Moon Ventures, LLC v. KPMG, LLPMoon Ventures, LLC v. KPMG, LLP
Oscar E. Reed, Jr., LaBorde Law Firm, Lafayette, Louisiana, for Plaintiff/Appellant, Moon Ventures, L.L.C.
Luke Motley, IV, Sanders, O‘Hanlon & Motley, P.L.L.C., Sherman, Texas, for Plaintiffs/Appellants, Moon Exploration, L.L.C., Mark H. Massey.
John Gregory Odom, Charles F. Zimmer II, John Alden Meade, Odom & Des Roches, L.L.P., New Orleans, Louisiana, Paul J. Hebert, Mark D. Sikes, Ottinger, Hebert, Sikes & Hebert, L.L.C., Lafayette, Louisiana, for Defendants/Appellees, KPMG, L.L.P., J. Mark Garrett.
Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JOHN D. SAUNDERS, JIMMIE C. PETERS, BILLY HOWARD EZELL, and JAMES T. GENOVESE, Judges.
GENOVESE, Judge.
Plaintiffs, Moon Ventures, L.L.C.; Mr. Rudy O. Young, Chapter 7 Trustee of the bankruptcy estate of Moon Ventures, L.L.C.; the bankruptcy estate of Moon Ventures, L.L.C.; Moon Exploration, L.L.C.; and Mark Massey (Plaintiffs will hereafter be referred to collectively as Moon Ventures), appeal the trial court‘s judgment sustaining the peremptory exception filed by Defendants, KPMG, L.L.C. and its employee, J. Mark Garrett (KPMG), dismissing Moon Ventures‘s claims against KPMG. For the following reasons, we reverse and remand.
FACTUAL AND PROCEDURAL HISTORY
In March of 1998, Moon Ventures entered into negotiations to purchase the assets of Nautica Marine Services, L.L.C. (Nautica). Moon Ventures hired KPMG to provide accounting services to assist them in the evaluation of Nautica‘s assets. KPMG was to confirm all of Nautica‘s accounts receivable valued over $10,000. KPMG drafted confirmation letters to the companies Nautica listed as owing Nautica money on those accounts receivable. KPMG tendered a draft report to Moon Ventures in July of 1998 stating that the “results of the confirmations were pending.” Moon Ventures alleges that KPMG failed to confirm the accounts receivable prior to the purchase of Nautica in September of 1998. Moon Ventures claims
On June 13, 2005, over six years after suit was filed, and after sporadic discovery and litigation, KPMG filed a “Peremptory Exception of Peremption pursuant to
The trial court granted KPMG‘s exception and dismissed the claims of Moon Ventures with prejudice. Moon Ventures appeals.
ASSIGNMENTS OF ERROR
Moon Ventures appeals the judgment of the trial court, asserting three assignments of error:
1. The trial court erred in holding that KPMG did not waive its right to claim the suit as premature when it answered the lawsuit without asserting a prematurity exception, as a dilatory exception of prematurity is the proper procedural mechanism for challenging a claim brought in district court prior to filing with the accounting review panel.
2. The trial court erred in holding that Plaintiff‘s claims were perempted pursuant to
La.R.S. 9:5604 and the Louisiana Accountancy Act [La.R.S. 37:71 , et seq.].3. The trial court erred in holding that the review panel provisions of the Louisiana Accountancy Act were constitutional.
Because the first two assignments of error are so closely related in this matter, we shall address them together. Because the constitutionality of the Louisiana Accountancy Act was not properly raised or ruled on in the trial court below, nor did Defendants alert the attorney general that the constitutionality of the act was under attack as required by law1, we need not and do not address the third assignment of error relative to the constitutionality of the Louisiana Accountancy Act.
STANDARD OF REVIEW
The issue before this court is whether the Moon Ventures lawsuit, which was filed within one year of the alleged negligence, has perempted, considering the time constraints imposed by
DISCUSSION
This case involves the application of
A. No action for damages against any accountant duly licensed under the laws of this state, or any firm as defined in R.S. 37:71, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide professional accounting service shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered; however, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect.
B. The provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged act, omission, or neglect occurred. . . . The one-year and three-year periods of limitation provided in Subsection A of this Section are peremptive periods within the meaning of Civil Code Article 3458 and, in accordance with Civil Code Article 3461, may not be renounced, interrupted, or suspended.
Louisiana Revised Statutes 37:102 provides, in pertinent part:
A. All claims against certified public accountants or firms, other than claims validly agreed for submission to a lawfully binding arbitration procedure, shall be reviewed by a public accountant review panel established pursuant to R.S. 37:109.
B. Review of a claim by a public accountant review panel shall not take place unless, within the time limitations provided for in R.S. 9:5604, a claimant files with the society a written request for review of the claim and pays to the society a one hundred dollar filing fee to defray the society‘s administrative costs incurred in performing the duties imposed on it by this Part.
