McMahan v. Deutsche Bank AG

In 2012 action by plaintiff alleging that his accountant and others committed malfeasance in advising and facilitating his participation in Son of BOSS tax shelter that IRS subsequently determined to be not legitimate, Dist. Ct. did not err in granting defendant-bank’s motion to dismiss, where instant action was filed beyond applicable 5-year limitations period. While plaintiff contended that instant action was timely, since it was filed within five years of date IRS issued its notice of tax deficiency based on its disallowance of tax shelter, Ct. of Appeals found that instant action was untimely, where: (1) action normally accrued in 2001, when plaintiff paid bank fees for its role in facilitating tax-shelter-related transfers; (2) limitations period would have expired in 2006, but for any application of discovery rule; and (3) certain events occurring in 2005, such as plaintiff’s awareness of class action against different defendant relating to its role in promoting sham tax shelters, as well as IRS notification on same day that it was auditing plaintiff’s 2001 tax return containing said tax shelter, should have put plaintiff on notice to investigate whether he had claim against bank, so as to trigger limitations period. Dist. Ct. also did not err in dismissing for want of prosecution plaintiff’s claims against two other defendants, where plaintiff waited 16 months to contact said defendants to participate in court-ordered arbitration, and where key witness for one defendant had died during said period.