                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.




                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-2795-17T2

RIAD KABAKIBI and LAMA
KABAKIBI, Husband and Wife,
and RIAD KABAKIBI, M.D.,
P.A.,

          Plaintiffs-Appellants,

v.

RAMESH SARVA, C.P.A.,
RAMESH SARVA, C.P.A.,
P.C., and MICHAEL W.
FRANK, F.S.A., M.A.A.A.,

     Defendants-Respondents.
____________________________

                    Argued September 9, 2019 – Decided October 24, 2019

                    Before Judges Fasciale, Moynihan and Mitterhoff.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Bergen County, Docket No. L-9757-14.

                    Jannat Nalwa argued the cause for appellants
                    (Piekarsky & Associates, LLC, attorneys; Scott B.
                    Piekarsky and Jannat Nalwa, on the briefs).
            Kenneth B. Falk argued the cause for respondents (Falk
            & Flotteron, LLC, attorneys; Kenneth B. Falk and
            Jacob Davidson, on the brief).

PER CURIAM

      Plaintiffs Riad Kabakibi and Lama Kabakibi appeal from an order for

judgment dismissing with prejudice their complaint alleging professional

malpractice against their accountant, defendant Ramesh Sarva and from the

denial of their motion for a new trial. Plaintiffs argue the trial court erred by

denying their motion for a new trial and committed trial errors by: failing to set

forth findings of fact and conclusions of law in its decision following a bench

trial; finding plaintiffs committed tax fraud; failing to find defendant negligently

advised them regarding a defined benefit plan (the plan) into which plaintiffs

transferred real estate, and that defendant was responsible for the damages—

taxes, penalties and interest charged by the Internal Revenue Service (IRS) after

an audit of plaintiffs' returns from 2008 through 2011—which plaintiffs incurred

as a result of defendant's negligent preparation of plaintiffs' personal and

corporate tax returns for Riad's 1 medical practice and inclusion of the improper

real-estate contributions to the plan. Because we agree that the trial court erred



1
   At times, we refer to the Kabakibis by their given names for purposes of
clarity; we mean no familiarity or disrespect by so doing.
                                                                            A-2795-17T2
                                         2
by failing in its written decision to set forth its analysis, correlating its findings

of facts to the applicable legal principles, consequently supplying ample support

to grant plaintiffs' motion for a new trial, we reverse and remand.

      In its eight-page written decision following a three-day bench trial, the

trial court said it would "deal with the first two audit issues raised in the [IRS]

auditor's report," then went on to list five

             items, which increased corporate income in the years in
             question[:] 1) [a]dditions to income of [the professional
             corporation] from monies diverted by Lama; 2)
             [d]isallowed deductions for rent; 3) [d]isallowed
             expenses from [the professional corporation] that was
             [sic] never paid; 4) [i]mproper contributions to [the
             plan] from a real estate transfer; 5) [d]isallowed
             automobile expenses.

The court then divided its decision into three parts:             Diverted Income,

Deductions and Pension Plan Deductions.

      Under the heading "Diverted Income," the court concluded plaintiffs

"wrongfully took" almost $684,000, which the IRS auditor determined was

income to the professional corporation, and deposited it in accounts in their

individual names in what the court described as part of "a large and willful

evasion of paying appropriate taxes." The court found "[p]laintiffs had eight

1099s for the two accounts where the diverted money went" and "[n]one were



                                                                              A-2795-17T2
                                          3
ever presented to [defendant]" showing plaintiffs purposely hid their diversion

from defendant.

      The trial court labeled plaintiffs' deductions for rent and repair expenses

"clear tax evasion," finding Lama told the IRS auditor plaintiffs owned the

building in which the medical practice was located so no rent was paid, "the

utility and the repair expenses were not used for the [professional corporation]

but instead for other properties" plaintiffs owned, and that equipment rental

expenses were "arguable at best." The court determined, "Lama, by offering no

opposition to issues in audit's [sic] disallowed deductions, was conceding that

her conduct was wrongful" and "there was no attempt to prove that these

additions to income or deductions, which the auditor disallowed, are

defensible."

      Lastly, the trial court considered evidence relating to the plan and

deductions for contributions of real estate in 2008 and 2009 which the auditor—

who did not testify—ruled improper. The trial court concluded the IRS "auditor

made comments regarding [the plan] but at no time gave any indication that

there was anything wrong with [it]. The plan had been approved by the IRS."

The court deemed defendant's testimony

               strong evidence that [the plan], for which he listed a
               deduction and which was approved by the IRS, was

                                                                         A-2795-17T2
                                         4
              proper. He testified that such a plan never created an
              issue for over 150 clients of his. The auditor's reason
              for disallowing [the plan] contributions was that there
              was no cash contributions by the corporation and that
              [the] transfer was not permitted.

