COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 61203 WILLIAM E. PHILPOTT, ET AL. : : Plaintiff-appellants : : JOURNAL ENTRY -vs- : AND : OPINION ERNST & WHINNEY : : Defendant-appellee : : DATE OF ANNOUNCEMENT : NOVEMBER 25, 1992 OF DECISION : CHARACTER OF PROCEEDING : Civil appeal from Court of Common Pleas : Case No. CV-172526 JUDGMENT : AFFIRMED DATE OF JOURNALIZATION : APPEARANCES: For plaintiff-appellants: For defendant-appellee: EDWARD I. STILLMAN, ESQ. ERIC H. ZAGRANS, ESQ. R. JACK CLAPP, ESQ. MICHAEL S. POULOS, ESQ. 1610 Euclid Avenue 2000 National City Center Cleveland, OH 44115 Cleveland, OH 44114 - 2 - JOHN V. CORRIGAN, J. Plaintiffs-appellants, William E. Philpott, Robert W. Giles, Philpott Corporation dba Sterling Engine Supply, Philpott-Giles Partnership, and Cummins Diesel of Northern Ohio (collectively "appellants") appeal the decision of the trial court which granted summary judgment to Ernst & Whinney, nka Ernst & Young ("E&Y") on a claim of accountant malpractice. The trial court found that appellants' claims were time barred under the applica- ble statute of limitation contained in R.C. 2305.09. The facts giving rise to this appeal are as follows: From the early 1970s through July of 1984, appellants utilized the accounting services of E&Y. Pursuant to this relationship E&Y provided services to the appellants including investment advice, auditing of financial statements, and tax return preparation. The parties' relationship was terminated in July of 1984. In late 1985 or early 1986, the Internal Revenue Service ("IRS") began to audit several of the appellants' tax returns which were prepared by E&Y during the years of 1982, 1983 and 1984. In early May of 1987, the appellants received notices from the IRS of deficiency assessments rendered against their audited returns. - 3 - On July 7, 1989, appellants commenced this action against 1 E&Y alleging accountant malpractice. Specifically, it was contended that E&Y rendered improper investment advice and tax services, including the preparation of tax returns. In addition to the claims based upon negligence, appellants asserted a claim for breach of an oral contract based on the same underlying conduct of E&Y. E&Y answered the complaint and asserted a counterclaim against the appellants for money owed on an account. E&Y filed a motion for summary judgment alleging that the appellants' claims were barred by the statute of limitations. R.C. 2305.09. The appellants filed a brief in opposition to the motion. On October 22, 1990, the trial court granted E&Y's motion for summary judgment. The trial court's decision disposed of all appellants' claims against E&Y. However, E&Y's counter- claim and the claims against the additional defendants remained pending before the trial court. Appellants subsequently filed a motion with the trial court requesting Civ. R. 54(B) certification of the order granting E&Y summary judgment. The motion was granted and the trial court certified that "there was no just reason for delay." Before addressing the merits of the instant appeal, we must first address E&Y's motion to dismiss the appeal which has been referred to this panel for disposition. Therein, E&Y argues that 1 In addition to the claims against E&Y, appellants alleged claims against Seeley, Savidge & Aussem; Hillow Dornsk & Co.; and Mark E. Gammons. - 4 - the grant of summary judgment is not a final appealable order because their counterclaim and claims against other defendants remain pending in the trial court. For the following reasons E&Y's motion to dismiss is not well-taken and denied. An order of a court is a final appealable order only if the requirements of both Civ. R. 54(B), if applicable, and R.C. 2505.02 are met. Chef Italiano Corp. v. Kent State Univ. (1989), 44 Ohio St.3d 86, syllabus. Moreover, an order which adjudicates one or more but fewer than all the claims or the rights and liabilities of fewer than all the parties must meet the requirements of R.C. 2505.02 and Civ. R. 54(B) in order to be final and appealable. Noble v. Colwell (1989), 44 Ohio St.3d 92, syllabus. An order fully adjudicating a claim and accompanied by a Civ. R. 54(B) determination and direction is final and appeal- able despite the fact that a counterclaim remains pending. Id. at 94. R.C. 2505.02 