Stephen v. Sallaz & Gatewood, Chtd., Docket No. 36322
Supreme Court of Idaho
March 17, 2011
Opinion Author: J. Jones, Justice
Concurring in Opinion: Eismann, Chief Justice; Burdick, Justice; W. Jones, Justice; Horton, Justice
Whether a law firm that is not licensed to practice law can nonetheless be liable for the malpractice of one of its attorneys.
Summary of Ruling:
Plaintiff asserted legal malpractice claims against her divorce attorney and his law firm. The district court found that the attorney breached duties owed to Plaintiff and imposed liability against the attorney, personally, and against the law firm. On appeal, in addition to other issues, the law firm argued that it could not be liable for the attorney’s malpractice. In particular, the law firm argued that I.C. § 5-219 prevents a professional liability claim against an entity that is not licensed to perform professional services. Because the firm was not licensed to practice law, the firm therefore contended that it could not be liable for professional malpractice.
Idaho Code § 5-219 provides a two-year statute of limitations for professional malpractice actions and defines “professional malpractice” as “wrongful acts or omissions in the performance of professional services by any person, firm, association, entity or corporation licensed to perform such services under the law of the state of Idaho.” Citing earlier precedent concerning an unlicensed accountant, County v. Rife, 593 P.2d 995 (1979), the Court agreed with the law firm that it was not within the scope of I.C. § 5-219.
The Court did not agree with the law firm, however, that the inapplicability of the two-year statute of limitations served as a bar to a professional liability claim. The Court explained: “Nothing in I.C. § 5-219 or in Rife immunizes a person or entity carrying on a profession from being sued for malpractice, just because the applicable professional standards do not require the particular person or entity to have a license.”
Rather, ordinary principles of business entity liability govern whether the law firm is liable for the malpractice of one of its attorneys. The Court was unable to determine from the record whether the firm was a corporation or general partnership at the time of the malpractice, but the Court noted that the firm would be liable either way. Idaho Code § 30-1304 places liability on a corporation for the wrongful acts of its employees for professional services engaged on behalf of the corporation, and I.C. § 53-3-305(a) imposes liability on a partnership for a partner’s actionable conduct in the ordinary course of business of the partnership.
Therefore, the Supreme Court affirmed the district court’s ruling that the law firm was liable for the attorney’s malpractice.
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