The court found that plaintiffs' expert Frank Brunetti2 "cleared up the issue" by

testifying the 2008 contribution was disallowed because it was not a contribution

by the professional corporation, but from a separately owned limited liability

company that owned the contributed real estate. The court found "no testimony

or evidence that the auditor was concerned with no compensation showed on the

11403 of the [professional corporation]." In addressing the 2009 contribution to

the plan, the trial court found it was "disallowed solely because [the professional

corporation] did not follow [defendant's] instructions in contributing to the

payment plan as directed." The court also found plaintiffs' experts, Jay Soled

and Brunetti "gave testimony, hinting but never stating, that the [p]lan was

improper." The court then rejected Soled's opinion that the plan "deductions

were the cause, in any way, of the audit [sic]," and found the "audit was caused




2
    We note the trial court, at times, referred to Brunetti as Burnetti.
3
  Plaintiffs contend the trial court's reference to form 1140 is erroneous because
the correct designation of the form is 1120.
                                                                           A-2795-17T2
                                          5
by the conduct of the [p]laintiffs in diverting [almost $684,000] of corporate

income."

      Our review of "the findings and conclusions of a trial court following a

bench trial are well-established." Allstate Ins. Co. v. Northfield Med. Ctr., P.C.,

228 N.J. 596, 619 (2017). While we review the trial court's interpretation of law

de novo, Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,

378 (1995), normally:

            [W]e give deference to the trial court that heard the
            witnesses, sifted the competing evidence, and made
            reasoned conclusions. Reviewing appellate courts
            should "not disturb the factual findings and legal
            conclusions of the trial judge" unless convinced that
            those findings and conclusions were "so manifestly
            unsupported by or inconsistent with the competent,
            relevant and reasonably credible evidence as to offend
            the interests of justice."

            [Allstate Ins. Co., 228 N.J. at 619 (alteration in
            original) (internal citations omitted) (quoting
            Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254
            (2015)).]

Nor do we "engage in an independent assessment of the evidence as if [we] were

the court of first instance," State v. Locurto, 157 N.J. 463, 471 (1999), and will

"not weigh the evidence, assess the credibility of witnesses, or make conclusions

about the evidence," Mountain Hill, L.L.C. v. Twp. of Middletown, 399 N.J.



                                                                           A-2795-17T2
                                        6
Super. 486, 498 (App. Div. 2008) (quoting State v. Barone, 147 N.J. 599, 615

(1997)).

      "If we are satisfied that the trial judge's findings and result could

reasonably have been reached on sufficient credible evidence in the record as a

whole, his [or her] determination should not be disturbed." Pioneer Nat'l Title

Ins. Co. v. Lucas, 155 N.J. Super. 332, 338 (App. Div. 1978). "Reversal is

reserved only for those circumstances when we determine the factual findings

and legal conclusions of the trial judge went 'so wide of the mark that a mistake

must have been made.'" Llewelyn v. Shewchuk, 440 N.J. Super. 207, 214 (App.

Div. 2015) (quoting N.J. Div. of Youth & Family Servs. v. M.M., 189 N.J. 261,

279 (2007)).

      Unfortunately, the trial court did not apply any findings of fact to the

elements related to plaintiffs' malpractice claim and then make legal conclusions

relevant to those elements. In fact, the court's decision does not set forth any

legal citation.   Rule 1:7-4(a) requires that a trial court "by an opinion or

memorandum decision, either written or oral, find the facts and state its

conclusions of law thereon in all actions tried without a jury. . . ." "[N]either

the parties nor [the court] are well-served by an opinion devoid of analysis or

citation to even a single case." Great Atl. & Pac. Tea Co., Inc. v. Checchio, 335


                                                                         A-2795-17T2
                                       7
N.J. Super. 495, 498 (App. Div. 2000) (emphasis added). "When a trial court

issues reasons for its decision, it 'must state clearly [its] factual findings and

correlate them with relevant legal conclusions, so that parties and the appellate

courts      [are]    informed     of    the    rationale   underlying     th[ose]

conclusion[s].'" Avelino-Catabran v. Catabran, 445 N.J. Super. 574, 594 (App.

Div. 2016) (alterations in original) (quoting Monte v. Monte, 212 N.J. Super.

557, 565 (App. Div. 1986)). When that is not done, a reviewing court does not

know whether the judge's decision is based on the facts and law or is the product

of arbitrary action resting on an impermissible basis. See Monte, 212 N.J.

Super. at 565.

         A claim for damages related to professional malpractice accrues when the

professional's negligence is the proximate cause of the client's damages. Circle

Chevrolet Co. v. Giordano, Halleran & Ciesla, 274 N.J. Super. 405, 413 (App.

