Application of Comparative Fault to Economic Loss

The Missouri Supreme Court has determined that comparative fault principles should apply to cases where the loss suffered by the plaintiff is purely economic.

In Children’s Wish Foundation, International, Inc. v. Mayer Hoffman McCann, P.C.,   No. SC9094 (Missouri S.C. 2/8/11)  plaintiff brought a professional negligence claim against the accounting firm that provided it auditing services and another firm that provided tax services.   Defendants persuaded the trial court to charge the jury that any contributory negligence of plaintiff barred its claim.  The jury returned a verdict for defendants.

The issue on appeal was whether comparative fault applies in a professional negligence action alleging only economic damage.  (Missouri adopted comparative fault in personal injury cases in 1983).  Defendants argued that contributory negligence should bar the claim because the relationship between them and the plaintiff was governed by a contract and that contract gave the parties the opportunity to allocate risk of loss.

The Court rejected the Defendants’ argument, saying as follows:

There is no compelling reason to limit  the application of comparative fault based on the nature of the injury.  The defining feature of negligence actions is not the nature of the damages but the negligent breach of a legal duty of care that results in injury or loss to the plaintiff.  Negligence actions are  fault-driven, whether the plaintiff suffers a broken leg in a car accident or the loss of money due to professional negligence.  There is nothing inherent in the nature of the type of injury that warrants the application of comparative fault in the former case and contributory fault in the latter case. Consistency dictates that comparative fault apply in both cases. 

The Court noted that plaintiff’s "cause of action is not premised on the contract.  It is premised on the professional duty recognized by law that arises from the relationship created by the accountant-client relationship.  Comparative fault should apply in this professional negligence case for the same reasons that it applies in a negligence action involving personal injury."  [Citation omitted.]

It is a little hard to believe that it took 28 years after the adoption of comparative fault for this issue to reach the highest court in Missouri.  Then again, those of us who practice tort law in Tennessee know the large number of open questions we still have in the comparative fault field even though we have had the law since May 4, 1992.