Anderson v. Glenn
| Decision Date | 03 November 2003 |
| Docket Number | No. 29300.,29300. |
| Citation | 139 Idaho 799,87 P.3d 286 |
| Parties | Gordon ANDERSON and Thomas Anderson, individually, as Trustees of the Anderson Family Trust, and as Personal Representatives of the Estate of Ora Anderson, Gordon Anderson, Duly Designated Trustee of the Gordon Anderson Family Trust; Thomas Anderson, Duly Designated Trustee of the Thomas Anderson Family Trust; Rodney B. Curtis, Duly Designated Trustee of the Anderson Irrevocable Trust; and Ronald Blackwood, Duly Designated Trustee of the Colleen Adams Family Trust, Plaintiffs-Appellants, v. James D. GLENN, Jr., Lloyd Webb, Riley Burton and Kenneth Pedersen, Defendants-Respondents. |
| Court | Idaho Supreme Court |
Ellis, Brown & Sheils, Chtd., Boise, for appellants. Allen B. Ellis argued.
Holland & Hart, Boise, for respondents. Steven B. Anderson argued.
James D. Glenn, Jr., Lloyd Webb, Riley Burton and Kenneth Pedersen are lawyers whose firm did work in setting up a trust for Albert and Ora Anderson. James D. Glenn, Jr. was the attorney who handled the matter for the Andersons. Gordon Anderson and Thomas Anderson are trustees of the trust and personal representatives of the estate of Albert and Ora Anderson and brought this action, claiming malpractice in the establishment of the trust. The district court dismissed the suit on the grounds that the statute of limitations had run. The trust was set up in 1978; property was transferred to the trust in 1980; the statute of limitations is two years; this action was brought in 1999. The issue on appeal is what event triggers commencement of the statute of limitations. Gordon and Thomas Anderson contend the time began to run when the first legal costs were incurred with respect to the incident of malpractice. The district court ruled that the statute of limitations began to run in 1980 when the grantors to the trust lost control of the property they put in trust.
Albert and Ora Anderson hired Glenn in 1978 to prepare an estate plan to remove portions of their assets from their estate to minimize estate taxes. The estate plan Glenn developed called for the creation of the Anderson Family Trust into which Albert and Ora would transfer cash, several shares of stock and their home. This transfer into the irrevocable trust was made in April of 1980. However, the language of the trust instrument reserved to Albert and Ora Anderson annual trust income and the power of appointment over some of the assets. As a consequence, their estate would be responsible for estate taxes on the trust assets. Albert Anderson died in 1983. Ora Anderson died in 2000, and substantial estate taxes were levied against the trust assets, diminishing their value and preventing distribution of the assets in accordance with the expectations of the trust.
Gordon and Thomas Anderson first learned of the defects in the trust on August 27, 1997, when another attorney warned them of the defects in the estate plan. They filed this action on August 26, 1999.
Glenn moved for summary judgment on the grounds that the action was time barred under I.C. § 5-219, which states in relevant part:
4. An action to recover damages for professional malpractice ... [T]he cause of action shall be deemed to have accrued as of the time of the occurrence, act or omission complained of, and the limitation period shall not be extended by reason of any continuing consequences or damages resulting therefrom or any continuing professional or commercial relationship between the injured party and the alleged wrongdoer.
The district court applied the "some damage" rule as it was set down in Streib v. Veigel, 109 Idaho 174, 706 P.2d 63 (1985). Under this rule, the two (2) year statute of limitation begins to run when the party first incurs "some damage" resulting from the alleged malpractice. This Court "extended the date for the accrual of actions for professional malpractice where the negligence is continuing, until the date that damage occurred." Griggs v. Nash, 116 Idaho 228, 232, 775 P.2d 120, 124 (1989). The district court made the following ruling:
In 1980 the Plaintiffs transferred their cash, home and stock into the trust, and by so doing effectively lost control of their ability to use those assets as they desired. Plaintiffs lost the ability to receive interest on the cash, sell their property or receive the dividends paid on the H.J. Heinz stock they placed into the fund. This loss of control and right to receive income constituted a monetary loss. As the case law shows, a loss of money due to the actions of the alleged negligent party constitutes "some damage", and therefore the two year statute of limitations begins to run. Hence, the statute of limitations would have expired in 1982 and Plaintiff's cause of action against the Defendant expired at that time as well.
