This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff, a physician, filed a professional negligence claim against her former accountant and accounting firm. The Plaintiff alleged that the Defendants negligently advised her and her then-husband to invest in a limited partnership, which later resulted in significant tax liabilities following an IRS audit and subsequent legal proceedings. The IRS issued a Final Partnership Administrative Adjustment (FPAA) notice in 1989, and the Tax Court ruled in favor of the IRS in 1995, leading to the Plaintiff's tax liability assessment in 1996 (paras 2-5).
Procedural History
- District Court of Bernalillo County: Granted summary judgment in favor of the Defendants, dismissing the Plaintiff's claim on the basis that it was barred by the statute of limitations.
Parties' Submissions
- Plaintiff-Appellant: Argued that her cause of action for professional negligence did not accrue until 1995, when the Tax Court ruled in favor of the IRS, or alternatively in 1996, when she received the IRS tax assessment. She contended that the FPAA notice in 1989 did not constitute "actual injury" (paras 7-9).
- Defendants-Appellees: Asserted that the Plaintiff's claim was barred by the four-year statute of limitations, as her cause of action accrued in 1989 when the IRS issued the FPAA notice, which they argued constituted "actual injury" (paras 7-8).
Legal Issues
- Did the Plaintiff's cause of action for professional negligence accrue upon receipt of the IRS FPAA notice in 1989, thereby barring her claim under the statute of limitations?
Disposition
- The Court of Appeals of New Mexico affirmed the District Court's grant of summary judgment, holding that the Plaintiff's claim was barred by the statute of limitations (para 21).
Reasons
Per Bustamante J. (Alarid and Bosson JJ. concurring):
The Court held that the Plaintiff's cause of action accrued in 1989 when she received the FPAA notice from the IRS. Under New Mexico law, a professional negligence claim accrues when the client sustains an "actual injury" and discovers, or reasonably should discover, the facts essential to the cause of action. The Court determined that the FPAA notice constituted "actual injury" because it was the functional equivalent of a notice of tax deficiency, directly affecting the Plaintiff's tax liability as a limited partner. The Court rejected the Plaintiff's argument that her injury did not occur until the Tax Court's 1995 decision or the 1996 IRS assessment, emphasizing that the FPAA notice imposed liability and triggered the statute of limitations (paras 7-20).
Per Bosson J., specially concurring:
Judge Bosson concurred with the majority but expressed dissatisfaction with the "actual injury" analysis established in prior case law, particularly in Sharts v. Natelson. He criticized the precedent for encouraging premature litigation but acknowledged that it remains binding law. He agreed that the Plaintiff's attempts to distinguish Sharts were unpersuasive (paras 23).