Treasure Valley Bank v. Killen & Pittenger, P.A.

Decision Date05 February 1987
Docket NumberNo. 16186,16186
Citation732 P.2d 326,112 Idaho 357
CourtIdaho Supreme Court
PartiesTREASURE VALLEY BANK, a state chartered banking institution, Plaintiff-Appellant, v. KILLEN & PITTENGER, P.A.; William M. Killen and Kathy Killen, husband and wife; and Gregory C. Pittenger and Linda Pittenger, husband and wife, Defendants-Respondents.

Rolf M. Kehne, Boise, for plaintiff-appellant.

W. Scott Wigle of Quane, Smith, Howard & Hull, Boise, for defendants-respondents.

BAKES, Justice.

The appellant, Treasure Valley Bank (TVB), brought a legal malpractice action against the law firm of Killen & Pittenger, P.A. (Killen), alleging negligent representation in a bankruptcy proceeding. Killen moved for summary judgment alleging that the appropriate statute of limitations set forth in I.C. § 5-219(4) 1 had run. The district court granted the motion, and TVB then brought this appeal.

In a summary judgment proceeding, "[t]he facts are to be liberally construed in favor of the party opposing the motion, who is also to be given the benefit of all favorable inferences which might be reasonably drawn from the evidence." Huyck v. Hecla Mining Co., 101 Idaho 299, 300, 612 P.2d 142, 143 (1980); Farmers Ins. Co. v. Brown, 97 Idaho 380, 544 P.2d 1150 (1976); Salmon River Sportsmen Camps, Inc. v. Cessna Air Co., 97 Idaho 348, 544 P.2d 306 (1975); Smith v. Idaho State University Federal Credit Union, 103 Idaho 245, 247, 646 P.2d 1016, 1018 (Ct.App.1982); I.R.C.P. 56(c). On appeal, this Court applies the same standard of review as a district court in evaluating a summary judgment. Mitchell v. Siqueiros, 99 Idaho 396, 398, 582 P.2d 1074 (1978).

The facts in this case were stipulated by the parties for the purpose of the summary judgment motion. William Killen represented TVB in a Chapter 13 bankruptcy proceeding initiated by one of TVB's debtors. Killen's duties required him to file TVB's claims with the federal bankruptcy court. The bankrupt owed TVB approximately $93,000 on the date the Chapter 13 bankruptcy was filed. 2 After preliminary questions on the debtor's bankruptcy plan were resolved, the debtor's amended Chapter 13 bankruptcy plan was confirmed by the bankruptcy court on August 24, 1982. This plan established the legal relationship between TVB and the debtor and awarded TVB $93,210.98, but made no mention of interest.

Two days later, on August 26, 1982, Killen sent TVB a letter reporting the results of the confirmation hearing, stating, "The amounts allowed to us will draw interest at the rate provided in 26 U.S.C. 6621, which is the interest rate the IRS draws...." TVB relied upon Killen's representation in this letter. Over a year later, in 1983, a dispute arose between TVB, the bankrupt and the trustee, regarding the amended bankruptcy plan and whether TVB was entitled to post-confirmation interest. 3 On November 16, 1983, TVB, represented by new counsel, filed a motion with the bankruptcy court to clarify the question of its entitlement to post-confirmation interest under the amended plan, which was silent on the subject of interest. On December 12, 1983, the bankruptcy judge held a hearing on TVB's claim and denied the claim for post-confirmation interest, stating that TVB was required to make any such claim prior to August 24, 1982, when the bankruptcy plan was confirmed.

This Court has dealt with the question of professional malpractice in a number of recent cases. These cases point out that while I.C. § 5-219(4) provides that "the cause of action shall be deemed to have accrued as of the time of the occurrence, act or omission complained of ...," nevertheless until some damage occurs no cause of action accrues for professional malpractice, even though the "occurrence, act or omission complained of," which ultimately causes the damages, has occurred earlier. Mack Financial Corp. v. Smith, 111 Idaho 8, 720 P.2d 191 (1986); Streib v. Veigel, 109 Idaho 174, 706 P.2d 63 (1985); Blake v. Cruz, 108 Idaho 253, 698 P.2d 315 (1985); Stephens v. Stearns, 106 Idaho 249, 678 P.2d 41 (1984). The question in this case is whether or not Treasure Valley Bank unquestionably suffered some monetary damage on August 24, 1982, the date of confirmation of the plan, or whether there is a material issue of fact over whether damage, if any, occurred at some later date. The trial court concluded that damage occurred, and the statute began to run on August 24, 1982. We agree.

