Analyzing the Broz. v. Plante & Moran Decision



Accounting malpractice can occur when an accountant fails to exercise the appropriate level of due professional care in the conduct of an engagement and such failure causes damages. Malpractice suits, while not exactly common, are not entirely unheard of but a recent series of rulings from the Michigan Court of Appeals, upheld by the Michigan Supreme Court in February offers some further insight into the burden of proof that a plaintiff must carry in order to establish a claim.

In the case Broz v. Plante & Moran PLLC, Robert F. and Kimberly Broz brought a suit against Plante & Moran, PLLC (Plante Moran), claiming accounting malpractice relating to some tax services purportedly performed by the firm in 2002. According to court documents, the plaintiffs’ claims included breach of contract, negligent misrepresentation, breach of fiduciary duty and “estoppel to mitigate and indemnity1.” After nearly 7 years of litigation, including multiple appeals conducted by the plaintiffs, the multiple court rulings in favor of Plante Moran were upheld up by the Michigan Supreme Court on Feb. 21, 2021.

What ruling, you ask? Using examples from previous cases, the final Court ruling in February held that accountant-malpractice plaintiffs, in accordance with other malpractice plaintiffs, carry the burden of proof when proving both the standard of care and a breach of the standard of care. Because the plaintiff’s expert witness did not originally testify or report about the applicable standard of care or how Plante Moran allegedly violated any applicable standard, Plante Moran was awarded summary disposition of the claim in the original ruling. This led to an appeal which tested the question of who was responsible for establishing and proving a violation of the standard of care in accounting malpractice suits.

To help us understand what this means for Michigan CPAs and accounting firms, the MICPA reached out to CEO of Miller Canfield Michael Hartmann for his insights regarding the implications of this ruling moving forward. “The main message is that the plaintiff in a malpractice action must produce an expert opinion that the CPA violated a specific standard of care enunciated by the AICPA or some authoritative body such as the IRS,” Hartmann explains. “The expert cannot just opine that he or she would have done it differently. This principle is particularly important in complex tax or audit cases.”

To discuss what this means for you or your practice, login to MICPA Connect and share your insights, concerns and questions.

  1. Robert F Broz V Plante & Moran PLLC.Justia U.S. Law. Jan. 2020. Accessed on 18 Jun 2021.

Source: MICPA

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