          Supreme Court of Florida
                                  ____________

                                  No. SC15-740
                                  ____________

                            DONALD KIPNIS, et al.,
                                Appellants,

                                        vs.

        BAYERISCHE HYPO-UND VEREINSBANK, AG, etc., et al.,
                          Appellees.

                                [November 3, 2016]

PERRY, J.

      The United States Court of Appeals for the Eleventh Circuit certified the

following question of Florida law that is determinative of a cause pending in that

court and for which there appears to be no controlling precedent.

            UNDER FLORIDA LAW AND THE FACTS IN THIS CASE,
      DO THE CLAIMS OF THE PLAINTIFF TAXPAYERS RELATING
      TO THE CARDS TAX SHELTER ACCRUE AT THE TIME THE
      IRS ISSUES A NOTICE OF DEFICIENCY OR WHEN THE
      TAXPAYERS’ UNDERLYING DISPUTE WITH THE IRS IS
      CONCLUDED OR FINAL?

Kipnis v. Bayerische Hypo-Und Vereinsbank, AG, 784 F.3d 771, 783 (11th Cir.

2015). We have jurisdiction. See art. V, § 3(b)(6), Fla. Const. For the following
reasons, we answer the certified question by holding that the plaintiff taxpayers’

claims accrued at the time their action in the tax court became final. That action

became final ninety days after the tax court’s judgment, at the expiration of the

time period for an appeal of that judgment.

                                       FACTS

      Donald Kipnis and Lawrence Kibler (Kipnis and Kibler) owned Miller &

Soloman General Contractors, Inc., one of South Florida’s largest general

contractors. In search of increased bonding capacity and unable to obtain

financing through conventional methods, Kipnis and Kibler’s accountant learned

about custom adjustable rate debt structure (CARDS) transactions. See Kipnis,

784 F.3d at 774. According to the promoters, a CARDS transaction could increase

Kipnis and Kibler’s bonding capacity and provide tax savings. Although neither

Kipnis, Kibler, nor their accountant fully understood the nature of CARDS

transactions, the law firm and banks facilitating the transaction insisted that such

transactions were legitimate, economically substantive transactions that were valid

for tax purposes.

      Relying on the reputations of the banks Bayerische Hypo-Und Vereinsbank,

AG, and HVB U.S. Finance, Inc. (appellees), and the law firm facilitating the

transactions, Kipnis and Kibler initiated a CARDS transaction, which began on

December 5, 2000. See id. at 774-76. In connection with the transaction, Kipnis


                                         -2-
and Kibler paid promotional fees to the various entities involved in facilitating the

transaction, including the appellees. On November 13, 2001, appellees notified

Kipnis and Kibler that the CARDS transaction would end in under a month,

twenty-nine years earlier than appellees’ earlier representations at the beginning of

the transaction.

      Several months after the conclusion of Kipnis and Kibler’s CARDS

transaction, the Internal Revenue Service (IRS) determined that CARDS

transactions lacked economic substance. See IRS Notice 2002-21, 2002-1 C.B.

730 (Mar. 18, 2002); see also Gustashaw v. Comm’r, 696 F.3d 1124, 1135 (11th

Cir. 2012) (“There is no question that the CARDS transaction lacked economic

substance.”). On February 13, 2006, appellees entered into a deferred prosecution

agreement with the United States Department of Justice, in which they admitted to

assisting United States citizens with tax evasion by using CARDS transactions.

Appellees specifically admitted that “CARDS transactions . . . involved false

representations” and “had no purpose other than generating tax benefits for the

clients involved.”

      On October 4, 2007, the IRS issued notices of deficiency, which disallowed

the deductions based on the CARDS transaction on Kipnis and Kibler’s 2000 and

2001 federal tax returns on the ground that the CARDS transaction lacked

economic substance. Kipnis and Kibler challenged the deficiency determinations


                                         -3-
in tax court. The tax court rejected the IRS’s motion for summary judgment,

holding that “it appears that that there is a material fact in dispute” on the issue of

whether Kipnis and Kibler “had a nontax business purpose in entering into the

CARDS transaction.” Kipnis v. Comm’r, Docket Nos. 30370-07, 30373-07, at 1-2

(T.C. Sept. 13, 2011). Following a three-day trial, the tax court upheld the notice

of deficiency on November 1, 2012, ruling that Kipnis and Kibler’s “CARDS

transaction lacked economic substance. It could not be profitable, and [Kipnis and

Kibler] did not have a business purpose for entering into the transaction.” Kibler

v. Comm’r, 104 T.C.M. (CCH) 530, 2012 WL 5371787, at *13.

