AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• Plaintiff, a dentist, sought to remodel his office and purchase equipment, requiring approximately $140,000. He consulted Defendant, his financial advisor, about withdrawing funds from a deferred variable annuity without incurring taxes or penalties. Relying on Defendant's erroneous advice that withdrawals would be tax-free, Plaintiff withdrew the necessary funds. This advice proved incorrect, leading to a significant tax liability for Plaintiff, including taxes, interest, and penalties totaling $77,623.06, after the annuity company reported the withdrawal as taxable income to the IRS (paras 3-5).

Procedural History

• [Not applicable or not found]

Parties' Submissions

• Plaintiff: Argued that Defendant's erroneous financial advice led to an unexpected tax liability, seeking recovery for taxes, penalties, and interest incurred due to the partial surrender of a deferred variable annuity (para 2).
• Defendants: Contended that Plaintiff did not suffer a compensable loss due to the erroneous financial advice and argued that the Unfair Practices Act (UPA) does not apply to this case because the transaction did not involve the sale of goods or services (para 2).

Legal Issues

• Whether Plaintiff established a compensable loss as a result of the erroneous financial advice.
• Whether the Unfair Practices Act applies to Defendants’ financial advising services.

Disposition

• The court affirmed the district court's judgment in favor of Plaintiff, awarding $77,623 for the additional tax liability, plus attorney fees and costs (para 7).

Reasons

• The court, led by Judge Cynthia A. Fry with concurrence from Judge J. Miles Hanisee and a partial concurrence and dissent from Judge Jonathan B. Sutin, found that Plaintiff had established a compensable loss due to the tax liability incurred from the misrepresentation. It was determined that the Unfair Practices Act applied to the financial advising services provided by Defendants, as the services constituted a commercial relationship in connection with the sale of goods or services. The court rejected Defendants' arguments that Plaintiff did not suffer a compensable loss and that they were not responsible for the interest and penalties assessed by the IRS. The court also addressed the applicability of the UPA, concluding that the financial advice given was in connection with the sale of goods or services and thus fell within the scope of the UPA. Judge Sutin dissented in part, specifically disagreeing with the majority's analysis and holding regarding the UPA's applicability, arguing that the tax advice was not connected to the sale of goods or services and was incidental and remote to the annuity purchase (paras 8-29).