Filed 9/13/96; pub. order and mod. filed 10/10/96 (see end of opn.) CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SIX RICHARD W. TALLEY, 2d Civil No. B094669 (Super. Ct. No. 145098) Plaintiff and Appellant, (Ventura County) v. HENRIKSEN, BOBROWSKE & ANDREWS et al., Defendants and Respondents. Richard W. Talley (Talley) appeals from the summary judgment granted respondents, the accounting firm of Henriksen, Bobrowske & Andrews, and Paul Henriksen (Henriksen). Talley filed suit against respondents for negligent preparation of his tax returns. He alleged that Henriksen erred in the depreciation claimed for a business airplane. The trial court granted summary judgment because the two-year statute of limitations had run on the accounting malpractice action. Talley contends there are triable issues of fact regarding delayed discovery of respondents' malpractice. We disagree and affirm the summary judgment. FACTS In 1987, Talley, a stockbroker, retained Henriksen to prepare his income tax returns. Henriksen prepared Talley's tax returns for the 1986 through 1989 tax years. Talley states that Henriksen acted as his accountant until the summer of 1992. In 1989, the Inte rnal Revenue Service (IRS) began auditing Talley's 1987 tax return. Later, the IRS broadened the 2. scope of its investigation to include Talley's 1988 tax return. One of the issues raised by the IRS to Talley during 1989 was the depreciation he claimed as the sole owner of an airplane. Talley jointly-owned the airplane with another individual. On January 28, 1992, the IRS sent a notice of deficiency to plaintiff's home by certified mail regarding his 1987 tax return. The notice specified the assessment of $4,985 in underpaid taxes, penalties and interest thereon. On February 19, 1992, the IRS sent a notice of deficiency to plaintiff's home by certified mail regarding Talley's 1988 tax return. The 1992 notice specified additional taxes, penalties and interest Talley owed to the IRS. These notices stated that Talley had 90 days from the respective notices to file a petition to contest these deficiencies in the United States Tax Court. The IRS found Talley liable for payment of $7302.12 for the 1987 tax year and for $25,028.04 for the 1988 tax year. On August 10, 1993, Talley filed an accounting malpractice action against Henriksen for negligently preparing his 1987 and 1988 tax returns. The trial court dismissed the action without prejudice because it was not properly served. On June 15, 1994, Talley filed the instant action alleging the same malpractice against Henriksen. On March 6, 1995, Henriksen filed the instant motion for summary judgment. Henriksen asserted that Talley's action was barred by the two-year statute of limitations applicable to actions alleging accounting malpractice. (Code Civ. Proc., § 339, subd. 1.) Henriksen maintained that Talley had actual and constructive notice of the alleged negligent acts for more than two years before he filed the instant complaint and that Talley incurred actual, appreciable damages as a result of such negligent acts more than two years before filing the complaint. After hearing the motion for summary judgment, the trial court determined that Talley did not file the instant action within two years of his receipt of the notices of 3. deficiency, and that respondents are entitled to summary judgment as a matter of law. (Code Civ. Proc., § 339, subd. 1; International Engine Parts Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606; McKeown v. First Interstate Bank (1987) 194 Cal.App.3d 1225, overruled on other grounds as discussed in International Engine Parts, supra, at pp. 617-618.) The trial court entered judgment in the matter and this appeal ensued from the judgment. DISCUSSION We independently review the summary judgment granted to respondents to determine whether there are any triable issues of fact and whether respondents are entitled to summary judgment as a matter of law. ( Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673-674.) "The purpose of the summary judgment procedure is to penetrate through evasive language and adept pleading and ascertain the existence or absence of triable issues. [Citations.]" ( Chern v. Bank of America (1976) 15 Cal.3d 866, 873; accord Ann M., supra, at p. 673.) First, we dispose of two procedural issues Talley raises: 1. Talley may not assign error to various evidentiary objections for which he did not obtain rulings in the trial court, and 2. the statute of limitations is not tolled during the pendency of his initial action which was dismissed without prejudice. (Code Civ. Proc., § 437c, subd. (c); Wood v. Elling Corp. (1977) 20 Cal.3d 353, 358-360.) The statute of limitations for an action asser ting accounting malpractice is two years. (Code Civ. Proc., § 339, subd. (1); International Engine Parts, Inc. v. Feddersen & Co., supra, 9 Cal.4th at p. 608; Liberty Mut. Ins. Co. v. Harris, Kerr, Forster & Co. (1970) 10 Cal.App.3d 1100, 1104.) A cause of action for accountant malpractice accrues as soon as the injured party discovers, or should have discovered, the loss or damage suffered. ( International Engine Parts, supra, at pp. 608, 619; 4. accord Schrader v. Scott (1992) 8 Cal.App.4th 1679.) The client must also suffer actual injury from the negligence before the