in relevant part defines a final order as "an order affecting a substantial right in an action which in effect determines the action and prevents a judgment." Id. at 88. In the instant case the trial court's order granting summary judg- ment deprives the appellant of a remedy, determines the action and prevents a judgment against E&Y. Thus, it constitutes a final order pursuant to R.C. 2505.02. Furthermore, Civ. R. 54(B) provides in relevant part: When more than one claim for relief is presented in an action, whether as a claim, counterclaim, - 5 - cross-claim or third-party claim, or when multiple parties are involved, the court may enter final judgment as to one or more but fewer than all of the claims or parties only upon an express deter- mination that there is no just reason for delay. In the absence of such determination, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties. In the instant case the trial court's order granting summary judgment included the Civ. R. 54(B) language "no just reason for delay." Accordingly, it satisfies the requirements contained in Civ. R. 54(B). Given our determination that the trial court's order grant- ing summary judgment in favor of E&Y meets the requirements of R.C. 2505.02 and Civ. R. 54(B), the order is final and appeal- able. Chef Italiano, supra; Noble, supra. Thus, E&Y's motion to dismiss the instant appeal is denied. On appeal the appellants present the following two assign- ments of error for review. I. THE TRIAL COURT ERRED, TO THE DETRIMENT OF THE PLAINTIFF-APPELLANTS, IN GRANTING DEFEN- DANT-APPELLEE ERNST & YOUNG'S MOTION FOR SUMMARY JUDGMENT AS APPELLANTS' CAUSE OF ACTION WAS BROUGHT WITHIN FOUR YEARS OF WHEN IT ACCRUED. II. THE TRIAL COURT ERRED, TO THE DETRIMENT OF THE PLAINTIFF-APPELLANTS, IN GRANTING DEFEN- DANT-APPELLEE ERNST & YOUNG'S MOTION FOR SUMMARY JUDGMENT AS THERE EXISTED GENUINE - 6 - ISSUES OF MATERIAL FACT TO BE DETERMINED BY THE TRIER OF FACT. Appellants argue in their first assignment of error that the trial court erred in concluding that the claims against their former accountants were barred by the four-year statute of limitations found in R.C. 2305.09. Specifically, appellants argue that the four-year limitation period applicable to accoun- tant malpractice actions does not commence in actions involving tax deficiency assessments until the IRS has completed its audit and assessed a deficiency. For the following reasons appellants' argument lacks merit. Claims of accountant negligence are governed by the four- year statute of limitations for general negligence claims found in R.C. 2305.09(D). Investors REIT One v. Jacobs (1989), 46 Ohio St.3d 176, paragraph one of the syllabus. Moreover, the "discov- ery rule" is not available to claims of professional negligence brought against accountants. Id. at paragraph two of the sylla- bus. The "discovery rule" generally provides that a cause of action accrues, for statute of limitations purposes, at the time the plaintiff discovers or, in the exercise of reasonable care, should have discovered the injury. Id. at 179. E&Y maintains that appellants' action was time-barred by the four-year statute of limitations and we agree. It is uncontro- verted that the alleged negligent acts of E&Y occurred prior to the termination of the parties' accountant-client relationship in July of 1984. Moreover, the instant action was commenced on July - 7 - 7, 1989, approximately five years following the termination of the parties' relationship. Despite these facts appellants argue that the cause of action did not accrue until the IRS issued its deficiency assessments in early May of 1987. We specifically reject appellants' contention and find that it is an ineffective attempt to circumvent the four-year statute of limitations contained in R.C. 2305.09. In Jacobs, supra, the accounting services performed on behalf of the plaintiff were completed in 1975. Thus, the Supreme Court of Ohio explicitly held "[t]he four-year statute of limitations governing [plaintiffs'] claims in accountant negli- gence commenced to run when the allegedly negligent act was committed, or, in this case, no later than 1975." Jacobs, supra, at 182. Furthermore, this court has previously held that a cause of action based on accountants' negligence accrues at the time of