. A health professional and patient on the one hand are similarly situated in this regard to an accountant who provides annual income tax preparation services and the accountant‘s client. As, under the rationale of the last treatment rule, a patient was (before the amendment of § 5838[1] making it inapplicable to medical malpractice claims) entitled to rely “completely” on the health professional and not inquire into the effectiveness of the health professional‘s measures prior to the termination of the relationship, an accountant‘s client is likewise entitled to rely “completely” on the account‘s [sic: accountant‘s] skills and effectiveness until the termination of the relationship. A patient who attended a periodic examination and was not diagnosed with any medical problem was under the rationale of the last treatment rule provided with an “assurance” of good health that induced the patient to take no further action to investigate the pertinent health matters until the next periodic examination. Likewise, a client who entrusts preparation of annual tax returns to an accountant is provided with an assurance of professional preparation of the tax returns that induces the client to take no further action regarding those matters until it is time to prepare the next year‘s tax returns. As discussed above, accepting the well-pleaded allegations of the complaint as true, [Home Ins Co v Detroit Fire Extinguisher Co, Inc, 212 Mich App 522, 527-528; 538 NW2d 424 (1995)], defendants prepared annual tax returns for plaintiffs from 1974 until 1996--encompassing the times of the
alleged professional negligence in preparing the 1991 and 1992 tax returns. Thus, I conclude that, based on the well-pleaded allegations of plaintiffs’ complaint, under the last treatment rule of § 5838(1) as explained in Morgan, plaintiffs’ possible claim did not accrue--meaning the statute of limitations did not begin to run--until at least 1996. The complaint in this case was filed in 1997 and thus was plainly within the applicable limitation period, which was two years as noted by the majority. Thus, in my view, the trial court erred by granting summary disposition in favor of defendants under MCR 2.116(C)(7) based on the statute of limitations.
I respectfully disagree with the majority‘s attempt to distinguish the “continuing care of one patient‘s set of eyes in Morgan, supra,” from what the majority describes as “the series of unrelated tax calculations in this case.” . . . The touchstone of the analysis in Morgan was the continuing professional relationship between a professional and the person receiving the professional‘s services with regard to a particular subject matter, not any direct connection between the work performed by the professional at continuing periodic sessions during that relationship. The alleged negligence in Morgan occurred during a glaucoma test on the principal plaintiff in Morgan at a 1981 eye examination. Morgan, supra at 182-183. The principal plaintiff in Morgan did not return to the defendant optical company for an examination until 1983 for his next routine eye examination. Id. at 182. There is no indication in Morgan that the manner in which the eye examination was conducted in 1983 had any direct connection to the performance of the 1981 glaucoma test. Nevertheless, the Morgan Court concluded that, due to the statutory “last treatment” rule, the statute of limitations with regard to alleged negligence in the 1981 glaucoma test did not begin to run on the date it was performed because of the continuing professional relationship between the patient and the optical company.
Similarly, in this case, plaintiffs’ complaint alleges, without any contrary documentary evidence in the record, the existence of a continuing relationship of tax preparer and client that did not end until 1996. Until the end of that rela-
tionship, for purposes of applying the “last treatment” rule and thereby ascertaining whether the statute of limitations bars this suit, plaintiffs had “no duty to inquire into the effectiveness of [defendants‘] measures” until the end of the professional relationship. Id. at 188 (citation omitted).3
I note that it may (or may not) be wise for
MCL 600.5838(1) ;MSA 27A.5838(1) to be amended to completely abolish the “last treatment” rule. However, “[t]he wisdom of the provision in question in the form in which it was enacted is a matter of legislative responsibility with which the courts may not interfere.” Morgan, supra at 192, quoting Melia v Employment Security Comm, 346 Mich 544, 561; 78 NW2d 273 (1956). Our duty is to faithfully apply the legislatively adopted policy of the “last treatment” rule to claims of professional malpractice, other than medical malpractice, not to attempt to limit that policy by an unduly narrow application.
We respectfully disagree with the dissent‘s assertion that this case should be distinguished from Morgan on the ground that Morgan involved the continuing treatment of the same set of eyes while this case involves discrete tax calculations. The basis for our disagreement comes from a review of the development of the last treatment rule in Michigan.
A claim based on the malpractice of a person who is, or holds himself out to be, a member of a state licensed profession accrues at the time that person discontinues treating or otherwise serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of which the claim for malpractice arose.