cause of action can be established. ( International Engine Parts, supra, at pp. 608, 614.) In a tax deficiency case, actual injury occurs when the IRS provides its notice of tax deficiency, penalties and interest. ( Id., at pp. 617, 620, 622.) Accordingly, such an action may be brought after the injured party both discovers, or with reasonable diligence should have discovered, the accountant's negligence, and the party sustains actual, appreciable harm as a result of the negligence. (International Engine Parts, Inc. v. Feddersen & Co., supra, 9 Cal.4th at p. 619; Schrader v. Scott, supra, 8 Cal.App.4th at p. 1686, fn. 2.) Here, the IRS provided Talley with its notice of deficiency on January 28, 1992. Talley did not file the instant action until June 15, 1994. When Actual Appreciable Harm is Deemed Sustained Although Code of Civil Procedure section 339, subdivision 1 does not expressly require actual injury before the statute of limitations commences, courts have interpreted the statute to require it. ( International Engine Parts, Inc. v. Feddersen & Co., supra, 9 Cal.4th at pp. 608, 613-614, esp. fn. 1; see also Schrader v. Scott, supra, 8 Cal.App.4th at pp. 1679, 1684, 1687.) Actual injury or harm from accountant malpractice in tax deficiency cases occurs when the IRS provides its notice assessing the deficiency. The notice triggers the right of the IRS to collect the amounts due. ( International Engine Parts, supra, at pp. 608-609, 612-613, 617, 620.) Until the deficiency is assessed it is only a contingency. In International Engine Parts, our Supreme Court ruled that "[t]he use of the date of deficiency assessment to mark the date of actual injury in accountant malpractice cases provides the parties with a bright line that, once crossed, commences the limitations period under 5. section 339, subdivision 1" even though injury may be clear before such notice is provided in some cases. ( Id., at p. 621- 622.) Here, actual appreciable inj ury occurred on January 28, 1992 and February 19, 1992, when the IRS provided Talley with its notices of deficiency, penalties and interest by certified mail for the 1987 and 1988 tax years. Date to Discover Harm Talley argues that he has raised triable issues of fact as to his claim that he did not discover the precise reason for the assessed deficiency, the improper depreciation deductions for the business airplane, until June 23, 1993. We disagree. California courts have ruled that "'. . . a cause of action for malpractice does not accrue until the plaintiff knows, or should know, of the negligent act. [Citation.]'" International Engine Parts, Inc. v. Feddersen & Co., supra, 9 Cal.4th at p. 619; Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 179; Schrader v. Scott, supra, 8 Cal.App.4th at p. 1686, fn. 2; Electronic Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122 Cal.App.3d 834, 848.) Under this delayed discovery rule, "the statute of limitations begins to run when the plaintiff suspects or should suspect that [his] injury was caused by wrongdoing, that someone has done something wrong . . . ." ( Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110.) The statute begins to run when the plaintiff "'"'has notice or information of circumstances to put a reasonable person on inquiry . . . .'"' [Citations]" ( Id., at pp. 1110-1111; original italics.) "A plaintiff need not be aware of the specific 'facts' necessary to establish the claim; that is the process contemplated by pretrial discovery. Once the plaintiff has a suspicion of wrongdoing, . . . , [he] must decide whether to file suit . . . . So long as a suspicion exists, it is clear that the 6. plaintiff must go find the facts; [he] cannot wait for the facts to find [him]." ( Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at pp. 1110-1111.) Where one becomes "aware of facts which would make a reasonably prudent person suspicious, [he] had a duty to investigate further, and [he is] charged with knowledge of matters which would have been revealed by such an investigation." (Miller v. Bechtel Corp. (1983) 33 Cal.3d 868, 875.) The date of discovery is deemed to be no later than the date of actual harm. (See McKeown v. First Interstate Bank, supra, 194 Cal.App.3d at p. 1230; Budd v. Nixen (1971) 6 Cal.3d 195, 201.) In cases concerning accountant malpractice, the date of actual harm is deemed to be no later than the date the client receives the notice of tax deficiency. ( International Engine Parts, Inc. v. Feddersen & Co., supra, 9 Cal.4th at p. 621 [date of notice of deficiency deemed date of actual injury]; Schrader v. Scott, supra, 8 Cal.App.4th at p. 1687.) By that time, the taxpayer has been through an exhaustive audit, has received findings thereon, and has had the opportunity to protest the findings at an appeals' hearing. (See International Engine Parts, Inc., supra, at pp. 612-613.) Such notice of assessment, as here, states there is a deficiency, it states the amount thereof and it shows how the IRS figured the deficiency. One may discover the harm before the notice of tax deficiency assessment. That is what happened here. Talley declared that "[i]n 1989, my wife and I were 'audited'. The audit was extensive and focused on a variety of issues. The airplane I owned jointly was only one of several issues . . . ." (Italics added.) It is irrelevant that Talley may not have discovered the precise reason for the assessment of tax deficiency until June 1993. He was placed on inquiry notice by the IRS no later than 1989. (See Miller v. Bechtel Corp., supra, 33 Cal.3d at p. 875, fn. 6.) 