      On November 4, 2013, Kipnis and Kibler filed a diversity action against

appellees in the United States District Court for the Southern District of Florida,

alleging a host of state law claims: violation of the state Civil Remedies for

Criminal Practices Act; fraud; aiding and abetting fraud; conspiracy to commit

fraud; breach of fiduciary duty; aiding and abetting breach of fiduciary duty; and

negligent supervision of employees and executives. The federal district court

dismissed the complaint, ruling that Florida’s five-year statute of limitations on a

Civil Remedies for Criminal Practices Act claim and the four-year statute of

limitations on all other claims had run. See § 772.17, Fla. Stat. (2013) (Civil

Remedies for Criminal Practices Act); § 95.11(3)(a), Fla. Stat. (2013) (negligence);

§ 95.11(3)(j), Fla. Stat. (fraud); § 95.11(3)(p), Fla. Stat. (2013) (“[a]ny action not


                                          -4-
specifically provided for in these statutes”). Kipnis and Kibler appealed, and the

United States Court of Appeals for the Eleventh Circuit certified the question of

state law to this Court.

                                    ANALYSIS

      The question before us, as certified by the Eleventh Circuit is:

            UNDER FLORIDA LAW AND THE FACTS IN THIS CASE,
      DO THE CLAIMS OF THE PLAINTIFF TAXPAYERS RELATING
      TO THE CARDS TAX SHELTER ACCRUE AT THE TIME THE
      IRS ISSUES A NOTICE OF DEFICIENCY OR WHEN THE
      TAXPAYERS’ UNDERLYING DISPUTE WITH THE IRS IS
      CONCLUDED OR FINAL?

Kipnis, 784 F.3d at 784.

      Kipnis and Kibler argue that had they won their tax court case, the cause of

action alleged in their complaint would not have accrued. Appellees dispute that

argument and assert that a claim for fees could have proceeded earlier without

impact from Kipnis and Kibler’s tax court litigation. This particular issue, the

effect of the tax court litigation on Kipnis and Kibler’s claim, is not before us and

we decline to decide it. But for the purpose of answering the certified question, we

assume that Kipnis and Kibler are correct and hold that their claim accrued when

their underlying dispute with the IRS became final.

      Generally, “the time within which an action shall be begun under any statute

of limitations runs from the time the cause of action accrues.” § 95.031, Fla. Stat.

(2013). “A cause of action accrues when the last element constituting the cause of

                                         -5-
action occurs.” § 95.031(1), Fla. Stat.; see also State Farm Mut. Auto. Ins. Co. v.

Lee, 678 So. 2d 818, 821 (Fla. 1996) (“[A] cause of action cannot be said to have

accrued, within the meaning of the statute of limitations, until an action may be

brought.”). Damages are often the last element of a cause of action to accrue.

      Two interrelated rules are at issue in this case: the “first injury” rule and the

“finality accrual” rule.

      The general rule, of course, is that where an injury, although slight, is
      sustained in consequence of the wrongful act of another, and the law
      affords a remedy therefor, the statute of limitations attaches at once.
      It is not material that all the damages resulting from the act shall have
      been sustained at that time and the running of the statute is not
      postponed by the fact that the actual or substantial damages do not
      occur until a later date.

City of Miami v. Brooks, 70 So. 2d 306, 308 (Fla. 1954). Lower courts have

labeled this the “first injury” rule. See Philip Morris USA, Inc. v. Barbanell, 100

So. 3d 152, 158 (Fla. 4th DCA 2012); R.J. Reynolds Tobacco Co. v. Webb, 93 So.

3d 331, 333-34 (Fla. 1st DCA 2012). However, a special rule applies when the

plaintiff’s damages exist by virtue of an enforceable court judgment. In these

circumstances, the statute of limitations begins to run when the underlying

judgment becomes final. See Peat, Marwick, Mitchell & Co. v. Lane, 565 So. 2d

1323, 1326 (Fla. 1990). We now label this the “finality accrual rule.”

