Accountant Faces Heat From Teed Off Golfer

(CN) - Professional golfer Hank Kuehne can sue his former accountant for allegedly concealing that he owed more than $500,000 in back taxes, a federal judge ruled.

A former fiance of pro tennis player Venus Williams, Kuehne is an amateur champion who last played in a major tournament at the 2012 Honda Classic, where he finished 94 out of 144 players.

In 2004, he hired Thomas Bertsch, then an employee with McCormack Advisors International, to take care of his finances. Bertsch formed his owned company, FSM Capital Management, in 2007 and brought Kuehne over as a client. The relationship ended in 2011 after Kuehne allegedly learned he had racked up over $500,000 in income-tax liabilities and penalties for 2006 and 2007.

He also discovered Bertsch had offered the Internal Revenue Service $90,000 to settle the debt, according to Kuehne's complaint. The IRS allegedly countered with a $342,000 settlement offer, which expired after Bertsch failed to respond. To make things worse, Kuehne said he learned that he still owed state taxes for 2006 because Bertsch included gambling income on his California return.

Bertsch allegedly never communicated any of these problems or concerns about Kuehne's tax returns to the client and refused to give Kuehne a direct answer about the situation.

Kuehne said he did not realize how deeply he was in debt until he hired a new accountant. Using his birth name, Henry A. Kuehne II, the golfer filed a federal complaint against Bertsch in Floriday, alleging fraud, negligence and other claims.

Bertsch argued that either improper venue or Florida's economic loss rule warranted dismissal.

U.S. District Judge Robin Rosenbaum shot the accountant down last week, noting that the latter doctrine sets the circumstances under which a tort action is prohibited if the only damages suffered are economic losses.

This rule no longer applies, however, after the Florida Supreme Court's recent decision that "strictly confined application of the economic loss rule to cases involving products liability," Rosenbaum wrote.

The landmark opinion was issued March 7, 2013, in Tiara Condominium Association Inc. v. Marsh & McClennan Companies.

In a blog post after that ruling, Weston, Fla.-based attorney Alex Rosenthal said the rule is rooted in the products liability arena and primarily intended to limit actions in the products liability context.

"However, over the years, the economic loss rule has also been applied to circumstances when the parties are in a contractual privity and one party seeks to recover damages in tort for matter arising from the contract," Rosenthal wrote. "The Florida Supreme Court began hinting at its belief that the economic loss rule had been extended too far over the past several years. Now, it has finally removed all doubt and has receded from any prior decisions which have applied the economic loss rule to anything other than products liability claims."

In Kuehne's case, the court also upheld venue based on the allegation that Bertsch's fraudulent representations took place in Palm Beach County, Fla.

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