Marshall v. PricewaterhouseCoopers, LLP

Under Westwood Construction Co. v. Hallmark Inns, 182 Or App 624 (2002), when a judgment or order in a prior proceeding shows on its face “that a matter was actually determined, the determination is preclusive.”

Marshall appealed the dismissal of its negligence and breach of contract claims and grant of summary judgment on their repleaded negligence claim. Marshall assigned error to the trial court’s finding of issue preclusion regarding the original claims and determination that the repleaded claim was beyond the statute of limitations. On appeal, Marshall argued that findings about PricewaterhouseCooper’s (PwC) advice to them in a 2016 United States Tax Court decision were not necessary or essential to the tax court’s decision that Marshall was liable for back taxes. Marshall also contended there was a genuine issue of material fact regarding when they realized that PwC’s alleged negligence caused them damages. In response, PwC argued that the tax court’s finding that Marshall had constructive knowledge required to impose the tax liability was based on PwC’s advice and, therefore, essential to the decision. PwC further argued that Marshall should have known of any damages when the IRS notified Marshall that it was investigating the transaction at issue. Under Westwood Construction Co. v. Hallmark Inns, 182 Or App 624 (2002), when a judgment or order in a prior proceeding shows on its face “that a matter was actually determined, the determination is preclusive.” The Court found that Marshall’s claims in the instant case and the “issues of ultimate fact determined in the prior tax case” are identical and that the tax court’s conclusions regarding PwC’s advice were essential to its decision because it based liability on Marshall’s actual knowledge and because of the way the case was pleaded. The Court found a genuine issue of material fact as to when the statute of limitations began tolling. Reversed and remanded as to plaintiffs’ negligence claim; otherwise affirmed.