Opinion ID: 1257666
Heading Depth: 1
Heading Rank: 3

Heading: this action accrued when emsi and van gelder were damaged.

Text: Having resolved that I.C. § 5-219(4) is the applicable statute of limitations in this case, we must then determine when the action accrued. The statute provides that actions for professional malpractice accrue as of the time of the occurrence, act or omission complained of. If we were to apply the statute strictly, the claims of EMSI and Van Gelder against Trout would clearly be barred. The alleged acts or omissions of Trout occurred in May 1984. Since the third-party complaint was not filed until September of 1987, the statute would bar the claims. However, in Streib v. Veigel, 109 Idaho 174, 706 P.2d 63 (1985), this Court extended the date for the accrual of actions for professional malpractice where the negligence is continuing, until the date that damage occurred. In Streib, an accountant had negligently prepared income tax returns for taxpayers, claiming certain deductions that were not allowable. The taxpayers filed an action against the accountant more than two years after the last return was prepared. The accountant moved for summary judgment on the basis of I.C. § 5-219(4). This Court held that the action for professional malpractice accrued when the Internal Revenue Service assessed the taxpayers for penalties and interest due to the deductions that were not allowable. The Court characterized the negligence of the accountant as continuing in nature until [the taxpayers] suffer damage. 109 Idaho at 179, 706 P.2d at 68. The assessment by the IRS was considered by the Court to be the date when damage to the taxpayers occurred. The taxpayers were allowed two years after that date within which to file their action against the accountant. Here, the trial court found that EMSI and Van Gelder had suffered damage as a result of Trout's alleged malpractice by at least November 2, 1984  the date of Van Gelder's letter to counsel for the Griggses stating that EMSI had incurred approximately $1,500 in attorney fees in preparing to file an action against Trout. From reviewing the record, we are uncertain whether this proposed action was based only on the fact that the recorded deed of trust from the Nashes to the Griggses did not have priority over other liens on the property, or whether it was also based on Trout's alleged failure to inform EMSI about the appraisal of the property at $31,800. The letter of October 4, 1984 from Van Gelder to the Griggses states: When we closed our loan, we employed the services of an attorney by the name of Kim Trout in Lewiston to disburse the funds to clear the property and put you in the first position on the property. We paid the funds over to him in Trust and he assured this office that he would do as we requested. As it turns out, Mr. Trout was representing Mr. Nash on a prior sale of the property that was foreclosed. Mr. Trout did not make anyone aware of that pending litigation or of any other things regarding the property that he had prior knowledge of. As it stands now, we have hired an attorney in Lewiston who is preparing a claim against Mr. Trout as well as the title company to recover the funds. We are paying the costs of that. The procedure is to submit a claim to Mr. Trout's malpractice insurance company. Hopefully this will resolve the whole thing quickly. In his deposition, Van Gelder was asked what Trout did or failed to do that he should have done to ensure that the loan was closed properly. He answered: Normal procedure is when you record a Deed of Trust you don't disperse funds  any funds until you have the dated down, endorsement showing your Deed of Trust recorded and your title dated down. Van Gelder also stated that when Trout wanted to disburse the funds to the Nashes, he asked Trout if the title had been cleared and that Trout said: `Yes, you're in the first position on the property.' In considering Trout's motion for summary judgment we are required to construe liberally the facts in the record in favor of EMSI and Van Gelder, to draw all reasonable inferences from the record in their favor, and to resolve all doubts against Trout. Pearson v. Parsons, 114 Idaho 334, 757 P.2d 197 (1988). Applying these rules to the record here, we conclude that the proposed action against Trout for which EMSI had incurred attorney fees by November 4, 1984, would have been based only on Trout's failure to clear the tax lien of the State of Idaho from the title to the property, and not on the alleged failure of Trout to inform EMSI of the $31,800 appraisal on the property. Therefore, we conclude that any damage that EMSI and Van Gelder had suffered by November 2, 1984, by having incurred attorney fees, related only to the failure to clear the title and not to the question of the value of the property. Under the rule in Streib, the two year statute of limitations of I.C. § 5-219(4) bars the claims of EMSI and Van Gelder with regard to this professional malpractice of Trout. We must next consider whether the action for malpractice because of Trout's alleged failure to inform EMSI and Van Gelder about the $31,800 appraisal accrued more than two years before the third-party complaint was filed in September of 1987. In order to do so, we must determine when EMSI and Van Gelder first suffered damage because of this alleged failure. EMSI and Van Gelder were served with the complaint of the Griggses on August 5, 1985. In the complaint the Griggses alleged that the property was worth only $31,800 and that EMSI and Van Gelder were negligent in failing to investigate or determine the fair market value of the property before the loan was made to the Nashes. In each of four claims in the complaint the Griggses requested judgment against EMSI and Van Gelder of (1) $75,000, plus additional sums to be proved at trial, less any sums received from the sale of the property, (2) punitive damages in the amount of $100,000, (3) interest on the entire amount of the judgment, and (4) reasonable attorney fees in the amount of $10,000, if the matter was not contested, plus additional attorney fees in the event of contest, trial or appeal. While the record does not indicate exactly when EMSI and Van Gelder commenced their defense to the action, on September 9, 1985, the trial court sent to the attorneys who now represent EMSI and Van Gelder a copy of an order reassigning the case to a different district judge. This makes it clear that at least by that date EMSI and Van Gelder were represented by counsel and were defending the action. Further evidence of the defense of the action is contained in the transcript of the deposition of Van Gelder taken on November 26, 1985. The transcript indicates that prior to the deposition an amended notice of taking the deposition had been issued. On November 11, 1985, the Griggses had requested production of documents from Van Gelder. The exhibits to the deposition were from the documents produced pursuant to this request. From these facts we conclude that EMSI and Van Gelder suffered damage, as that concept was used in Streib, by no later than September 9, 1985, when they were being represented by counsel in defending against the complaint. Therefore, we conclude that the action of EMSI and Van Gelder against Trout for malpractice accrued by at least September 9, 1985. To avoid being barred by I.C. § 5-219(4), an action by EMSI and Van Gelder for professional malpractice based on Trout's alleged failure to inform them of the value of the property must have been commenced by September 9, 1987. On January 29, 1987, EMSI and Van Gelder filed a motion pursuant to I.R.C.P. 14(a) for leave to file a third-party complaint against Trout. A copy of the third-party complaint was attached to the motion. On September 8, 1987, the trial court signed an order granting EMSI and Van Gelder leave to file their third-party complaint. The order was filed on September 10, 1987. The third-party complaint was filed on September 23, 1987. Pursuant to I.R.C.P. 3(a), an action is commenced by the filing of a complaint. Therefore, the action contained in the third-party complaint was not commenced until September 23, 1987. This was at least 14 days after the two-year statute of limitations had run. Therefore, we affirm the trial court's ruling that the third-party complaint was barred by I.C. § 5-219(4).