On August 24, 1982, the bankruptcy court confirmed the amended Chapter 13 plan which fixed the rights and obligations of the parties. The August 24th ruling was reaffirmed on December 12, 1983, when the bankruptcy court denied TVB's claim for post-confirmation interest and stated that such claim was not included in the amended Chapter 13 plan approved at the August 24, 1982, confirmation hearing. As a matter of federal law, TVB lost its opportunity to secure post-confirmation interest on the secured claim on August 24, 1982, and that is the date upon which damage occurred. The bankruptcy court in its December 12, 1983, hearing did not adjudicate TVB's right to interest, but instead simply confirmed that the amended plan approved on August 24, 1982, had adjudicated that right, and the court on December 12, 1983, refused to amend the plan.

Accordingly, the district court did not err in granting the summary judgment. The two-year statute of limitations for professional malpractice set forth in I.C. § 5-219(4) ran from the August 24, 1982, date that the bankruptcy plan was adopted and the date upon which TVB suffered some damage which commenced the running of the statute of limitations.

For the foregoing reasons, the decision of the district court is affirmed. Costs to respondents.

SHEPARD, C.J., and DONALDSON and HUNTLEY, JJ., concur.

BISTLINE, Justice, dissenting.

The majority nicely frames the issue: "The question in this case is whether or not Treasure Valley Bank unquestionably suffered some monetary damage on August 24, 1982, the date of confirmation of the plan, or whether there is a material issue of fact over whether damage, if any, occurred at some later date." Ante at p. 328. However, I cannot agree with the majority's answer to that question.

To decree that the Bank unquestionably suffered monetary damage at the confirmation hearing is to hold the client to the standard of a bankruptcy lawyer. This the majority does not hesitate to do: "As a matter of federal law, TVB lost its opportunity to secure post-confirmation interest on the secured claim on August 24, 1982, and that is the date upon which damage occurred." Ante at p. 328. How was the Bank to know "as a matter of federal law" that it might be damaged by its attorney's failure to specify, in unambiguous terms, its desire for post-confirmation interest in the document spelling out the debtor's repayment plan? To charge the client with such knowledge of federal law is particularly unrealistic here where the attorney, only two days after the confirmation hearing, wrote to the Bank assuring that it would receive interest.

Until today, the "date of damage" rule had been applied reasonably consistently by this Court in the recent cases of Mack Financial, Streib, Blake, and Stephens. Now the trial bench and bar will be left guessing how to advise their clients based on our zig-zag interpretation of I.C. § 5-219(4).

The rationale for the "date of damage" rule is two-fold. First, it is axiomatic that no cause of action in negligence, such as professional malpractice, can accrue until all essential elements of the claim, including damages, have occurred. Chief Justice Shepard analyzed this point extremely well in Streib. Second, damages must have occurred so that the Bank is put on notice that action is required within a definite time period; otherwise, it will be viewed as having "slept on its rights." See Mack...

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11 cases
  • Olds v. Donnelly
    • United States
    • New Jersey Supreme Court
    • July 16, 1997
    ...upon the entry of trial court's judgment because that was when plaintiff incurred actionable harm); Treasure Valley Bank v. Killen & Pittenger, 112 Idaho 357, 732 P.2d 326, 328 (1987) (finding that malpractice action regarding attorney's negligent misrepresentation in bankruptcy proceeding ......
  • City of McCall v. Buxton
    • United States
    • Idaho Supreme Court
    • January 22, 2009
    ...a duty by failing to advise the City to seek advice from independent counsel before releasing J-U-B. Treasure Valley Bank v. Killen & Pittenger, P.A., 112 Idaho 357, 359, 732 P.2d 326, 328 (1987). Assuming the City had a claim against J-U-B, the City had objectively ascertainable damage whe......
  • Parsons Packing, Inc. v. Masingill, 29926.
    • United States
    • Idaho Supreme Court
    • July 23, 2004
    ...post-confirmation interest was deemed accrued as of the date of confirmation. Id. at 869, 865 P.2d at 960 (citing Treasure Valley Bank, 112 Idaho at 357, 732 P.2d at 326). Lapham v. Stewart, 137 Idaho 582, 51 P.3d 396 (2002), involved a claim of legal malpractice when an attorney's secretar......
  • Moshier v. Fisher
    • United States
    • Utah Supreme Court
    • August 13, 2019
    ...2019 UT 29, ¶ 17.28 We also note that this date has been used by other jurisdictions. See, e.g. , Treasure Valley Bank v. Killen & Pittenger, P.A. , 112 Idaho 357, 732 P.2d 326, 328 (1987) (following the damages rule and concluding that the malpractice claim accrued when the bankruptcy plan......
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