Horan et al v. Detello et al

Filing 46

OPINION AND ORDER by Judge Claire V Eagan - Defendant Regier, Carr & Monroe, LLP's Motion to Dismiss (Dkt. # 19), Defendant Kern & Associates' and Kern & Company's Motion to Dismiss and Brief in Support (Dkt. # 21), and Defendant Nicholas Detello's Joinder in Motions to Dismiss (Dkt. # 43) are granted, and plaintiffs' complaint (Dkt. # 2) is dismissed. Plaintiffs may file an amended complaint realleging their negligence and breach of fiduciary duty claims no later than July 15, 2015. ; setting/resetting deadline(s)/hearing(s): ( Miscellaneous Deadline set for 7/15/2015); granting 43 Joinder in Motion; granting 19 Motion to Dismiss; granting 21 Motion to Dismiss (Re: 2 Complaint ) (RGG, Chambers)

UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
KIMBERLY HORAN and
DAVID HORAN,
Plaintiffs,
v.
NICHOLAS DETELLO,
KERN & ASSOCIATES,
KERN & COMPANY, P.C., and
REGIER, CARR & MONROE, LLP,
Defendants.

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Case No. 15-CV-0051-CVE-PJC

OPINION AND ORDER
Now before the Court is Defendant Regier, Carr & Monroe, LLP’s Motion to Dismiss (Dkt.
# 19), Defendant Kern & Associates’ and Kern & Company’s Motion to Dismiss and Brief in
Support (Dkt. # 21), and Defendant Nicholas Detello’s Joinder in Motions to Dismiss (Dkt. # 43).
Defendants argue that plaintiffs failed to attach an affidavit of merit to their complaint, and that
plaintiffs’ complaint should be dismissed due to their failure to comply with OKLA. STAT. tit. 12, §
19.1. Defendants also argue that plaintiffs have failed to state a claim upon which relief can be
granted.
Plaintiffs Kimberly Horan and David Horan filed this case alleging claims of negligence and
breach of fiduciary duty against Nicholas Detello, Kern & Associates and Kern & Company, P.C.
(collectively “Kern”), and Regier, Carr & Monroe, LLP (RCM). The complete factual allegations
of the complaint are as follows:
1.

Plaintiffs hired Defendant Detello to prepare their income tax returns for
many years. At some point, Defendant Detello joined Defendant Kern. In
November, 2012, Defendant Kern was acquired by the Tulsa, Oklahoma
branch of Defendant RCM. These Defendants are all jointly liable to
Plaintiffs.

2.

Defendants failed to properly prepare the Plaintiffs’ taxes, failed to respond
to issues regarding late payments and non-filing issues, and generally
neglected their fiduciary duties to the Plaintiffs after Defendants Detello,
Kern and RCM had been paid for their services.

Dkt. # 2, at 2. Plaintiffs state that they are residents of Pennsylvania and that defendants are
residents of Oklahoma, and plaintiffs seek damages in excess of $75,000. Plaintiffs have not
attached an affidavit of merit to their complaint.
In considering a motion to dismiss under Rule 12(b)(6), a court must determine whether the
claimant has stated a claim upon which relief may be granted. A motion to dismiss is properly
granted when a complaint provides no “more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
A complaint must contain enough “facts to state a claim to relief that is plausible on its face”and the
factual allegations “must be enough to raise a right to relief above the speculative level.” Id.
(citations omitted). “Once a claim has been stated adequately, it may be supported by showing any
set of facts consistent with the allegations in the complaint.” Id. at 562. Although decided within
an antitrust context, Twombly “expounded the pleading standard for all civil actions.” Ashcroft v.
Iqbal, 556 U.S. 662, 684 (2009). For the purpose of making the dismissal determination, a court
must accept all the well-pleaded allegations of the complaint as true, even if doubtful in fact, and
must construe the allegations in the light most favorable to claimant. Twombly, 550 U.S. at 555;
Alvarado v. KOB-TV, LLC, 493 F.3d 1210, 1215 (10th Cir. 2007); Moffett v. Halliburton Energy
Servs., Inc., 291 F.3d 1227, 1231 (10th Cir. 2002). However, a court need not accept as true those
allegations that are conclusory in nature. Erikson v. Pawnee County Bd. Of County Comm’rs, 263
F.3d 1151, 1154-55 (10th Cir. 2001). “[C]onclusory allegations without supporting factual

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averments are insufficient to state a claim upon which relief can be based.” Hall v. Bellmon, 935
F.2d 1106, 1109-10 (10th Cir. 1991).
Defendants argue that plaintiffs filed a professional negligence case without attaching an
affidavit of merit to their complaint, and the case should be dismissed due to plaintiffs’ failure to
comply with § 19.1. Section 19.1 provides that:
A.1.

In any civil action for negligence wherein the plaintiff shall be required to
present the testimony of an expert witness to establish breach of the relevant
standard of care and that such breach of duty resulted in harm to the plaintiff,
except as provided in subsection B of this section, the plaintiff shall attach
to the petition an affidavit attesting that:

a.

the plaintiff has consulted and reviewed the facts of the claim with a qualified
expert,

b.

the plaintiff has obtained a written opinion from a qualified expert that
clearly identifies the plaintiff and includes the determination of the expert
that, based upon a review of the available material including, but not limited
to, applicable records, facts or other relevant material, a reasonable
interpretation of the facts supports a finding that the acts or omissions of the
defendant against whom the action is brought constituted negligence, and

c.

on the basis of the review and consultation of the qualified expert, the
plaintiff has concluded that the claim is meritorious and based on good cause.