7. Even if he had not been placed on such notice, he would be deemed to have discovered the harm no later than January 28, 1992, the date IRS provided certified notice of its assessment of tax deficiency. The filing of the instant complaint in June 1994 was untimely. We note that in some cases, allegations of negligent misrepresentation or fraud may extend the statute. (See generally United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 596.) This is not such a case. Here, aside from Talley's discovery in 1989 that the IRS was concerned about his deductions for the plane, Talley only pled negligence against defendants in the instant suit. It is irrelevant that Talley also pled the conclusion that he "justifiably" relied on defendants' assurances that his returns were properly prepared. Although Henriksen admitted in his deposition that he never told Talley that the IRS "had a problem with the plane . . . ," th ere are no factual allegations or evidence that defendants' conduct was fraudulent. Estoppel exists only when "a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing is true and to act upon such belief . . . ." (Evid. Code, § 623; Ovadia v. Abdullah (1994) 24 Cal.App.4th 1100, 1111; Rinaldi v. Workers' Comp. Appeals Bd. (1988) 199 Cal.App.3d 217, 223.) No evidence is proffered that defendants may have engaged in such conduct in the instant case. Talley also argues that the statute of limitations should be tolled as a result of Henriksen's continued representation of him after February 1992. Although International Engine Parts did not reach the question of whether the statute should be tolled during a period of continuous representation, it did state, "We believe any broadening of the continuous representation rule should come from the Legislature." (International Engine Parts, Inc. v. Feddersen & Co., supra, 9 8. Cal.4th at p. 622.) Presumably, our Legislature is aware of the long-standing special limitations statutes regarding medical and legal malpractice cases. (See Code Civ. Proc., §§ 340.5 and 340.6 enacted in 1970 and 1977, respectively.) Section 340.6 not only extended the statute of limitations for legal malpractice actions, but it adopted the continuous representation rule. Our Legislature has declined to do so for accounting malpractice cases. We decline the invitation to create an exception to section 339 in the instant case. The judgment is affirmed. Costs to respondents. GILBERT, J. We concur: STONE, P. J. YEGAN, J. 9. Ken W. Riley, Judge Superior Court County of Ventura ______________________________ Richard I. Wideman, for Plaintiff and Appellant. Randall J. Dean and Michael R. O'Neill, for Defendants and Respondents. 10. CERTIFIED FOR PUBLICATION [NO CHANGE IN JUDGMENT] IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SIX RICHARD W. TALLEY, 2d Civil No. B094669 (Super. Ct. No. 145098) Plaintiff and Appellant, (Ventura County) v. ORDER MODIFYING OPINION HENRIKSEN, BOBROWSKE & ANDREWS et AND DENYING REHEARING; al., CERTIFICATION FOR PUBLICATION Defendants and Respondents. THE COURT: It is ordered that the opinion filed herein on September 13, 1996, be modified in the following particulars: On page 1, insert the following paragraph before the first paragraph: When does the statute of limitations begin to run for an action against an accountant for negligently preparing a tax return? When plaintiff receives a notice of tax deficiency from the Internal Revenue Service (IRS). ( International Engine Parts, Inc. v. Fedderson & Co. (1995) 9 Cal.4th 606.) That is also the date on which the plaintiff suffers harm and knows or should know that his accountant may have caused the harm. On page 2, the first line of the second full paragraph, delete "Internal Revenue Service (IRS)" and insert "IRS" so that the sentence reads: In 1989, the IRS began auditing Talley's 1987 tax return. 11. On page 3, line 6 of the first full paragraph, reference to International Engine Parts is changed to read: International Engine Parts, Inc. v. Fedderson & Co., supra, 9 Cal.4th 606. On page 7, first full paragraph, first sentence, the word "even" is to be inserted between the words "harm" and "before" so that the sentence reads: One may discover the harm even before the notice of tax deficiency assessment. On page 7, before the first full paragraph, insert a new paragraph which reads: In International Engine Parts , the accountant admitted his negligence during the audit by the IRS, several years before the notice of tax deficiency. Here there was no such admission. It does not matter. The result is the same. The notice of tax deficiency satisfies both prongs of International Engine Parts . Appellant's petition for rehearing is denied. The opinion in the above entitled matter filed September 13, 1996, was not certified for publication in the Official Reports. For good cause it now appears that the opinion should be published in the Official Reports and it is so ordered. There is no change in judgment.
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