Moonie

Defendant appeals from judgment dismissing a cross-complaint for alleged malpractice of an accountant, after demurrer sustained without leave to amend on ground that the alleged cause of action is barred by the statute of limitations.

Question Presented

Does the statute of limitations in an action for alleged malpractice by an accountant start to run from the alleged negligent act, from discovery of the negligence, or from the date when defendant was notified of the income tax penalty assessment ?

May 15, 1963, plaintiff David L. Moonie, a certified public accountant, filed an action in the municipal court against defendant Frank W. Lynch, for services rendered and accounts stated. The services were alleged to have been rendered between January 1, 1959 and January 1, 1961. On-November 5, 1963, defendant filed a cross-complaint alleging that plaintiff negligently prepared defendant’s 1956 federal income tax return which resulted in defendant being damaged in the sum of $19,336.25 due to an income tax penalty assessment. Plaintiff demurred to the cross-complaint and by stipulation the demurrer was sustained with leave to amend. Thereafter, defendant filed an amended answer,…