      To determine whether to apply the rule in any particular case, we have

considered a series of factors and applied the finality accrual rule where those


                                         -6-
factors favored the rule’s application. Our analysis has focused on whether

application of the finality accrual rule would (1) avoid the needless disruption of an

ongoing, preexisting relationship between the plaintiff and the defendant that could

occur if we required an earlier lawsuit; (2) shield a potential plaintiff from having

to argue inconsistent positions in separate actions; (3) ensure that a plaintiff’s

damages are sufficiently real and concrete prior to a judgment in the underlying

litigation; (4) encourage the efficient use of scarce judicial resources; and (5)

promote the policies underlying statutes of limitations in the case at bar.

      First, we have refused to adopt a “rule that would mandate simultaneous

suits [if doing so] would . . . prematurely disrupt an otherwise harmonious business

relationship,” especially where the plaintiff “has an established relationship” with

the defendant. Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1065 (Fla.

2001); see also Larson & Larson, P.A. v. TSE Indus., Inc., 22 So. 3d 36, 45 (Fla.

2009) (discussing the need to avoid “undue disruption” of “an ongoing attorney-

client relationship”).

      Appellees point out that there was no ongoing relationship to disrupt because

Kipnis and Kibler’s last transaction with appellees was in 2001. Kipnis and Kibler

do not contest this point. Because that concern is not present in this case, it does

not counsel in favor of applying the finality accrual rule. Accordingly, we focus

our analysis on the remaining considerations.


                                          -7-
      Second, we have applied the finality accrual rule where doing so would

shield a potential plaintiff from “the wholly untenable position of having to take

directly contrary positions in these two actions.” Larson & Larson, 22 So. 3d at 44

(quoting Peat, Marwick, 565 So. 2d at 1326); see also Perez-Abreu, Zamora & De

La Fe, P.A. v. Taracido, 790 So. 2d 1051, 1054 (Fla. 2001). Requiring a plaintiff

to argue inconsistent positions in different courts would “hinder the defense of the

underlying claim.” Blumberg, 790 So. 2d at 1065. However, we distinguished

cases in which the plaintiff “understood and believed” that he or she had suffered

an injury prior to the conclusion of related litigation. See Peat, Marwick, 565 So.

2d at 1327.

      Here, this factor weighs in favor of Kipnis and Kibler. They should not have

had to argue before the tax court that their CARDS transaction had a legitimate

economic purpose, while arguing before the federal district court that the tax court

was likely to find that the CARDS transaction was a sham. This is not a case in

which Kipnis and Kibler understood and believed that they had suffered injury

before the tax court judgment. To the contrary, they repeatedly argued in the tax

court that their CARDS transaction was economically substantive, and the tax

court found that a genuine dispute of material fact existed on the question. To the

extent that appellees argue that the invalidity of CARDS transactions is not central

to Kipnis and Kibler’s claims, we determine that the effect of the tax court


                                        -8-
litigation on those claims is not before us, and for the purpose of this decision, we

assume without deciding that none of those claims would have been valid absent

the tax court judgment. Accordingly, this factor weighs in favor of holding that the

finality accrual rule should apply to Kipnis and Kibler’s claims.

      Third, we have expressed concern about “claim[s] [that are] hypothetical and

damages [that] are speculative.” Larson & Larson, 22 So. 3d at 42 (quoting

Silvestrone v. Edell, 721 So. 2d 1173, 1175 (Fla. 1998)). A settlement or final

judgment creates certainty as to whether the plaintiff has or has not been injured.

See id. at 46. This certainty does not exist “prior to the conclusion of the

[underlying] litigation, [when] there [is] the potential of a lower settlement or

judgment.” Fremont Indem. Co. v. Carey, Dwyer, Eckhart, Mason & Spring, P.A.,

796 So. 2d 504, 506 (Fla. 2001); Blumberg, 790 So. 2d at 1065 (noting that “the

insurer’s denial of coverage in this case merely represented the insurer’s position

on the matter and did not resolve whether damages were incurred”).

