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STATE OF MICHIGAN
COURT OF APPEALS


C. J. ENTERPRISES, LTD., a Michigan corporation, CYNTHIA JONES, and LLOYD JONES,

UNPUBLISHED July 9, 1996

Plaintiffs-Appellants, v RATTENBURY & ASSOCIATES, INC., a Michigan corporation, and BETTY J. RATTENBURY, jointly and severally, Defendants-Appellees. No. 165164 LC No. 92-3524-NZ

Before: White, P.J., and T.G. Kavanagh* and S.N. Andrews,** JJ. PER CURIAM. In this accounting negligence case, plaintiffs appeal as of right from the circuit court order granting summary disposition in favor of defendants on the basis that the period of limitations had expired. MCR 2.116(C)(7). We affirm in part and reverse in part. I Plaintiffs Cynthia and Lloyd Jones, owners of a trucking firm, C. J. Enterprises, Ltd., h ired defendants, who were "independent accountants" and enrolled agents of the Internal Revenue Service, not certified public accountants, to prepare plaintiffs' 1985 and 1986 tax returns. The sparse record in this case indicates that, in September 1987, the IRS conducted a civil audit of plaintiffs' 1986 corporate federal income tax return, form 1120. Thereafter, the scope of the audit was broadened to include investigation of plaintiffs' 1985 and 1986 individual and corporate tax returns. In March 1988, plaintiffs were notified by the IRS of a deficiency concerning their payment of employment taxes, and they signed * Former Supreme Court justice, sitting on the Court of Appeals by assignment. ** Circuit judge, sitting on the Court of Appeals by assignment. -1

an "Agreement to assessment and collection of additional tax" concerning this deficiency. Plaintiffs paid the deficiency. Sometime in late 1988, the criminal fraud division of the IRS began an investigation of plaintiffs' 1985 and 1986 individual and corporate tax returns. In September 1989, plaintiffs met with the two criminal fraud investigators, who indicated that in their preliminary opinion defendants had made various errors in the preparation of plaintiffs' returns and that taxes, penalties, and interest had accrued in excess of $100,000. Eventually, in October 1991, plaintiffs received a deficiency notice from the IRS. On December 3, 1991, plaintiffs filed a complaint against defendants alleging negligence. The complaint was dismissed without prejudice on June 23, 1992, due to a failure to comply with discovery, and they refiled the complaint on July 22, 1992. The trial court granted defendants' motion for summary disposition, finding plaintiffs' complaint to be time-barred under the three-year statute of limitation for negligence actions inasmuch as they had signed the acknowledgment of employment tax deficiency in March 1988. MCR 2.116(C)(7). Plaintiffs appeal as of right. II Where a malpractice action is brought against an accountant, who is or holds himself or herself out to be a state licensed professional, the period of limitation is two years pursuant to MCL 600.5805(4); MSA 27A.5805(4), MCL 600.5838; MSA 27A.5838. Local 1064, RWDSU AFLCIO v Ernst & Young, 449 Mich 322; 535 NW2d 187 (1995). Notably, however, defendants are not certified public accountants, therefore, they are not licensed professionals under the Michigan Occupational Code, MCL 339.701 et seq.; MSA 18.425(701) et seq. Where an ordinary negligence action is brought against an accountant, bookkeeper, or tax preparer who is neither a CPA nor otherwise state licensed, the period of limitation is three years pursuant to MCL 600.5805(8); MSA 27A.5805(8) [injury to a person or property]. In the latter case, the general accrual statute, MCL 600.5827; MSA 27A.5827, provides that a negligence claim "accrues at the time the wrong upon which the claim is based was done regardless of the time when damage results." To ensure that a prospective plaintiff's valid cause of action is not time barred before the existence of a cognizable injury, our Supreme Court has held that, pursuant to

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