Late last year, the Court of Appeals issued a published decision in Broz v Plante & Moran, PLLC, which provided some much-needed clarity regarding the applicable standards for accountant-malpractice claims. (See our post about Broz here.)  But that clarity was short-lived, as the Supreme Court recently issued an order vacating part of the decision.

At issue in Broz is MCL 600.2912a, which requires the plaintiff to prove that the defendant failed to provide the recognized standard of applicable professional care. The plaintiffs in Broz argued that this statute doesn’t apply to accountant-malpractice claims.  But the Court of Appeals disagreed. In part II-A of the decision, the Court held that the burden imposed by MCL 600.2912a applies to all malpractice claims.  The Court went on to find that the report and affidavit of plaintiffs’ accounting expert failed to meet this burden.

The plaintiffs applied for leave to appeal to the Supreme Court. In lieu of granting their application, the Supreme Court vacated and directed the Court of Appeals to reconsider part II-A of the decision in light of Cox v Flint Board of Hospital Managers. In Cox, the Supreme Court held that the plain language of MCL 600.2912a doesn’t apply to nurses because they don’t practice medicine. Instead, a common-law standard of care applies. The Supreme Court didn’t go any further and thus didn’t address what would be required (such as expert testimony) to establish the common-law standard of care.  The Court of Appeals in Broz did address this, noting that expert testimony is usually required to establish the applicable standard of care and a breach of the applicable standard of care, unless the lack of professional care is so obvious as to be within the common knowledge and experience of a layman. But the Supreme Court’s remand order vacated that part of the Court of Appeals’ decision.

What this Decision Means for Accountants

By vacating part II-A of Broz, the Supreme Court left plaintiffs with an avenue to argue that expert testimony isn’t required in accountant-malpractice actions. On remand, the Court of Appeals could determine that expert testimony is generally required to establish the applicable standard of care in accountant-malpractice actions, even if MCL 600.2912a doesn’t apply to accountants. But until an opinion is issued, we’re left to rely on analogous case law in other types of professional-malpractice cases.

We can continue to rely on the part of Broz that dismissed the claims for breach of contract, negligent misrepresentation, breach of fiduciary duty, and “estoppel to mitigate and indemnity” as duplicative of the claims for accountant malpractice.  The Supreme Court’s remand order left that part of Broz intact.

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