An Analysis of Contributory Negligence and Comparative Fault

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The Missouri Supreme Court’s decision in Children’s Wish Foundation International, Inc. v. Mayer Hoffman McCann, P.C., et al, 331 S.W. 3d 648 (Mo. 2011), resolved the issue of whether the comparative fault structure set forth in Gustafson v. Benda, 661 S.W.2d 11 (Mo. Banc 1983) applies to negligence cases that do not involve personal injury, such as actions for professional negligence. Gustafson abrogated contributory negligence in favor of comparative negligence in cases of personal injury but subsequent cases led to conflicting results as to whether comparative fault applied to negligence actions that do not involve personal injury. The Children’s Wish Court held comparative fault applies to negligence actions that do not involve personal injury and found it was improper for a contributory negligence jury instruction to be given in a professional negligence case.

Children’s Wish Foundation International, Inc. (“Foundation”) is an organization providing gifts to terminally ill children. As part of its fundraising, it accepts gifts in kind. The inventory of gifts in kind was tracked by Foundation employees using a spreadsheet.

Foundation retained Mayer Hoffman McCann, P.C. (“Mayer Hoffman”") to perform an audit.  The audit engagement letter required Mayer Hoffman to receive complete, accurate financial records. Foundation gave the accounting firm the spreadsheet used to track gifts in kind. Mayer Hoffman ultimately determined the fair market value of the gifts in kind stated by Foundation was materially accurate. These findings were sent to CBIZ Accounting, Tax & Advisory of Kansas City, Inc. (“CBIZ”), which prepared the Foundation’s tax returns.

The Court opinion said Foundation’s financial statements were not accurate.  According to the Court, the fair market value of the gifts in kind contribution was overstated by approximately $1.31 million.  The key issue in this case was whether Foundation was barred from recovering any damages if the jury found it provided erroneous information to defendants concerning the gifts in kind received from donors.

Foundation asserted the audit and tax preparation performed by defendants should have revealed the discrepancy. Mayer Hoffman and CBIZ countered Foundation failed to provide accurate records to the auditors. They offered a contributory negligence instruction, which was submitted to the jury. The jury found in favor of both defendants and Foundation appealed, arguing the trial court erred in giving the contributory negligence instruction.  The Supreme Court reversed and remanded the case.

Initially, trial lawyers assumed the Children’s Wish Foundation decision benefitted plaintiffs.  In practice, this assumption may not be true.  Before Children’s Wish Foundation, attorneys representing CPAs argued they had a significant chance of a defense verdict because the plaintiff had some degree of fault.  Defense lawyers argued the slightest degree of negligence should result in a defense verdict.  Attorneys representing plaintiffs, on the other hand, argued a jury would understand any fault attributable to the plaintiff would result in a defense verdict and, therefore, no fault would be attributable to the plaintiff.

After the decision in Children’s Wish Foundation, extremes are eliminated.  Defense lawyers do not risk their clients being assigned 100% of fault because a jury will not want to return a verdict which would result in a plaintiff receiving no money.  It is foreseeable that a compromise alternative, wherein a plaintiff can receive some money even if he or she has some fault, is more likely. Consequently, attorneys representing CPAs can argue some, but not absolute, fault on the part of plaintiff should significantly impact settlement.     

by Lyndon Sommer


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