The appeal was initially assigned to the Court of Appeals which rendered a decision. This Court granted review.
In Bonz v. Sudweeks, 119 Idaho 539, 808 P.2d 876 (1991), this Court reviewed a grant of summary judgment in which the statute of limitations for a cause of action for malpractice had run under the "some damage" rule. As to the standard of review in that case, this Court stated:
A motion for summary judgment shall be rendered forthwith if the pleading, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. I.R.C.P. 56; Rawson v. United Steelworkers of Am., 111 Idaho 630, 726 P.2d 742 (1986); Schaefer v. Elswood Trailer Sales, 95 Idaho 654, 516 P.2d 1168 (1973). Standards applicable to summary judgment require the district court and Supreme Court upon review, to liberally construe facts in the existing record in favor of the nonmoving party, and to draw all reasonable inferences from the record in favor of the nonmoving party. Tusch Enters. v. Coffin, 113 Idaho 37, 740 P.2d 1022 (1987); Doe v. Durtschi, 110 Idaho 466, 716 P.2d 1238 (1986); Kline v. Clinton, 103 Idaho 116, 645 P.2d 350 (1982); Palmer v. Idaho Bank & Trust of Kooskia, 100 Idaho 642, 603 P.2d 597 (1979). "[M]otions for summary judgment should be granted with caution." Bailey v. Ness, 109 Idaho 495, 497, 708 P.2d 900, 902 (1985); Steele v. Nagel, 89 Idaho 522, 528, 406 P.2d 805, 808 (1965). If the record contains conflicting inferences or reasonable minds might reach different conclusions, a summary judgment must be denied. Kline v. Clinton, 103 Idaho 116, 645 P.2d 350 (1982); Farmers Ins. Co. of Idaho v. Brown, 97 Idaho 380, 544 P.2d 1150 (1976); Stewart v. Hood Corp., 95 Idaho 198, 506 P.2d 95 (1973).
The Court outlined the law applicable to limitations on the commencement of a professional malpractice action in Lapham v. Stewart, 137 Idaho 582, 585-86, 51 P.3d 396, 399-400 (2002):
"The determination of what constitutes `damage' for purposes of accrual of an action must be decided on the circumstances presented in each individual case." Bonz v. Sudweeks, 119 Idaho 539, 543, 808 P.2d 876, 880 (1991). The issue in this case is whether the transfer of property into the flawed trust with the accompanying loss of control over portions of that property constituted "some damage."
In Streib v. Veigel, 109 Idaho 174, 706 P.2d 63 (1985), accountants prepared flawed tax returns for the years of 1976 through 1980. The errors were discovered in 1982 when new accountants were hired and the Internal Revenue Service (I.R.S.) began levying sanctions. Suit was filed in 1983. 109 Idaho at 174, 706 P.2d at 63. The Court analogized the situation to:
the sale of a tainted but frozen piece of meat which is then stored by the purchaser for more than two years before it is prepared and eaten with resultant injuries; or a vintner's sale of a case of wine containing one poisoned bottle, which the customer more than two years later decants and consumes, sustaining tragic injuries as a consequence.
Id. at 175, 706 P.2d at 64. The Court held that "the preparation and submission of income tax returns contemplate a review by the Internal Revenue Service, with damages resulting at that time if the returns have been erroneously prepared." Id. at 179, 706 P.2d at 68. The negligence occurred when the accountant prepared the statement, but that act did not harm the taxpayer until the I.R.S. processed the return and made an assessment. There was no surrender of control of property as in this case, hence no damage at the time the returns were erroneously prepared.
In Elliott v. Parsons, 128 Idaho 723, 918 P.2d 592 (1996), an attorney negligently structured and drafted a transaction for the sale of the Elliott's business which resulted in the failure of the transaction to qualify for installment sales treatment which in turn resulted in increased liability and interest payment to the I.R.S. The Court distinguished Elliott's case from Streib, holding that some damage occurred when the Elliotts hired new tax lawyers in 1986 after receiving a 30 day letter from the I.R.S. This accelerated the running of the statute of limitations.
In Bonz v. Sudweeks, 119 Idaho 539, 808 P.2d 876 (1991), the defendant attorneys failed to properly record the plaintiffs' land in 1986. This gave rise to a cloud on the title that was...
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