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

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 Financial Corp. v. Smith, 111 Idaho at 11, 720 P.2d at 194 (1986).

Applying these principles to the case at hand, it is apparent the matter must be remanded to the district court for a determination of the date when the Bank first received a payment from the debtor which it knew or should have known did not include interest. Neither the record nor the briefs reveal precisely when those no-interest payments began. The date of the first such payment would satisfy both prongs of the date of damage rationale discussed above. Obviously, it is the date when monetary damages began. Equally clear is that this date would be the earliest point that the Bank conceivably could be said to be on notice that it might have a claim against its attorney for failing to ensure that interest would be included in the confirmation plan.

In contrast, the date chosen by the majority is merely the date the alleged negligent act of the attorney occurred. Thus, the majority creates an unacceptable conflict with Streib which should control our decision here. In Streib the injured party suffered no monetary damage until served with a notice of tax deficiency. Here Treasure Valley Bank did not suffer damage until it began receiving payments minus interest. Therefore, our better action would be to remand to the district court to determine that crucial date.