Div. 1994).      "One who undertakes to render services in the practice of a

profession or trade is required to exercise the skill and knowledge normally

possessed by members of that profession in good standing in similar

communities."       Levine v. Wiss & Co., 97 N.J. 242, 246 (1984) (citing

Restatement (Second) of Torts § 299A (Am. Law Inst. 1965)). In Levine, the

Court "expressly recognized, and . . . stressed, that an accountant may be held


                                                                          A-2795-17T2
                                         8
responsible to those to whom a duty is owed, for failure to adhere to the

[accepted] standards of [conduct for] the profession." Ibid.

      In the context of an architectural malpractice case, we recognized:

            In a professional negligence case, the standard of care
            must normally be established by expert testimony. This
            is so because a jury should not be allowed to speculate,
            without expert testimony, in an area where laypersons
            have insufficient knowledge or experience. Moreover,
            opinion testimony "must relate to generally accepted . .
            . standards, not merely to standards personal to the
            witness." In other words, plaintiff must produce expert
            testimony upon which the jury could find that the
            consensus of the particular profession involved
            recognized the existence of the standard defined by the
            expert. It is insufficient for plaintiff's expert simply to
            follow slavishly an "accepted practice" formula; there
            must be some evidential support offered by the expert
            establishing the existence of the standard.

            [Taylor v. DeLosso, 319 N.J. Super. 174, 179-80 (App.
            Div. 1999) (internal citations omitted) (quoting
            Fernandez v. Baruch, 52 N.J. 127, 131 (1968)); see also
            Skoloff & Wolfe, P.C., 339 N.J. Super. 97, 102-03
            (App. Div. 2001) (relating the same tenet to an attorney
            malpractice action).]

      Thus, as with any professional malpractice case, the trial court was

compelled to follow the same analysis we would expect of any trier of fact and

            determine what is standard [accounting] practice from
            the testimony of the expert witnesses who have been
            heard in this case. After deciding what the standard of
            care is, what standard [accounting] practice is in the
            circumstances of this case, [the trier of fact] must then

                                                                          A-2795-17T2
                                        9
             determine whether defendant has conformed with or
             whether defendant has departed from that standard of
             care.

             [Model Jury Charges (Civil), 5.51A,                "Legal
             Malpractice" (approved June 1979).]

Although we have quoted the model jury charge for legal malpractice cases, the

same analysis is required for accounting malpractice cases for which no model

charge exists.

      Plaintiffs presented expert testimony from Brunetti and Soled, who

testified as to deviations they said defendant committed with regard to the filing

of plaintiffs' tax returns and the advice defendant gave to plaintiffs regarding the

plan. Soled testified that accountants must prepare tax returns in accordance

with standards published by the American Institute of Certified Public

Accountants (AICPA), among which is the need to be accurate and proactive,

not just scriveners who "take whatever information [their] client says and just

put it on a tax return."

      Soled testified the fact that the absence of reported salary for a medical

specialist such as Riad on the returns "seems on its face to be fundamentally

flawed" and that "there seems to be no bridge to be able to make qualified

contributions to a pension plan . . . because usually the sine qua non to having

bonafide contributions to a pension plan is the receipt of salary."           Soled

                                                                            A-2795-17T2
                                        10
characterized these errors as "egregious flaws . . . on the returns." Soled opined

that an accountant "should have [heard] alarm bells going off" when faced with

such circumstances and if the returns seemed flawed, the accountant "cannot just

point the finger at the client and say . . . he or she or it gave me this information

and it's their fault because [an accountant has] to stand behind the work." Soled

referenced an AICPA standard in maintaining that an accountant "should make

a reasonable effort to obtain from the taxpayer the information necessary to

provide appropriate answers to all questions on a tax return before signing as a

preparer." He opined the absence of salary "scream[ed] out" that defendant

should not have signed the returns without demanding more information from

plaintiffs.

      He also testified that because no salary was listed, the IRS disallowed the

deduction for the plan. Soled offered if the tax returns had been properly

prepared, plaintiffs would not have owed taxes. Defendant admitted on cross-

examination that a pension plan contribution cannot be made if a salary is not

paid, and the IRS can disqualify such a pension deduction.

      Brunetti, in reviewing a Pension Plan Expense Lead Sheet marked P-14

for identification at trial, testified that the IRS auditor, citing to case law, held

firm to the opinion that transfers of property to a pension plan are prohibited.


                                                                             A-2795-17T2
                                        11
Brunetti also described the transfer of real estate to the pension plan as

prohibited.

      The trial court never considered whether defendant deviated from the

standard that required an accountant demand further information from a client.

Instead, he placed liability on plaintiffs who failed to provide defendant with

1099 forms and provided defendant with information "[a]s to all the deductions

that were disallowed," which defendant "utilized and relied upon." The court

also failed to analyze that standard of care in connection with its analysis of

"diverted income," concluding plaintiffs intentionally withheld eight 1099 forms

from defendant.

