Rodrigues Dairy v. Genske, Mulder & Company
Published: Dec. 10, 1994 | Result Date: Oct. 11, 1994 | Filing Date: Jan. 1, 1900 |Case number: RCV059379 – $564,610
Judge
Court
San Bernardino Superior
Attorneys
Plaintiff
Richard A. Soll
(Mahoney & Soll LLP)
Defendant
Stephen J. Tully
(Garrett & Tully)
Experts
Plaintiff
Kimberly Bennett
(technical)
Allen Byone
(technical)
Paul Anderstrom
(technical)
Luis Renden
(technical)
Defendant
John Costello
(technical)
Terry Krupczak
(technical)
Bennett Felt
(technical)
Facts
Plaintiffs are dairy farmers. Defendants were Plaintiff's accountants since 1982. In 1988, Plaintiffs wanted to exchange their dairy located in Chino for another dairy located in Hanford--both in California. Plaintiffs consulted with Paul Mulder, a partner of Defendant Genske, Mulder & Company, regarding the tax consequences of the exchange. Paul Mulder allegedly assured Plaintiffs that they would not have to pay any taxes, because this would be a tax-free exchange under Internal Revenue Code Section 1031. Based on that advice, Plaintiffs went forward with the exchange. Later, Plaintiffs learned that there was a taxable gain on the exchange in the amount of $1,600,000. Paul Mulder then allegedly advised Plaintiffs to pre-buy $796,000 worth of grain in 1989 and $500,000 worth of grain in 1990 to offset the taxes. In 1991, Plaintiffs consulted with new accountants, Wurth & Company, who advised Plaintiffs that Defendants had negligently structured and reported the exchange so that it ended up as being fully taxable. Wurth & Company filed an amended tax return, reporting the transaction as a 1031 tax-free exchange. The IRS audited the amended return and accepted it.
Settlement Discussions
Plaintiffs contend their demand was a 998 in the amount of $500,000 and Defendant's offer was a 998 in the amount of $220,000.
Damages
$564,610 consisting of economic losses, loss of income, and accountant's fees resulting from the improper handling of the 1031 exchange.
Result
Although the jury found that Plaintiffs were 50 percent negligent, they also found that such negligence was not a proximate cause of Plaintiff's damages; therefore, there was no reduction of the jury's verdict for contributory negligence.
Deliberation
2 days
Poll
10-2
Length
3.5 weeks
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