Court Opinion

ID: 9786528
Source: CourtListenerOpinion
Date Created: 2023-08-30 23:57:26.496326+00
Date Added: 2024-06-11T07:36:46.124569
License: Public Domain

Justice EISMANN,
Dissenting.
Because I do not agree that Albert and Ora Anderson were damaged when their property was transferred into the trust, I respectfully dissent.
As the majority notes, this case hinges upon when the Andersons suffered some damage. In 1978 the Andersons engaged the services of attorney James D. Glenn, Jr., to create a trust and transfer then* assets into that trust in order to minimize their estate taxes. Glenn created the irrevocable trust, and in April 1980 the Andersons transferred assets into that trust. On August 27, 1997, the trustees and personal representatives of the Andersons’ estates learned that the trust document was defective and would not minimize the estate taxes as intended because it reserved to the Andersons the annual trust income and the power of appointment over some of the assets. The plaintiffs filed this lawsuit within two years of that date, before any additional estate taxes were assessed or paid.
The transfer of the assets into the trust did not damage the Andersons because that is precisely what they retained their attorney to accomplish. They wanted those assets out of them ownership. He did not transfer into the trust assets that they wanted to retain, which distinguishes this case from Lapham v. Stewart, 137 Idaho 582, 51 P.3d 396 (2002). In Lapham, the client claimed that he put monies into the hands of his attorney with instructions not to disburse the money without the client’s express authorization, and the attorney disbursed that money without authorization. Here, the Andersons wanted their assets transferred into the trust in order to minimize their estate taxes. The assets were transferred into the trust as they requested, but because the attorney did not draft the trust instrument properly, estate taxes were not minimized. This case is indistinguishable from Streib v. Veigel, 109 Idaho 174, 706 P.2d 63 (1985), in which accountants negligently prepared income tax returns for the years 1976 through 1980, and more than two years later the Internal Revenue Service assessed interest and penalties when it disallowed certain deductions claimed in those returns. In reversing the grant of summary judgment based upon the statute of limitations, this Court held, “In the instant case, no damages accrued to the plaintiffs until the time of the Internal Revenue Service’s assessment of penalties and interest.” 109 Idaho at 178, 706 P.2d at 67. When addressing Streib in Elliott v. Parsons, 128 Idaho 723, 918 P.2d 592 (1996), this Court stated:
This Court first applied the “some damage” principle in a professional malpractice case in Streib v. Veigel, 109 Idaho 174, 706 P.2d 63 (1985). In Streib, which involved an accountant charged with malpractice in preparing a tax return, the Court concluded that “the Internal Revenue Service’s assessment of penalties and interest” was *804the point at which some damage was sustained. Id. at 178, 706 P.2d at 67 (emphasis added). Although the facts of Streib did not require the Court to elaborate on what it meant by “assessment” because the accountant conceded that the action was timely if judged from that date, it is clear that it meant the point at which I.R.S. assesses an enforceable and collectible tax liability against the taxpayer, not the mere initiation of the I.R.S. challenge as evidenced by the 30-day and 90-day letters. The issuance of an assessment under
I.R.C. § 6203 may come soon after I.R.S. challenges a tax return as in Streib, or it may come at the conclusion of a lengthy administrative and legal process as in the present case. Until there has been an assessment of unpaid taxes against the taxpayer, I.R.S. has not inflicted “some damage” against the taxpayer — at least not as the term was used by this Court in Streib.
128 Idaho at 725, 918 P.2d at 594 (emphasis added). I would therefore reverse the grant of summary judgment.