This statute constituted not only a codification, but also an expansion of the common-law last treatment rule. First, the statute expanded the common-law rule because it applied to a “member of a state licensed profession” meaning that the last treatment rule was extended not just to medically licensed, but to nonmedical state licensed professionals. Moreover, the statutory language “discontinues treating or otherwise serving the plaintiff . . . as to the matters out of which the claim for malpractice arose” extended the last treatment rule of De Haan to matters other than treating a specific recognized injury. How broadly to read “the matters out of which the claim for malprac-
However, in the present case, defendants have not offered documentary evidence regarding the nature of the professional services that were provided by defendants to plaintiffs. As Judge WHITBECK stated below, in the absence of any documentary evidence on a point, in reviewing a summary disposition motion under MCR 2.116(C)(7) we must accept the well-pleaded allegations in a complaint as true. Plaintiffs alleged that defendants prepared their income tax returns from 1974 to 1996. Defendants have failed to present any evidence that this is untrue or that each income tax preparation was a discrete transaction that should be considered to separately constitute “the matters out of which the claim for malpractice arose,”
For these reasons, we reverse in part the judgments of the circuit court and the Court of Appeals.21 We remand this case to the circuit court for further proceedings on the plaintiffs’ malpractice claim against the defendants. MCR 7.302(F)(1).
KELLY, TAYLOR, CORRIGAN, and YOUNG, JJ., concurred.
CAVANAGH, J., concurred in the result only.
MARKMAN, J. I respectfully disagree with and dissent from the majority‘s conclusion that the “last treatment” rule served to keep plaintiff‘s professional malpractice action viable in this case.1 Rather, I believe that the Court of Appeals correctly affirmed the trial court‘s grant of summary disposition in defendants’ favor.
From the very limited record in this case, it appears that defendants were hired by plaintiffs to act as their personal and corporate accountants. Defendants prepared plaintiffs’ annual tax returns for the years 1974 through 1996, a period of twenty-two years. Plaintiffs’ 1991 and 1992 tax returns were audited by the Internal Revenue Service (IRS) in 1994, with the IRS presenting plaintiffs with a notice of deficiency in December 1995. Plaintiffs subsequently filed
In lieu of answering plaintiffs’ complaint, defendants filed a motion for summary disposition under MCR 2.116(C)(7) (expiration of the applicable limitation period) and (8) (failure to state a claim). The circuit court granted defendants’ motion, and the Court of Appeals affirmed, with Judge WHITBECK dissenting.
This Court reviews the grant or denial of summary disposition de novo. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Similarly, we review questions of statutory construction de novo as a matter of law. Sands Appliance Services, Inc v Wilson, 463 Mich 231, 238; 615 NW2d 241 (2000); Donajkowski v Alpena Power Co, 460 Mich 243, 248; 596 NW2d 574 (1999).
The essential question in this case is: When did plaintiffs’ claim of professional malpractice accrue for purposes of applying the pertinent limitation period?
[a] person shall not bring or maintain an action to recover damages for injuries to persons or property unless, after the claim first accrued to the plaintiff or to someone through whom the plaintiff claims, the action is commenced within the periods of time prescribed by this section.
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(4) Except as otherwise provided in this chapter, the period of limitations is 2 years for an action charging malpractice.
With regard to the time of accrual of a professional malpractice claim, other than one for medical mal-
a claim based on the malpractice of a person who is, or holds himself or herself out to be, a member of a state licensed profession accrues at the time that person discontinues serving the plaintiff in a professional or pseudoprofessional capacity as to the matters out of which the claim for malpractice arose, regardless of the time the plaintiff discovers or otherwise has knowledge of the claim. [Emphasis added.]
An action involving a claim based on professional malpractice (other than medical malpractice) may be commenced at any time within the applicable period prescribed in
The cardinal rule of statutory construction is to identify and give effect to the intent of the Legislature. Helder v Sruba, 462 Mich 92, 99; 611 NW2d 309 (2000). The first step in discerning intent is to examine the language of the statute. Id. If the language of a statute is clear and unambiguous, the plain meaning of the statute reflects the legislative intent and judicial construction is not permitted. Western Michigan Univ Bd of Control v Michigan, 455 Mich 531, 538; 565 NW2d 828 (1997). “Each word of a statute is presumed to be used for a purpose, and, as far
In Michigan, the “last treatment” rule originated in De Haan v Winter, 258 Mich 293; 241 NW 923 (1932). At that time, the limitations statute contained no provision fixing the accrual point of a malpractice action. As in the present case, the De Haan Court was faced with the question:
When did plaintiff‘s cause of action accrue? Until treatment of the fracture ceased the relation of patient and physician continued, and the statute of limitations did not run. [Citations omitted.] While decisions are not in accord upon this question, we are satisfied that in such an action as this the statute of limitations does not commence to run while treatment of the fracture continues. Failure to give needed continued care and treatment, under opportunity and obligation to do so, would constitute malpractice. During the course of treatment plaintiff was not put to inquiry relative to the treatment accorded him. [Id. at 296-297 (emphasis added).]