Louisiana Revised Statutes 37:105, as it existed at the time of the filing of the Moon Ventures lawsuit, provides, in pertinent part:
A. Except as provided in this Part, no action against a certified public accountant or firm or his insurer may be commenced in any court before the claimant‘s request for review has been presented to a public accountant review panel established pursuant to this Part and the panel has issued a written opinion.
In the same year that the legislature enacted
A claimant‘s filing with the society of a written request for review and paying
to the society of the one hundred dollar filing fee in accordance with R.S. 37:102(B) shall be deemed that claimant‘s exercise of his right to seek judicial cognizance of the claim or claims described in the written request for review for purposes of R.S. 9:5604. . . .
As set forth in Ascension School Employees Credit Union v. Provost, Salter, Harper & Alford, L.L.C., 04-1227, pp. 11-12, (La.App. 1 Cir. 6/10/05), 916 So.2d 252, 258-59 (footnotes omitted):
The time periods that govern actions for professional accountant liability are set forth in LSA-R.S. 9:5604 and are peremptive. Thus, if the right to bring such a claim is not exercised within those time periods, the claim is extinguished. See LSA-C.C. art. 3468. Overlaid on the requirements of LSA-R.S. 9:5604 are those set forth in Title 37 relative to review panels. Applying principles of statutory construction to harmonize the applicable statutes, we turn to LSA-R.S. 37:125. Therein, the legislature explicitly provided that a claimant is deemed to have exercised its right to bring a claim for professional accountant liability and prevents the extinguishing effect of peremption when it files a request for review by a review panel. Thus, we interpret the applicable statutes to provide that peremption under LSA-R.S. 9:5604 is avoided when a claimant files a request for review of its claim of professional accounting liability within one year of the negligent act, or one year of discovering the negligent act, but not more than three years after the negligent act. See LSA-R.S. 9:5604; LSA-R.S. 37:102; LSA-R.S. 37:125.
Moon Ventures argues that the review panel requirement and KPMG‘s right to assert peremption were waived due to KPMG‘s failure to file an exception of prematurity. In support of its contention, Moon Ventures cites Solow v. Heard, McElroy & Vestel, L.L.C., 05-1028, pp. 4-5, (La.App. 4 Cir. 4/12/06), 937 So.2d 875, 878, writ denied, 06-1680 (La.10/6/06), 938 So.2d 80, which states that “[t]he jurisprudence has recognized that the parties may waive the [review] panel by failing to assert a dilatory exception of prematurity timely as required by
La. R.S. 40:1299.39.1 provides a similar provision for any claims against a state health care provider in that they must be brought before a medical review panel before suit may be commenced in a court. This court and the Louisiana Supreme Court have held the dilatory exception of prematurity is the proper procedural mechanism for a qualified health care provider to invoke when a medical malpractice plaintiff has failed to submit the claim for decision by a medical review panel before filing suit against the provider. See Spradlin v. Acadia-St. Landry Medical Foundation, 98-1977, p. 4 (La.2/29/00), 758 So.2d 116, 119.La C.C.P. art. 926(B) states, “All objections which may be raised through the dilatory exception are waived unless pleaded therein.” The parties have not raised this objection and it is waived.
Id. at 1259, fn. 3.
KPMG argues that while it may have waived the right to assert a dilatory exception of prematurity, it did not waive the right to the review panel, which may only be waived “[b]y written agreement of both parties.”
The issue before us is not whether peremption has run, but whether KPMG waived its right to require that the matter be presented to the review panel. It is undisputed that Moon Ventures filed its claim in a court of competent jurisdiction within one year of the alleged negligence as required by
DECREE
For the above reasons, we find the ruling of the trial court sustaining KPMG‘s exception of peremption and dismissing the claims of Moon Ventures to be legally incorrect. Therefore, the judgment of the trial court is reversed, and this matter is remanded to the trial court for further proceedings. Costs of this appeal are assessed against Defendants, KPMG, L.L.C. and J. Mark Garrett.
REVERSED AND REMANDED.
EZELL, J. dissents and assigns written reasons.
EZELL, J., dissenting.
I respectfully disagree with the majority opinion and, for the following reasons, would affirm the decision of the trial court.
The majority correctly notes that this case involves application of
A. No action for damages against any accountant duly licensed under the laws of this state, or any firm as defined in R.S. 37:71, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide professional accounting service shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered; however, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect.
B. The provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged act, omission, or neglect occurred. . . . The one-year and three-year periods of limitation provided in Subsection A of this Section are peremptive periods within the meaning of Civil Code Article 3458 and, in accordance with Civil Code Article 3461,
may not be renounced, interrupted, or suspended.
