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Jackson v. Greerwalker, LLP

United States District Court, N.D. Oklahoma

February 14, 2018




         Now before the Court are motions to dismiss plaintiffs' complaint (Dkt. # 2) filed by all defendants: GreerWalker, LLP (GreerWalker) (Dkt. # 24); Butcher Joseph & Co., LLC (Butcher Joseph) (Dkt. # 27); and Polsinelli, P.C. (Polsinelli) (Dkt. # 29).

         I. Background

         At all times pertinent to this action, plaintiffs were employees and shareholders of Freedom Pharmaceuticals, Inc. (Freedom), an S corporation[1] incorporated in the State of Oklahoma. Id. at 1. GreerWalker is a North Carolina accounting firm; Polsinelli is a Missouri law firm; and Butcher Joseph is a Missouri investment banking firm. Id. at 1-2.

         In their complaint, plaintiffs allege the following: in early 2013, Butcher Joseph “was retained” as an investment banker after plaintiffs “had been approached to sell Freedom” (the transaction). Id. at 2. Shortly thereafter, Polsinelli “was retained in connection with the transaction, ” and attorneys in its tax department, prior to the transaction, created a spreadsheet that included sections entitled “Tax Analysis” and “Net Shareholder After Tax Detail, ” as well as a line item labeled “less Total Tax Payable.” Id.

         In early March 2013, at Butcher Joseph's “recommendation, ” GreerWalker “was engaged . . . connection [sic] with” the transaction. Id. at 3. That month, “after GreerWalker had already been retained, [Butcher Joseph] recommended that GreerWalker be tasked with performing a ‘tax analysis' of the potential stock sale transaction ‘so that we can fine tune results to each individual.' [Butcher Joseph] stated that [it] would involve and task GreerWalker as indicated, unless someone disagreed; no one expressed disagreement.” Id.

         On April 17, 2013, “a closing occurred whereby Freedom's shareholders sold their stock to a third party pursuant to stock purchase agreements.” Id. GreerWalker, Butcher Joseph, and Polsinelli were aware of the closing date. Id. After the closing, GreerWalker provided tax advice to plaintiffs concerning the tax treatment and consequences associated with their stock sale, including capital gains treatment in Oklahoma. Id.

         On or about December 15, 2014, the Oklahoma Tax Commission (OTC) issued written notices to the plaintiffs. Id. The notices stated that plaintiffs owed additional tax to the State of Oklahoma for the tax year 2012 in amounts significantly in excess of $75, 000, together with monetary penalties and interest. Id. The notices reflect the OTC's decision to disallow the capital gains treatment and deduction, related to their sale of Freedom stock, that plaintiffs included in their 2013 Oklahoma income tax returns. Id. at 4. The OTC notified plaintiffs that, to be eligible for capital gains treatment and deduction, plaintiffs must have sold an ownership interest in an Oklahoma company that had been headquartered in the state for three or more years. Id. Freedom was incorporated and headquartered in Oklahoma, but the date of the closing-i.e., April 17, 2013-occurred before the third anniversary of its incorporation-i.e., May 28, 2013. Id. Plaintiffs administratively protested OTC's assessment of the additional taxes. Id. In November 2015, pursuant to a taxpayer amnesty program, plaintiffs paid the additional tax amounts assessed and, in exchange, avoided the monetary penalties and interest. Id.

         On July 7, 2017, plaintiffs filed their complaint in this case, Dkt. # 2, [2] which alleges: professional negligence against GreerWalker (count one), Polsinelli (count two), and Butcher Joseph (count three); breach of contract against GreerWalker (count four), Polsinelli (count five), and Butcher Joseph (count six); breach of fiduciary duty against all defendants (count seven); and aiding and abetting breach of fiduciary duty against all defendants (count eight). Id. at 4-9.

         GreerWalker, Butcher Joseph, and Polsinelli move to dismiss plaintiffs' complaint (Dkts. ## 24, 27, 29).

         II. Standard of Review

         In considering a motion to dismiss under Federal Rule of Civil Procedure 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, 683 (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 a claimant. Twombly, 550 U.S. at 555; Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007); Moffett v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1231 (10th Cir. 2002). A court need not accept as true, however, allegations that are conclusory in nature. Erikson v. Pawnee Cnty. Bd. of Cnty. Comm'rs, 263 F.3d 1151, 1154-55 (10th Cir. 2001).

         III. GreerWalker's Motion to Dismiss

         GreerWalker argues that plaintiffs' complaint must be dismissed because it fails to state a claim. Dkt. # 25, at 20-29.[3]

         As to plaintiffs' claim for professional negligence (count one), GreerWalker argues that plaintiffs fail to allege any facts to establish the existence of an accountant-client relationship giving rise to any duty by GreerWalker to provide plaintiffs with tax analysis, advice, or planning in connection with the transaction. Id. at 20. Plaintiffs respond that ...

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