      We also determine the trial court erred in focusing on the cause of the IRS

audit instead of whether defendant deviated from a standard of care by preparing

a return devoid of any income to Riad that deducted contributions to a pension

plan. The court also focused on whether the plan was "proper" but never

addressed whether defendant should have shown income and requested more

information from plaintiffs regarding the contribution, or both. Contrary to the

court's finding that plaintiffs' experts merely hinted that the plan was improper,

the experts clearly said the IRS prohibited the transfer of real estate to a plan




                                                                          A-2795-17T2
                                       12
and that the IRS would disqualify deductions to a plan if no income was

shown—a fact admitted by defendant.

      We are unable to determine from the trial court's ruling if it did not believe

Lama had a conversation with a Florida attorney who she said questioned the

transfer of Florida real estate in 2008 to the plan or if it did not believe she

conversed with defendant about the Florida attorney's concerns about the

transfer. The court stated defendant's reply, after Lama allegedly told him "that

a Florida attorney said he could not do what [defendant] wanted done," was to

tell Lama "to tell the Florida attorney to do what he was supposed to do." From

the context of the decision, it seems the court found defendant's reply as a

finding of fact. Although he declared the Florida attorney's statement hearsay,

it conflated the two alleged conversations—Lama with the Florida attorney and

Lama with defendant—in its decision and expressed "[w]e do not know what

[defendant] allegedly wanted the Florida attorney to do or the Florida attorney's

ultimate response," before cryptically concluding "[a]ny reasonable evaluation

of this version by Lama leads one to believe that this conversation never

occurred." If the court did not believe the conversation with the Florida attorney

took place, it still had to analyze defendant's knowledge as to the real estate

transfer. The trial court's decision makes our review impossible.


                                                                            A-2795-17T2
                                       13
      We also discern that the trial court did not analyze what it determined to

be plaintiffs' actions through the lens of our settled law regarding plaintiffs'

contributory negligence in professional malpractice actions. Our Supreme Court

observed:

            Actions involving a breach of professional duty are not
            everyday negligence claims—they involve obligations
            arising from special relationships. Five years ago, a
            unanimous Court in Conklin v. Hannock Weisman, 145
            N.J. 395, 412, 678 A.2d 1060 (1996), observed that,
            "when the duty of the professional encompasses the
            protection of the client or patient from self-inflicted
            harm, the infliction of that harm is not to be regarded
            as contributory negligence on the part of the client."
            The view that comparative or contributory negligence
            generally may not be charged when a professional
            breaches his or her duty to a client reflects our
            heightened expectations of professional services in this
            State.

            [Aden v. Fortsh, 169 N.J. 64, 75 (2001).]

      Thus, as to causation in professional negligence cases, "professionals may

not diminish their liability under the Comparative Negligence Act[, N.J.S.A.

2A:15-5.1 to -5.8,] when the alleged negligence of the client relates to the task

for which the professional was hired." Id. at 78. When, however, "a client

impedes the professional in his or her performance by . . . withholding or failing

to provide certain information to the professional concerning the matter for



                                                                          A-2795-17T2
                                       14
which the professional was hired[,] that [can] reduce[] a portion of the harm

committed[.]" Id. at 77. So too,

             comparative negligence principles may be applied in
             professional malpractice claims in which the client's
             alleged negligence, although not necessarily the sole
             proximate cause of the harm, nevertheless contributed
             to or affected the professional's failure to perform
             according to the standard of care of the profession.
             Steiner Corp. v. Johnson & Higgins, 996 P.2d 531, 532
             (Utah 2000). See also Scioto Mem. Hosp. Ass'n. v.
             Price Waterhouse, 74 Ohio St.3d 474, 659 N.E.2d 1268,
             1274 (1996) (Cook, J. concurring) (noting that in
             accounting     malpractice    actions    "comparative
             negligence may be applied only to negligent acts of a
             client that contribute to the accountant's failure to
             perform according to the standards of the accounting
             profession.")

             [Ibid.]


And if the client's—rather than the professional's—conduct was the sole,

proximate cause of the damages, the trier of fact may find the professional is not

liable. Ibid. While the trial court laid blame at plaintiffs' feet, it did not consider

whether defendant breached the standard of care due them.

      Because the trial court did not address pertinent issues, and did not comply

with Rule 1:7-4(a), correlating its findings to relevant legal conclusions, we are

compelled to reverse and remand this matter for a new trial before a different

judge, after which findings of fact and conclusions of law addressing plaintiffs'

                                                                               A-2795-17T2
                                         15
allegations of malpractice should be made in accordance with that Rule. In light

of our holding, we need not address plaintiffs' contention that the motion judge

erred in denying their post-trial motions.

      Reversed and remanded for proceedings consistent with this opinion. We

do not retain jurisdiction.




                                                                        A-2795-17T2
                                       16