      In this case, Kipnis and Kibler’s complaint asserts three types of damages:

(1) excessive fees paid to participate in CARDS; (2) back taxes and interest

assessed by the IRS and by state tax agencies; and (3) legal and accounting fees

and expenses paid in defending the CARDS transaction. None of the three types of

injuries were sufficiently real or concrete; instead, they were merely hypothetical

or speculative until the tax court’s decision. Accordingly, this factor weighs in


                                         -9-
favor of holding that the finality accrual rule should apply to Kipnis and Kibler’s

claims.

      Appellees argue that Kipnis and Kibler suffered damages from the early

termination of the CARDS transaction and that these damages were sufficiently

real and concrete many years before the tax court’s judgment. Appellees’

argument misses the mark because the complaint does not assert that Kipnis and

Kibler suffered damages as a result of the early termination of their CARDS

transaction. This is likely because, as the tax court found, “at no time did [Kipnis

and Kibler] have to forgo construction of a project because [they] could not get

bonding.” Kipnis, 2012 WL 5371787, at *3. We see no reason to hold that Kipnis

and Kibler were damaged by the early termination of the CARDS transaction when

the complaint itself makes no such allegation.

      Appellees also allege that their entry into the deferred prosecution agreement

is itself an injury to Kipnis and Kibler but do not elaborate on how or why.

Because entry into the deferred prosecution agreement is not one of the injuries

that Kipnis and Kibler allege in their complaint, that entry also does not constitute

an injury to Kipnis and Kibler.

      The first injury that Kipnis and Kibler allege is the payment of the CARDS

fees. They paid those fees in 2001, but payment of the CARDS fees did not

become an injury until the tax court’s decision in 2012. An “injury” is “[t]he


                                        - 10 -
violation of another’s legal right, for which the law provides a remedy; a wrong or

injustice.” Black’s Law Dictionary 905-06 (10th ed. 2014). Had the tax court

found in favor of Kipnis and Kibler, then they would have simply received what

they paid for: increased bonding capacity with accompanying tax benefits. In that

event, Kipnis and Kibler would have suffered no injury. The payment of CARDS

fees did not become a “violation of [Kipnis and Kibler’s] legal right,”—did not

become “a wrong or injustice”—until the tax court’s decision held that they could

not enjoy both the tax benefits and the increased bonding capacity that they

believed would have resulted from the transaction.

      With regard to the second injury alleged, the payment of back taxes and

interest, we hold that these damages did not become real and concrete, but instead

were hypothetical and speculative, until the dispute with the IRS became final. In

a similar case involving taxpayers who sued their accountants for improper tax

assistance, we held that until the tax court determination, both the taxpayers and

their accountants believed that the accounting advice was correct and that,

therefore, the taxpayers’ tax position was justified. Consequently, we held that

there was no injury, in part because the taxpayers “had the option to pay the tax

owed or to prove that they did not owe the tax by petitioning for a redetermination

of the deficiency in the tax court.” Peat, Marwick, 565 So. 2d at 1326.




                                        - 11 -
      As in Peat, Marwick, Kipnis and Kibler did not know for certain whether

they would suffer any adverse tax consequences until their dispute with the IRS

became final following the tax court’s decision. In fact, they had some reason to

believe that they would prevail: notwithstanding appellees’ deferred prosecution

agreement and other cases determining that CARDS lacked economic substance,

the tax court found that a genuine issue of material fact existed on the question of

whether Kipnis and Kibler’s CARDS transaction was economically substantive.

Accordingly, their injury concerning the payment of taxes and interest was

speculative and uncertain, rather than definite and concrete.

      We are also wary of the potential problems that could result if we were to

hold that Kipnis and Kibler’s injuries arose prior to the tax court’s decision.

