Unpublished Disposition, 899 F.2d 1225 (9th Cir. 1987)

MEMORANDUM^* 

Tom L. Turner and Ruth Ann Davidson (hereinafter "Turner") sued Richard Udell, an attorney, on two counts of professional malpractice for alleged negligence in advising them in connection with their purchase of certain real estate from Arthur Jellison. The district court granted Udell's motion for summary judgment on the ground that Turner had filed suit after the two-year period allowed by the statute of limitations had expired.

We review de novo the decision to award summary judgment to Udell. See Kruso v. International Telephone & Telegraph Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). Our task is to determine whether, viewing the evidence in the light most favorable to Turner, the district court correctly applied the statute of limitations to Turner's action. See Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989). We affirm in part and reverse in part and remand the case to the district court.

A. Count I: Liability for Deficiency.

According to Turner's first claim, Udell erroneously advised him that if Turner were to default on scheduled payments to Jellison and Jellison were to foreclose, Turner would not be liable to Jellison for any deficiency.¹  When default and foreclosure passed from the hypothetical to the actual, and Jellison sold the property for less than the amount Turner owed, Jellison sued Turner to recover the deficiency.

Turner filed his suit against Udell on June 24, 1987. By Idaho statute, Turner was entitled to bring a malpractice action within two years after the "occurrence, act or omission complained of." I.C. Sec. 5-219. The caselaw of the Idaho Supreme Court makes clear that the limitations period for Turner's suit began when he first sustained injury as a result of Udell's alleged negligence. See, e.g., Osborn v. Ahrens, 773 P.2d 282, 284 (Idaho 1989). Thus, the issue is whether, under Idaho law, Turner suffered damage prior to June 24, 1985. The district court concluded that the damage occurred on June 13, 1985, when Jellison sold the property for less than the amount Turner owed. We disagree.

On the date of the foreclosure sale, Turner had no legal responsibility to cover the difference between the amount he owed and the amount Jellison had received. Jellison had still to sue, and a court had still to assess the fair market value of the property before liability could exist. At most, the injury to Turner was only potential at the time of the foreclosure sale. The distinction between actual and potential loss is critical for determining the date of injury under Idaho law. See Mack Financial Corp. v. Smith, 720 P.2d 191, 194 (Idaho 1986) (in action against accountant for negligent audit of plaintiff's debtor, who subsequently declared bankruptcy, injury did not occur until bankruptcy court resolved claim of plaintiff for less than the total amount bankrupt owed plaintiff); Streib v. Veigel, 706 P.2d 63, 67 (Idaho 1985) (in action against accountant for negligent preparation of tax return, injury did not occur until IRS challenged deductions and assessed penalty against taxpayer).

As we read the Idaho precedents, the earliest date of injury would be August 8, 1985 when Jellison filed his deficiency suit against Turner. Alternatively, the date of injury may be June 8, 1987, when Turner paid a sum of money to Jellison in settlement of Jellison's claim. We need not decide which of these is correct, however, because both occurred within two years before Turner filed suit.

We reverse the grant of summary judgment to Udell on count I.

B. Count II: Concealment of Adjacent Mooring Facility.

In his second claim, Turner contends that Udell concealed the fact that a mooring facility had been constructed on a piece of land adjacent to the property he was purchasing, greatly reducing the value of the property. Turner concedes that he filed suit long after the two-year limitations period had expired, but argues that Udell should be equitably estopped from invoking a limitations defense because of his active concealment. The district judge rejected this argument. We agree that the estoppel theory is inappropriate here.

The Idaho Supreme Court recently listed the elements required for equitable estoppel; one is that "the party asserting estoppel did not know or could not discover the truth." Twin Falls Clinic & Hospital Bldg. Corp. v. Hamill, 644 P.2d 341, 344 (Idaho 1982). Turner does not dispute that the mooring facility was standing and complete, for all to see, in 1981--six years before he made a claim against Udell. The obvious presence of the facility undermines entirely the assertion, necessary for equitable estoppel, that Turner could not have discovered the facility's existence. Hence, the doctrine is of no avail to Turner.

We affirm the grant of summary judgment to Udell on count II.

Each party is to bear its own costs.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.