Louisiana Revised Statute 37:102 provides, in pertinent part:
A. All claims against certified public accountants or firms, other than claims validly agreed for submission to a lawfully binding arbitration procedure, shall be reviewed by a public accountant review panel established pursuant to R.S. 37:109.
B. Review of a claim by a public accountant review panel shall not take place unless, within the time limitations provided for in R.S. 9:5604, a claimant files with the society a written request for review of the claim and pays to the society a one hundred dollar filing fee to defray the society‘s administrative costs incurred in performing the duties imposed on it by this Part.
Louisiana Revised Statute 37:105, as it existed at the time of filing, provides:
A. Except as provided in this Part, no action against a certified public accountant or firm or his insurer may be commenced in any court before the claimant‘s request for review has been presented to a public accountant review panel established pursuant to this Part and the panel has issued a written opinion.
In the same year that the legislature enacted
A claimant‘s filing with the society of a written request for review and paying to the society of the one hundred dollar filing fee in accordance with R.S. 37:102(B) shall be deemed that claimant‘s exercise of his right to seek judicial cognizance of the claim or claims described in the written request for review for purposes of R.S. 9:5604. . . .
As set forth in Ascension School Employees Credit Union v. Provost, Salter, Harper & Alford, L.L.C., 04-1227, p. 11-12, (La.App. 1 Cir. 6/10/05), 916 So.2d 252, 258-259 (footnotes omitted):
The time periods that govern actions for professional accountant liability are set forth in LSA-R.S. 9:5604 and are peremptive. Thus, if the right to bring such a claim is not exercised within those time periods, the claim is extinguished. See LSA-C.C. art. 3468. Overlaid on the requirements of LSA-R.S. 9:5604 are those set forth in Title 37 relative to review panels. Applying principles of statutory construction to harmonize the applicable statutes, we turn to LSA-R.S. 37:125. Therein, the legislature explicitly provided that a claimant is deemed to have exercised its right to bring a claim for professional accountant liability and prevents the extinguishing effect of peremption when it files a request for review by a review panel. Thus, we interpret the applicable statutes to provide that peremption under LSA-R.S. 9:5604 is avoided when a claimant files a request for review of its claim of professional accounting liability within one year of the negligent act, or one year of discovering the negligent act, but not more than three years after the negligent act. See LSA-R.S. 9:5604; LSA-R.S. 37:102; LSA-R.S. 37:125.
Moon Ventures did not and has never filed a request for review of its claim of professional accounting liability. Accordingly, it has never exercised its right to bring a claim under Title 37. Thus, it has failed to avoid peremption under
Moon Ventures’ main claim is that the review panel requirement, and therefore, the exception of peremption, were waived due to the lack of an exception of prematurity. This argument is based mainly on language in Solow v. Heard, 05-1028, p. 4-5, (La.App. 4 Cir. 4/12/06), 937 So.2d 875, 878, writs denied, 06-1680 (La.10/6/06), 938 So.2d 80, stating that “[t]he jurisprudence has recognized that the parties may waive the panel by failing to assert a dilatory exception of prematurity timely as required by
La. R.S. 40:1299.39.1 provides a similar provision for any claims against a state health care provider in that they must be brought before a medical review panel before suit may be commenced in a court. This court and the Louisiana Supreme Court have held the dilatory exception of prematurity is the proper procedural mechanism for a qualified health care provider to invoke when a medical malpractice plaintiff has failed to submit the claim for decision by a medical review panel before filing suit against the provider. See Spradlin v. Acadia-St. Landry Medical Foundation, 98-1977, p. 4 (La.2/29/00), 758 So.2d 116, 119.La C.C.P. art. 926(B) states, “All objections which may be raised through the dilatory exception are waived unless pleaded therein.” The parties have not raised this objection and it is waived.
Id. At 1259, fn 3.
I feel that this language dealing with the Medical malpractice Act (MMA) indicates that the exception of prematurity is waived, not the review panel. Additionally, the Fourth Circuit cases of Wesco v. Columbia Lakeland Medical Center, 00-2232 (La.App. 4 Cir. 11/14/01), 801 So.2d 1187, writs denied, 01-3304 (La.3/8/02), 811 So.2d 884, and Farve v. Jarrot, 04-1424 (La.App. 4 Cir. 10/13/04), 886 So.2d 594, writs denied, 05-7 (La.3/11/05), 896 So.2d 74, which are more recent than Saia, stand for the premise that, based on LeBreton v. Rabito, 97-2221 (La.7/8/98), 714 So.2d 1226, in the context of the MMA, a suit filed before a review panel is requested is premature even if no exception of prematurity is filed, and that the failure to file the exception of prematurity does not prevent the assertion of prescription, or here, peremption.
While KPMG did, in fact, waive its right to assert an exception of prematurity, it did not waive the right to the review panel, which may only be waived “[b]y written agreement of both parties.”
I respectfully dissent.