Leon Jones Feed & Grain, Inc. v. General Business Services, Inc.

Pope, Judge.

Leon Jones Feed & Grain, Inc. (Jones) brought suit against General Business Services, Inc. (GBS) alleging negligence in the performance of financial and tax advice service to Jones. The dispute centers on Jones’ contention that GBS failed to advise it of certain Georgia sales tax exemptions available to it. The parties stipulate that upon showing proper proof, one who is exempt from payment of Georgia sales taxes, but who has mistakenly paid the taxes, is entitled by statute to a full refund of the mistakenly paid taxes for a period of three years prior to the date on which the claim is presented to the State of Georgia. In 1981 GBS advised Jones of the exemption. Jones applied for and received a refund from the State of Georgia for sales taxes mistakenly paid in 1981, 1980, 1979 and half of 1978. The parties also stipulate that a four-year statute of limitation is applicable to Jones’ cause of action, and that suit was filed on December 15, 1981.

The issue presented in this appeal is whether Jones has a right to seek damages from GBS for the sales taxes paid in the three-year period prior to December 16, 1977. Jones contends that had GBS properly advised it of the exemption on December 16, 1977 it could have applied for a refund of taxes paid in the three previous years. Jones argues that this refund is thus merely a greater measure of damages as provided by the refund statute of the tax law than would ordinarily be available in a professional negligence action. The trial court disagreed and ruled that Jones was barred by the statute of limitation from seeking damages occurring before December 16, 1977. Held,-.

The fallacy in Jones’ argument is its assumption that the applicable statute of limitation is to be counted back from the time of the filing of suit. This simply is not correct. In Jankowski v. Taylor, Bishop & Lee, 246 Ga. 804 (273 SE2d 16) (1980), the Supreme Court set out the principles which control our decision in the present case. Although the Jankowski case involved legal malpractice, it is clear from the decision that its principles extend to cases involving other types of alleged professional negligence. See, e.g., Shessel v. Stroup, 253 Ga. 56 (316 SE2d 155) (1984), and McDaniel v. Colonial Mtg. Svc. Co., 167 Ga. App. 717 (307 SE2d 279) (1983). The court in Jankowski held that a cause of action accrues when there is both a wrongful act and damage. This is true where even slight or nominal damage occurs as a result of the wrongful act. The statute of limitation begins to run at the time the wrongful act accompanied by any appreciable damage occurs. Applying this principle to the present case, it is clear that each time Jones paid the sales tax in reliance on GBS’s advice a cause of action accrued in favor of Jones and the four-year statute of limitation began to run. The damage incurred at that point would not be very great. It would be simply the loss of the use of the money paid unnecessarily. This damage would remain even if GBS corrected the mistake immediately by properly advising its client and promptly applying for a refund as allowed by law. In that event, the damage incurred would be slight; nonetheless it would be legally cognizable damage which, coupled with the wrongful act of failure to advise Jones of the sales tax exemption, would support a cause of action by Jones against GBS. Thus, the statute of limitation would have run on any advice given in 1976 in 1980,1975 in 1979, and so on.

Jones’ argument that the three-year refund which it could have gotten if properly advised in 1977 should be recoverable is also disposed of by a Jankowski principle. In Division 2 of Jankowski, the court held that a failure to correct the act which caused damage is not a separate breach for which the client has a new cause of action. Thus, in the present case, GBS’ alleged failure to advise Jones in 1977 that a refund could be had was merely a failure to correct the earlier breach for which damage had already been incurred, as discussed above. Thus, had GBS advised Jones at that time it would have only ameliorated damages incurred for the earlier wrongful acts, but the failure to so advise was not a new act of negligence which would trigger the running of the statute of limitation anew. The situation in the present case is closely analogous to that in the Jankowski case, supra. In Jankowski, the client suffered slight damage when the lawyer allowed the case to be dismissed without prejudice. This was within the statute of limitation; had the lawyer discovered the breach, the action would have been reinstated. The damage incurred when the suit was dismissed was not irreparable; court costs and delays in the progress of the case were factors of damage mentioned by the court in Jankowski, supra at 806. Severe damage was incurred only when the statute of limitation ran and the action had not been refiled. The plaintiff in Jankowski advanced the argument that a new tort occurred when the statute of limitation ran and he completely lost his right to proceed. The court in Jankowski specially rejected this argument, holding that loss of the right to proceed was but an additional damage flowing from the earlier breach. In the present case, as we have discussed above, Jones had a cause of action each time he paid the sales tax unnecessarily. The fact that GBS failed to advise the company that a refund could be had was merely greater damage (loss of the amount paid) added to that damage already incurred (loss of the use of the amount paid).

The dissent argues that the record is incomplete and that we do not know the scope of GBS’ duty to Jones. However, in answer to interrogatory number 8 propounded by GBS, Jones asserts, “Specifically, plaintiff asked defendant’s agent Matia to perform all services rendered in connection with the filing of state and federal tax returns in a competent and professional manner and to prepare such returns in such a manner as to require plaintiff to pay only those taxes for which it was legally obligated.” Thus, the duty is clear from the record. GBS had a continuing duty to advise Jones so that Jones paid only those taxes it was obligated to pay under the law. Allowing Jones to pay the sales tax was a breach of that duty accompanied by immediate, legally cognizable damage for which Jones had a present cause of action. Loss of the right to the refund was not a new breach, but rather a dramatic leap in the quantum of damage suffered. Clearly, the principles set out in Jankowski, supra, apply here and control our decision. For the foregoing reasons, we find that the grant of partial summary judgment by the trial court was correct.

Judgment affirmed.

McMurray, P. J., Carley, Sognier, and Ben-ham, JJ., concur. Banke, C. J., Deen, P. J., Birdsong, P. J., and Beasley, J., dissent.