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Hoffman v. Theriot

Court of Appeals of Louisiana, Fifth Circuit

May 30, 2018

PETER HOFFMAN AS SUCCESSOR TO POOL BOY THE MOVIE, LLC
v.
JOHN W. THERIOT, CPA AND MALCOLM M. DIENES, LLC PETER HOFFMAN, AS SUCCESSOR TO AUTOPSY, LLC
v.
JOHN W. THERIOT, CPA AND MALCOLM M. DIENES, LLC

          ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 754-520 C/W 754-522, DIVISION "A" HONORABLE RAYMOND S. STEIB, JR., JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, PETER HOFFMAN AS SUCCESSOR TO POOL BOY THE MOVIE, LLC Peter M. Hoffman

          COUNSEL FOR DEFENDANT/APPELLEE, JOHN W. THERIOT, CPA AND MALCOLM M. DIENES, LLC Michael A. Patterson S. Brooke Barnett-Bernal

          Panel composed of Judges Marc E. Johnson, Robert A. Chaisson, and Marion F. Edwards, Judge Pro Tempore

          MARION F. EDWARDS, JUDGE PRO TEMPORE JUDGE

         The judgment on appeal is the grant of a defense motion for summary judgment in two consolidated cases. For the reasons that follow, we affirm.

         Plaintiff/appellant, Peter Hoffman, as successor in interest to Pool Boy the Movie, L.L.C. (Pool Boy) and Autopsy, L.L.C. (Autopsy), filed two separate lawsuits against John Theriot, CPA (Theriot) and Malcolm M. Dienes, L.L.C. (MMD) for negligence and professional malpractice. Because the two actions derive from the same set of facts and assert the same claims against the same defendants, the matters were consolidated in the trial court by mutual consent of the parties. Upon completion of discovery, defendants filed a motion for summary judgment that was granted by the trial court. It is that judgment that is before this Court on appeal.

         FACTS AND PROCEDURAL HISTORY

         Both Pool Boy and Autopsy are limited liability companies set up as private, entrepreneurial motion picture production companies for the purpose of filming movies and taking advantage of the state sponsored tax credit program set forth in La. R.S. 47: 6007 et seq. Mr. Hoffman is the legal successor to both Pool Boy and Autopsy.

         On May 25, 2007, by two separate documents, Hoffman engaged MMD, a Louisiana certified public accounting limited liability company, to perform audit reports of the production expenditures of both Pool Boy and Autopsy as required by Louisiana law. John Theriot is a certified public accountant and the managing partner of MMD.

         The audits are expressions of a professional opinion about whether the cost report of production expenditures is fairly presented, and is in conformity with the practices prescribed by the Louisiana Department of Economic Development. The audits are conducted in accordance with generally accepted auditing standards and are used by the State to determine qualification for the film tax credits.

         In accordance with those agreements, MMD issued an independent auditor's report on each of the two movies. The Autopsy audit was issued on January 25, 2008 and the Pool Boy audit was issued on April 18, 2008. These audits were subsequently submitted to the State.

         On February 3, 2012, MMD notified Pool Boy and Autopsy by correspondence to Mr. Hoffman that it discovered that certain transactions with related parties were not disclosed in the cost report used as a basis for the audit. The correspondence informed both companies that the audit could no longer be relied upon and that professional standards required notification of this fact to users of the audit, including the State. MMD requested that Mr. Hoffman notify the Louisiana Department of Economic Development and/or the Office of Entertainment Industry Development that the cost report and accompanying audit report could no longer be relied upon.

         Mr. Hoffman responded by sending a correspondence demanding that MMD disclose the specifics of the transaction with related parties to which it was referring. MMD sent written notice to Mr. Hoffman listing the entities it perceived as related parties not disclosed in the information provided by Pool Boy and Autopsy. MMD also responded to what it considered an implied threat of litigation in the correspondence from Pool Boy and Autopsy by stating that it could no longer be independent and would be unable to perform any further audit procedures, including the re-issuance of audits. MMD also reasserted its request that Pool Boy and Autopsy notify known users that the cost reports and audit reports could no longer be used or relied upon.

         When Mr. Hoffman failed to notify the appropriate Louisiana departments that the audits could no longer be relied upon, MMD recalled the audits. On February 28, 2012, MMD issued audit recall letters to the Louisiana Department of Economic Development and the Office of Entertainment Industry Development. Upon receipt of the recall letters, the State sent written demand to Pool Boy and Autopsy for replacement audits performed by a certified public accountant within fourteen days. The letter warned that unsupported movie tax credits would be disallowed. Ultimately, the tax credits were significantly reduced.

         On September 28, 2012, Mr. Hoffman filed a complaint against MMD and John Theriot with the Society of Louisiana Certified Public Accountants (the Society) pursuant to La. R.S. 37:102. In that complaint Mr. Hoffman alleges MMD and John Theriot acted negligently in preparing the audits and in issuing letters of withdrawal of the audits to the State of Louisiana.

         MMD and Mr. Theriot filed an exception of peremption seeking dismissal of the claims related to the audits pursuant to the three-year peremptive period in La. R.S. 9:5604. The trial court denied that exception. MMD and Theriot filed an application for supervisory writs in this Court seeking review of that ruling. Upon review, this Court held that any claims asserted that related to the preparation of the audits were perempted by the three-year peremption ...


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