The legislative comment accompanying the 1961 enactment of § 5838, indicates that “[s]ection 5838 is based on the rule stated and followed in the Michigan case of De Haan.” Morgan v Taylor, 434 Mich 180, 187, n 13; 451 NW2d 852 (1990).3
“The rationale for the last treatment rule has been explained on grounds that the patient, while his treatment continues, ‘relies completely on his physician and is under no duty to inquire into the effective-
In the present case, the majority relies on the Court of Appeals dissent, which in turn relied on this Court‘s analysis in Morgan, supra. Respectfully, I disagree with the dissent‘s assertion that “[t]he touchstone” of the “last treatment” rule is the ”continuing professional relationship between a professional and the person receiving the professional‘s services
The plain language of subsection 5838(1) does not state that a claim of professional malpractice accrues on the last date of service (i.e., “last date of treatment“), period. Rather, the statutory language clearly defines the point of accrual, confining the last date of service expressly to those matters “out of which the claim for malpractice arose“; from this language, certainly, a professional relationship may continue on even though a malpractice claim arising out of that relationship has accrued and the clock has started to run with regard to the two-year limitation period. The Court of Appeals dissent and the majority‘s adoption of the dissent‘s analysis without explanation fail to acknowledge and give effect to the plain language of the entire sentence comprising subsection 5838(1), thereby rendering the modifying phrase “matters out of which the claim for malpractice arose” superfluous.
The majority asserts that, in enacting § 5838, the Legislature “extended” or “expanded” upon the common-law “last treatment” rule set forth in De Haan. See ante at 488. However, in my judgment, the legislative comment that § 5838 “is based on the rule stated and followed in the Michigan case of De Haan” effectively militates against the majority‘s assertion. The facts in De Haan involved a distinct period of medical treatment, relating to a distinct medical condition, with this Court concluding that a claim of professional malpractice, arising “[d]uring the course of [that] treatment,” would not be barred by the limita-
The phrase “as to the matters out of which the claim for malpractice arose,” found in subsection 5838(1), clearly equates with the phrases “[u]ntil treatment of the fracture ceased” and “[d]uring the course of treatment” found in De Haan. Id. at 296, 297. Moreover, Morgan refers to the De Haan language “while . . . treatment continues” in attempting to explain the rationale for the “last treatment” rule. 434 Mich 187. Importantly, this Court, in determining that the facts of Morgan were “unique,” limited its holding to the facts of that case. Id. at 194. Thus, I can discern no logical force to the suggestion that the Legislature intended to broaden the common-law “last treatment” rule, as stated and applied in De Haan, when it drafted the language of § 5838.
Further, the facts in the present case, although very sparse for purposes of appellate review, are nevertheless quite distinguishable from the facts found in Morgan, supra. In Morgan, there was a requirement under an employer/union contract that the plaintiff be given an opportunity to have his eyes examined and reevaluated every two years.4 Granted, there may have been changes that occurred in the plaintiff‘s
However, plaintiffs’ annual tax returns in the present case cannot be considered analogous to the plaintiff‘s eyes in Morgan. The preparation of annual tax returns involves the compilation and computation of a distinct and discrete body of information, generally not the same from year to year. In other words, in each successive year, a client is not bringing to his accountant the same aggregation of receipts to be reevaluated and reexamined, to discern if some change has taken place in that particular body of information and data. Rather, the client generally brings in a new aggregation of receipts specific and distinct to the year for which the tax return is being completed. An accountant is generally not “caring for” the client‘s same tax return from year to year, as a physician cares for the same set of eyes, or the same liver, kidneys, or heart, from examination to examination. Thus, in the present case, each successive annual tax return represented “the matters out of which the claim for malpractice arose,” a phrase to which the Court of Appeals dissent and the majority here give little apparent effect.
Particularly in light of the contractual arrangement which bound defendant and entitled plaintiff to periodic eye examinations, it cannot be said that the relationship between plaintiff and defendant terminated after each visit. [Id. at 194 (emphasis added).]
of the professional relationship. Ante at 490, n 19. I do not agree with this allocation of the burden in the application of subsection 5838(1). Under the majority‘s approach, it appears that as long as a plaintiff pleads the existence of a professional relationship, “the matters out of which the claim for malpractice arose” will be presumed to consist of the entire duration of the relationship, a presumption which, in my judgment, runs contrary to the statutory language of subsection 5838(1).