the negligent conduct. Holsman Neon & Electric Co. v. Kohn (1986), 34 Ohio App. 3d 53. In light of the above, we conclude that the four-year statute of limitations for accountant malpractice began to run when the allegedly negligent acts were committed, or, no later than the date of termination of the accountant-client relation- ship in July of 1984. Jacobs, supra. In the instant case, the evidentiary materials reveal that alleged negligent investment advice was rendered in 1981 and 1982. The alleged negligent tax preparation occurred in the - 8 - years 1982, 1983 and 1984. Further, the parties terminated their accountant-client relationship in July of 1984. In late 1985 or early 1986, the IRS began to audit several of the appellants' tax returns and, in early May of 1987, the appellants received notices from the IRS of deficiency assessments rendered against their audited returns. We thus conclude that the four-year statute of limitations contained in R.C. 2305.09 expired in July of 1988, approximately one year prior to the filing of the instant suit. Moreover, we note that the appellants had in excess of one year after they received IRS deficiency assessments to bring this action within the limitations period yet they failed to do so. Accordingly, we overrule appellants' first assignment of error. Appellants also maintain that genuine issues of material fact exist regarding E&Y's alleged breach of an oral contract. Since the statute of limitations for oral contracts is six years from the date of breach (R.C. 2305.07), appellants contend that their action against E&Y was timely filed for breaches that occurred after July 7, 1983. Appellants' argument lacks merit. Review of the appellants' breach of oral contract claims reveal that they are, in essence, restatements of their profes- sional negligence or malpractice claims against E&Y. Moreover, appellant Giles, in his deposition testimony, acknowledged that their professional negligence and breach of contract claims were - 9 - predicated upon professional malpractice by the account appellees. (Giles Deposition at p. 16.) Additionally, review of the Jacobs case reveals that the plaintiffs therein also raised breach of contract claims yet the court applied the four-year statute of limitations contained in R.C. 2305.09. Similarly, we find that the four-year statute of limitations contained in R.C. 2305.09 is applicable in the instant case and not the six-year statute of limitations con- tained in R.C. 2305.07. We refuse to allow the appellants to transform their professional negligence or malpractice action into a breach of contract action for the sake of extending the statute of limitations. Accordingly, appellants' second assignment of error is overruled. Judgment affirmed. - 10 - It is ordered that appellee recover of appellants its costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. DAVID T. MATIA, C.J., CONCURS. JOHN F. CORRIGAN, J., DISSENTS IN PART SEE DISSENTING OPINION ATTACHED. JUDGE JOHN V. CORRIGAN* (*SITTING BY ASSIGNMENT: John V. Corrigan, Retired Judge of Court of Appeals of Ohio, Eighth Appellate District). N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announce- ment of decision (see Rule 26). Ten (10) days from the date hereof, this document will be stamped to indicate journalization, at which time it will become the judgment and order of the court and time period for review will begin to run. COURT OF APPEALS OF OHIO EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 61203 : WILLIAM E. PHILPOTT, ET AL : : : D I S S E N T I N G Plaintiffs-Appellants : : O P I N I O N vs. : : ERNST & WHINNEY : : : : Defendant-Appellee : : DATE: NOVEMBER 25, 1992 JOHN F. CORRIGAN, J., DISSENTING IN PART: Although I concur with the majority's determination that plaintiff's claim for negligent investment advice is barred by the statute of limitations, I find plaintiff's claims for negli- gent tax return preparation to be timely pursuant to R.C. 2305.0- 9, as this tort was not complete until tax deficiencies were subsequently assessed. Accordingly, I respectfully dissent. A statute of limitations is remedial in nature and is to be given a liberal construction in order to allow cases to be decided upon their merits. Elliott v. Fosdick & Hilmer, Inc. (1983), 9 Ohio App.3d 309, 