OKLA. STAT. tit. 12, § 19.1. Plaintiffs respond that § 19.1 is unconstitutional under the Oklahoma
Constitution and that the statute is a rule of procedure that does not apply to cases in federal court.
Dkt. # 25, at 3-6; Dkt. # 27, at 3-6. Plaintiffs also argue that § 19.1 is inapplicable because
defendants’ negligence in failing to file tax returns is so obvious that no expert testimony is
necessary.
Before reaching plaintiffs’ arguments concerning § 19.1, the Court will initially determine
if plaintiffs have stated a claim upon which relief can be granted. As to plaintiffs’ negligence claim,
plaintiffs allege that Detello failed to prepare their tax returns “for many years,” but the complaint

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fails to specify the tax years for which tax returns were allegedly not filed. The complaint does not
provide defendants enough information for defendants to determine if they can assert a statute of
limitations defense, and the tax years at issue are a critical fact for defendants to have sufficient
notice of the claims against them. Plaintiffs argue that their claims were filed within the applicable
statute of limitations, because they did not discover that tax returns had not been filed until they
received a letter from the Internal Revenue Service (IRS) on June 24, 2013. Dkt. # 25, at 8.
However, this allegation is not included in plaintiffs’ complaint and it cannot be considered when
ruling on defendants’ motions to dismiss. This allegation also gives defendants no notice of when
the acts giving rise to plaintiffs’ claims occurred. The complaint fails to give defendants sufficient
notice of the factual basis for plaintiffs’ negligence claim, and this claim should be dismissed for
failure to state a claim upon which relief can be granted.
Plaintiffs also claim that defendants are liable for breach of fiduciary duty, and they appear
to be alleging that accountants in general owe a fiduciary duty to their clients. They also argue that
the existence of a fiduciary duty is a fact question that cannot be decided on a motion to dismiss.
Dkt. # 27, at 7. That does not mean a complaint may simply allege the legal conclusion that a
fiduciary duty existed, and there must be some factual allegations which if accepted as true tend to
show that a fiduciary duty actually existed. See Iqbal, 556 U.S. at 678 (“the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions”).
The Oklahoma Supreme Court has broadly defined the terms “fiduciary” or “confidential” when
explaining what types relationships can give rise to a fiduciary duty:

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The law regarding a fiduciary relationship is well-settled. Fiduciary or confidential
relationship has a broad meaning that includes legal, contractual, formal, and
informal relations and exists when one person trusts and relies upon another. Such
a relationship exists when one person acquires influence over another such that the
influenced allows the influencer to substitute his or her will for the influenced’s own.
The confidence’s source is of no consequence.
Horton v. Hamilton, 345 P.3d 357 (Okla. 2015). A fiduciary duty “may arise by kinship between
the parties, or professional, business, or social relations that would lead an ordinary prudent person
in the management of business affairs to repose a degree of confidence that largely results in the
substitution of the will of the defendant for that of the plaintiff in the material matters involved in
a transaction.” Krug v. Helmerich & Payne, Inc., 320 P.3d 1012, 1017 (Okla. 2013). Plaintiffs
argue that accountants owe their clients an “enhanced” duty, if not exactly a fiduciary duty, based
on the Oklahoma Supreme Court’s statement that the duty owed by an accountant is “comparable”
to the duties owed by doctors or lawyers to their clients. Stroud v. Arthur Andersen & Co., 37 P.3d
783,789 (Okla. 2001). However, Stroud concerned the use of professional accounting standards
to establish the breach of duty in a negligence case, and the Oklahoma Supreme Court did not hold
that accountants owe a fiduciary duty to their clients. There is no Oklahoma authority suggesting
that accountants have a per se fiduciary duty to their clients, and plaintiffs must allege some facts
tending to support a finding that defendants acquired some influence over plaintiffs that would give
rise to a fiduciary relationship. The mere fact that defendants were allegedly responsible for
preparing plaintiffs’ taxes is not sufficient to establish that defendants owed plaintiffs a fiduciary
duty, and plaintiffs’ breach of fiduciary duty claim should be dismissed.
Based on the Court’s determination that plaintiffs have failed to state a claim upon which
relief can be granted, it is unnecessary to reach the parties’ arguments concerning plaintiffs’ failure
to attach an affidavit of merit to their complaint. The Court notes that plaintiffs have attached an

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affidavit of merit to their responses to defendants’ motions to dismiss, and the affidavit appears to
comply with § 19.1. See Dkt. # 25-1; Dkt. # 27-1. The Court will allow plaintiffs to file an
amended complaint realleging their negligence and breach of fiduciary duty claims if they can allege
sufficient facts to support these claims and, if plaintiffs choose to file an amended complaint, the
affidavit of merit should be attached to the amended complaint.
IT IS THEREFORE ORDERED that Defendant Regier, Carr & Monroe, LLP’s Motion
to Dismiss (Dkt. # 19), Defendant Kern & Associates’ and Kern & Company’s Motion to Dismiss
and Brief in Support (Dkt. # 21), and Defendant Nicholas Detello’s Joinder in Motions to Dismiss
(Dkt. # 43) are granted, and plaintiffs’ complaint (Dkt. # 2) is dismissed.
IT IS FURTHER ORDERED that plaintiffs may file an amended complaint realleging their
negligence and breach of fiduciary duty claims no later than July 15, 2015.
DATED this 8th day of July, 2015.

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