The majority‘s argument would be more compelling if the instant matter involved the treatment of, or the provision of service to, the same eyes, the same pancreas, the same heart, or any other object or transaction that is treated or serviced on a continuing or interrelated basis. Thus, arguably it may be incumbent upon a defendant, when faced with a professional malpractice action involving such an object or transaction, to come forward with additional evidence demonstrating that one provided treatment or service was distinct from another. But here, in my judgment, the individual annual tax returns cannot truly be equated with the same set of eyes, pancreas, heart, or other object or transaction that is treated or serviced on a continuing or interrelated basis. Thus, I believe that it is the plaintiff‘s burden, not the defendant‘s, to set forth well-pleaded allegations evidencing that there existed some connection between treatments or services occurring within the professional relationship.
In stating that “it is clear here that plaintiffs, rather than receiving professional advice for a specific problem, were receiving generalized tax preparation services from defendants,” ante at 489, the majority gainsays the discrete nature of each individual annual tax return prepared by defendant, and essentially considers the termination of the professional relationship itself (i.e., the end of plaintiffs “receiving generalized tax preparation services“) as the point at which plaintiffs’ claim for malpractice accrued. The statutory phrase “as to the matters out of which the claim for malpractice arose” is, thus, given little effect. Essentially then, my concerns about the majority‘s allocation of the burdens in (C)(7) motions parallel my larger concerns about the majority‘s focus upon the professional relationship in a malpractice action rather than upon the “matters out of which the claim for malpractice arose.”
The Court of Appeals dissent‘s analysis and the majority‘s reliance on this analysis, effectively erode the policy bases for having statutory limitation periods in the first place. Obviously, while one policy base is to afford plaintiffs a reasonable opportunity to bring suit, statutes of limitation are also intended to: (1) compel the exercise of a right of action within a reasonable time so that the opposing party has a fair opportunity to defend; (2) relieve a court system from dealing with stale claims, where the facts in dispute occurred so long ago that evidence was either forgotten or manufactured; and (3) protect potential defendants from protracted fear of litigation. Chase v Sabin, 445 Mich 190, 199; 516 NW2d 60 (1994).
Asserting, as the Court of Appeals dissent does in the present case, that the termination of the professional relationship is the beginning and end of the analysis in determining when a professional malpractice claim has accrued, tolls the limitation period in a potentially large number of professional malpractice cases, pending the ultimate and final termination of the professional relationship. Under the majority‘s interpretation of subsection 5838(1), a professional relationship may exist for one hundred years; if,
In enacting § 5838, it is reasonable to conclude that the Legislature addressed the conflict between the accrual of a simple tort claim, which generally involves but a single act or omission, and the accrual of a professional malpractice claim, where actual malpractice may occur within an extended, but nevertheless distinct, period of continuing professional service.7
WEAVER, C.J. (dissenting). I would grant leave to appeal in this case because I believe the issue presented needs oral argument.
accrued in 1990, at the time the malpractice occurred,
A second example might involve a patient visiting a dentist on five separate occasions for the purpose of repairing a tooth. In the course of this treatment, a root canal is necessary, and the dentist negligently damages the nerve that serves the tooth, causing severe and chronic jaw pain. The purpose of subsection 5838(1), prior to the enactment of § 5838a, would be served in its application because there would be no necessity to parse out the visits, thereby placing an extremely confusing burden on the parties or factfinder, to identify which specific visit resulted in the negligently provided treatment. It would only be necessary to examine the entire sequence of events, regarding that course of treatment, to determine the accrual date of the plaintiff‘s claim of professional malpractice.
Thus, a very different result is obtained under the facts of either example when the plain language of subsection 5838(1) is applied, compared with the result obtained under the general tort statute of limitation.
Notes
[Emphasis in original.]
The “last treatment” rule announced in De Haan v Winter, supra at 241, was codified in 1961 PA 236, the Revised Judicature Act of 1961,However, the majority here would place the burden upon the defendant to come forward, in bringing a motion for summary disposition pursuant to MCR 2.116(C)(7), with additional evidence establishing that the entirety of the professional relationship did not consist of “the matters out of which the claim for malpractice arose,” in order to prevail against a plaintiff‘s assertion that the claim for malpractice did not accrue until the end
Before the enactment of § 5838, the general tort statute of limitation would have applied, and Mr. Smith‘s claim against Lawyer Jones, for failing to object to personal jurisdiction in the first lawsuit, would have
(2) Except as otherwise provided in [MCL 600.5838a; MSA 27A.5838(1), which concerns medical malpractice], an action involving a claim based on malpractice may be commenced at any time within the [two-year limitation period of