Diedrich v. Wolters Kluwer

Background

Gregory Diedrich, proceeding without a lawyer, brought a breach-of-contract action against Wolters Kluwer concerning its TaxWise software. Diedrich alleged that a software malfunction failed to prompt him to attach required forms, including Form 8867, to tax returns he prepared during the 2016 tax year. The opinion states that the Internal Revenue Service later fined him $287,640 for deficient filings and that a court issued a permanent injunction barring him from preparing federal tax returns for other people.

Diedrich filed the lawsuit on January 24, 2023, seeking to recover the penalties assessed by the Internal Revenue Service. Wolters moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim for relief.

Contractual Filing Deadline

The 2016 software agreement required any claim arising from the agreement to be filed within one year after the claim first arose. The court noted that the 2017 agreement contained a similar one-year limitation. The 2016 agreement selected Illinois law, while the 2017 agreement selected New York law.

The court concluded that both Illinois and New York would enforce a reasonable contractual filing deadline and found the one-year period reasonable. It held that the alleged breach occurred during the 2016 tax season, or at the latest during the 2017 tax season, making the January 2023 lawsuit untimely.

Diedrich argued that his claim accrued when his first payment to the Internal Revenue Service was due in January 2022 because that was when his damages became real. The court rejected that argument, explaining that a contract claim generally begins when the alleged breach occurs, not when damages are later suffered. The court also stated that the complaint would have been late even under Diedrich’s proposed January 14, 2022 accrual date because he filed it one year and ten days after that date.

Failure to State a Contract Claim

The court held that the complaint would fail even if it had been timely. The 2016 and 2017 agreements disclaimed warranties that the software would satisfy statutory or regulatory requirements or ensure compliance with applicable laws. They also placed the entire risk of the products’ quality and performance, including electronic filing, on Diedrich and made him responsible for ensuring that his filings complied with Internal Revenue Service regulations.

The court rejected Diedrich’s argument that the agreements were unconscionable because he accepted them by clicking through the software installation process. It treated the agreements as enforceable clickwrap agreements, meaning agreements accepted by clicking an electronic box or button, and found nothing in the agreements or the way they were signed supporting unconscionability.

Disposition

The court granted Wolters’s motion to dismiss the complaint. It also directed the Clerk of Court to terminate the pending motion and close the case. The opinion does not state whether the dismissal permits refiling or bars refiling.