Illustrating our concern is a decision of the United States District Court for the

Southern District of Florida, holding that a taxpayer who was in settlement

negotiations with the IRS concerning the taxpayer’s use of a fraudulent tax shelter

lacked standing to sue the shelter’s promotors. Loftin v. KMPG LLP, No. 02-

81166-CIV, 2003 WL 22225621, at *7 (S.D. Fla. 2003). The federal district court

explained that “[u]ntil and unless [the taxpayer] and the IRS reach a final

resolution of the dispute, it is impossible to determine whether [the taxpayer]

actually suffered damages from [the promotors’] alleged misconduct,” because

“the amount and nature of the [taxpayer’s back taxes, interest, and penalties]


                                        - 12 -
payment[s] remain unknown,” making the injury insufficiently real and concrete to

support standing under article III of the United States Constitution. Id. If Loftin

makes a plaintiff ineligible to sue until the tax court enters its judgment and we

were to hold that the statute of limitations could begin to run before the tax court’s

judgment, then the statute of limitations might conceivably prohibit a plaintiff’s

claims before the plaintiff obtained standing to bring those claims. We cannot

countenance a rule that would time-bar a plaintiff’s lawsuit before the plaintiff

becomes eligible to sue.

      Because the payment of the CARDS fees did not become a real injury until

the tax court’s judgment, because the prospect of paying back taxes and interest

was too speculative to ripen into damages until the tax court’s judgment, and

because appellees do not argue that the legal and accounting fees and expenses that

Kipnis and Kibler paid in defending the CARDS transaction arose prior to the tax

court’s judgment, the injuries that Kipnis and Kibler allege they suffered all

ripened into real and concrete damages only when the tax court’s judgment became

final. Accordingly, this factor weighs in favor of holding that the finality accrual

rule should apply to Kipnis and Kibler’s claims.

      Fourth, we have endeavored to promote the efficient use of judicial

resources by creating a “bright-line rule [to] provide certainty and reduce litigation

over when the statute starts to run.” Silvestrone, 721 So. 2d at 1176; see also


                                        - 13 -
Larson & Larson, 22 So. 3d at 40, Perez-Abreu, 790 So. 2d at 1054. We have also

noted that the finality accrual rule is preferable where, by allowing for a plaintiff to

delay filing a lawsuit, a defendant would receive additional time to correct any

problems or errors that might cause the plaintiff problems in the underlying

litigation, perhaps obviating the need for any secondary litigation. See Peat,

Markwick, 565 So. 2d at 1327.

      Kipnis and Kibler argue that the finality accrual rule allows for the most

efficient use of judicial resources and believes that the appellees’ proposed

limitation is unworkable. Appellees argues that limiting the finality accrual rule to

malpractice cases or cases that are sufficiently analogous to malpractice allows for

the most efficient use of judicial resources. Appellees also asserts that Kipnis and

Kibler’s proposed expansion of the finality accrual rule is unworkable.

      We agree with Kipnis and Kibler that in this case, the finality accrual rule

allows for the more efficient use of judicial resources. If we held that the statute of

limitations began to run at an earlier date, we would force plaintiffs like Kipnis and

Kibler to bring their secondary lawsuits earlier in order to comply with the statute

of limitations, even though a secondary lawsuit would be unnecessary if the

plaintiffs won their underlying litigation. Allowing plaintiffs to delay filing their

secondary lawsuits provides potential defendants with more time to correct or

mitigate any problems they may have caused, decreasing the likelihood that


                                         - 14 -
secondary litigation would be necessary. By contrast, requiring plaintiffs to file

lawsuits earlier will force plaintiffs, defendants, and courts alike to grapple with

early litigation issues—i.e., motions to dismiss, discovery issues, and scheduling

appearances and hearings—in lawsuits that may prove to be entirely unnecessary.

Some courts would likely respond by holding these cases in abeyance,

unnecessarily crowding the docket with cases on hold. Applying the finality

accrual rule will enable plaintiffs to litigate their primary lawsuits to completion

and entirely avoid the unnecessary filing of secondary lawsuits in the event that the

primary lawsuits end favorably.

      We also agree with Kipnis and Kibler that appellees’ proposal to limit the

finality accrual rule to malpractice and malpractice-like cases is not likely to serve

the administration of justice. We have previously applied the finality accrual rule

in cases not involving malpractice. See Fremont Indem., 796 So. 2d at 505 (claims

for breach of contract and breach of fiduciary duty against an attorney); Blumberg,

790 So. 2d at 1065 (negligence claims against an insurance agent).

      Finally, we consider whether application of the finality accrual rule serves

the policies motivating the Legislature to enact statutes of limitations. “Clearly,

the purpose of the statute of limitations includes ‘protect[ing] defendants from

unfair surprise and stale claims.’ ” Raymond James Fin. Servs., Inc. v. Phillips,