313. "'[E]very reasonable presumption will be indulged and every doubt will be resolved in favor of affording rather than denying a plaintiff his day in court.'" - 2 - Id., quoting Draher v. Walters (1935), 130 Ohio St. 92, 94; see, also, Rowe v. Bliss (1980), 68 Ohio App.2d 247, 249. In determining when a cause of action "arose," and the statute of limitations begins to run, it is a general rule that a cause of action accrues at the time the wrongful act was committed. See O'Stricker v. Jim Walter Corp. (1983), 4 Ohio St.3d 84, 87; see, also Holsman Neon & Electric Sign Co. v. Kohn (1986), 34 Ohio App.3d 53, 55. It has been noted, however, that in some instances, application of this general rule "'would lead to the unconscionable result that the injured party's right to recovery can be barred by the statute of limitations before he is even aware of its existence.'" O'Stricker v. Jim Walter Corp., supra. Therefore, "In such cases, a cause of action for damages does not arise until actual injury or damage ensues. See Kunz v. Buckeye Union Ins. Co. (1982), 1 Ohio St.3d 79 (cause of action against insurer for failure to obtain coverage accrued at date of loss); Velotta v Leo Petronzio Landscaping, Inc. (1982), 69 Ohio St.2d 376 [23 O.O.3d 346], paragraph two of the syllabus ('actual injury' rule applied in action for negligence brought by vendee against builder- vendor of completed residence)." Id. That is, the tort is not deemed complete until there has been invasion of a legally protected interest of the plaintiff. See Kunz v. Buckeye Union Ins. Co., supra; Sedar v. Knowlton Constr. Co. (1990), 49 Ohio St.3d 193, 198; Elliott v. Fosdick & Hilmer, Inc., supra. - 3 - While the "discovery rule" is not applicable to claims of professional negligence brought against accountants, see Inves- tors REIT One v. Jacobs (1989), 46 Ohio St.3d 176, paragraph two of the syllabus, this rule is not a "discovery rule," as it deals with the delayed occurrence of damages, not the discovery of injury. See Sedar v. Knowlton Constr. Co., supra. By application of the delayed occurrence of damages rule, an action against an accountant for negligent preparation of tax returns has been held to accrue when the plaintiff is notified of an I.R.S. assessment, and not when the allegedly negligent accounting services were rendered. See Sladky v. Lomax (1988), 43 Ohio App.3d 4; accord Wisecup v. Gulf Development (1989), 56 Ohio App.3d 162 (plaintiff's cause of action against his employer for negligently misreporting his income to the I.R.S. accrued when the I.R.S. refused to recalculate his tax liability, and not when the allegedly negligent misreporting occurred). The Sladky court noted, moreover, that this rule is consistent with this court's decision in Holsman Neon & Electric Sign Co. v. Kohn, supra, as Kohn involved accountants' failure to detect employee forgery and embezzlement and the tort was therefore complete at the time of the negligent conduct. Id. at 6. The rule is not consistent, however, with the court's previous deci- sion in Richard v. Stachle (1980), 70 Ohio App.2d 93, but since Sladky was decided by the same court, it clearly supplants the court's previous decision in Richard. - 4 - Finally, other jurisdictions which have examined the issue have determined that actions against accountants for negligent preparation of tax returns do not accrue until the plaintiff is notified on an I.R.S. assessment. See Streib v. Veigel (1985), 109 Idaho 174, 706 P.2d 63; Chisolm v. Scott (App. 1974), 86 N.M. 707, 526 P.2d 1300; Adkins v. Crosland (Texas 1967), 417 S.W.2d 150. In this case, the evidentiary materials reveal that plaintiffs lost money on the investments recommended by the defendant short- ly after defendant's advice was given in 1981 and 1982. Thus, this tort accrued by 1982, and, no later than 1984 when the parties terminated their relationship. Accordingly, the com- plaint, filed in 1989, was not timely as to these claims. The 1982, 1983 and 1984 tax preparation, however, did not yield damages until tax deficiencies were assessed in May 1987. Ac- cordingly, this tort accrued at that time. I would therefore conclude that the action was timely with respect to the claim for negligent tax preparation, and would reverse and remand for disposition of this claim. .