126 So. 3d 186, 192 (Fla. 2013) (quoting Fla. Dep’t of Health & Rehab. Servs. v.


                                         - 15 -
S.A.P., 835 So. 2d 1091, 1096 (Fla. 2002)). We have explained that statutes of

limitations

      afford parties needed protection against the necessity of defending
      claims which, because of their antiquity, would place the defendant at
      a grave disadvantage. In such cases how resolutely unfair it would be
      to award one who has willfully or carelessly slept on his legal rights
      an opportunity to enforce an unfresh claim against a party who is left
      to shield himself from liability with nothing more than tattered or
      faded memories, misplaced or discarded records, and missing or
      deceased witnesses. Indeed, in such circumstances, the quest for truth
      might elude even the wisest court.

Major League Baseball v. Morsani, 790 So. 2d 1071, 1075 (Fla. 2001) (quoting

Nardone v. Reynolds, 333 So. 2d 25, 36 (Fla. 1976)).

      Here, these considerations do not counsel in favor of limiting the finality

accrual rule. Appellees were not likely to have been “unfairly surprised” by this

action, and the concerns about evidence succumbing to the sands of time are

weaker here. They were aware that Kipnis and Kibler were engaged in a tax court

action defending their CARDS transaction because appellees had employees who

were deposed in that litigation. Additionally, appellees were litigating CARDS

lawsuits as late as March and May of last year—nearly a year and a half after

Kipnis and Kibler filed their action. See Rezner v. HVB America, Inc., No. 06-cv-

02064-VC, at 1 (N.D. Cal. May 6, 2015), ECF No. 643 (noting a settlement

agreement had been reached); Kerman v. Chenery Assocs., No. 3:06-CV-00338-

CRS, 2015 WL 1292581, at *1 (W.D. Ky. Mar. 23, 2015) (dismissing plaintiffs’


                                       - 16 -
remaining claims against HVB). Both of these actions and Kipnis and Kibler’s tax

court litigation would have preserved testimony, brought important documents to

light, and otherwise mitigated the concern that evidence would be lost over time.

        Finally, we must weigh all of the above competing concerns. The need to

shield plaintiffs from taking directly contrary positions in separate actions weighs

heavily in favor of applying the finality accrual rule, as does our concern about

ensuring that claims accrue only when damages are real and concrete, not

hypothetical and speculative. The finality accrual rule also promotes the efficient

use of judicial resources, weighing in favor of applying the rule. Finally, because

the facts of this case are not inconsistent with the policy behind statutes of

limitations, policy considerations do not weigh against applying the finality accrual

rule.

                                   CONCLUSION

        In light of the above competing concerns, we hold that the finality accrual

rule applies in this case. Accordingly, we answer the certified question posed by

the United States Court of Appeals for the Eleventh Circuit by holding that Kipnis

and Kibler’s claims accrued at the time their action in the tax court became final,

following expiration of the ninety-day time period for appealing the tax court’s

judgment. See I.R.C. § 7483 (2012); Tax Ct. R. 190(a); see also Silvestrone, 721

So. 2d 1175 & n.2 (noting that for the purpose of the finality accrual rule, a


                                         - 17 -
judgment from which no appeal is taken becomes final after the expiration of the

appeal period). Having answered the certified question, we return this case to the

United States Court of Appeals for the Eleventh Circuit.

      It is so ordered.

LABARGA, C.J., and PARIENTE, LEWIS, and QUINCE, JJ., concur.
CANADY and POLSTON, JJ., concur in result.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.

Certified Question of Law from the United States Court of Appeals for the
Eleventh Circuit – Case No. 14-11959

Michael G. Dickler and Scott F. Hessell of Sperling & Slater, P.C., Chicago,
Illinois; and Dennis G. Kainen of Weisberg Kainen Mark, PL, Miami, Florida,

      for Appellants

Ann Marie St. Peter-Griffith of Kasowitz, Benson, Torres & Friedman LLP,
Miami, Florida; Michael A. Hanin of Kasowitz, Benson, Torres & Friedman
LLP, New York, New York; and Henry Brownstein of Kasowitz, Benson, Torres
& Friedman LLP, Washington, District of Columbia,

      for Appellees




                                       - 18 -
