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Asher v. Alkan Shelter, LLC

Supreme Court of Alaska

July 31, 2009

Martha L. ASHER, Appellant,

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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John C. Pharr, Law Offices of John C. Pharr, Anchorage, for Appellant.

Zane D. Wilson, Cook Schuhmann & Groseclose, Inc., Fairbanks, for Appellee.

Before : FABE, Chief Justice, EASTAUGH, CARPENETI, and WINFREE, Justices.




An employer sued a former employee and his ex-wife for damages it incurred when the employee embezzled a substantial sum from the employer. The ex-wife now appeals that portion of the judgment rendered against her, arguing that the court's findings are insufficiently specific for appellate review, that the complaint did not plead fraud with sufficient particularity, that the court should not have allowed amendment of the complaint, and that it was error to impose joint and several liability. Concluding that the court did not err in any of the first three areas, we affirm the trial court's determination that the ex-wife is liable for fraud. But because it was error to impose joint and several liability, and because the trial court did not have jurisdiction when it attempted later to amend the judgment, we reverse the damages award and remand the matter to the trial court for reassessment of both compensatory and punitive damages.

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A. Facts

Mitch and Martha Asher married in 1995 and divorced in 2002 in Florida. In February 2003 Mitch moved to Fairbanks to work for Alkan Shelter, LLC (Alkan) as its chief financial officer. He worked there until November 2003. During that time he stole about $104,000 from Alkan. The court found Martha was involved in three fraudulent transactions, described below.

1. Health insurance

Mitch enrolled Martha on Alkan's health insurance by lying and saying they were married. Martha claimed she did not know about the fraud, and that she paid Mitch $100 per month for the insurance. The trial court did not believe her, and found that she knew Mitch got her insurance by fraud. The court found the health insurance cost Alkan Shelter $3,457, which the court found to be " part of the money embezzled by Mitchell Asher."

2. House purchase

While Mitch was in Fairbanks, Martha bought a house there. Martha claimed Mitch loaned her some money for the purchase, and she paid him back. The trial court did not believe her. The court found that Mitch actually had a financial interest in the house, even though it was in Martha's name. The trial court found that Mitch put about $11,000 embezzled from Alkan into the house, and that Mitch and Martha put the house in her name in order to keep Alkan from getting its money back. Mitch testified that he expected to get about $30,000 when Martha sold the house, but that she refused to pay him that money. The trial court believed Mitch.

3. Fraudulent affidavit

When Alkan first sued Mitch and Martha, its complaint alleged the house Martha bought was really Mitch's, and should be " available" to pay Alkan back for the money Mitch embezzled. With the complaint, Alkan filed a lis pendens on the house. Although it appears this lis pendens had no legal effect relevant to this case,[1] everyone, including the trial court, assumed that the lis pendens gave Alkan a security interest in the house against its claim for damages.

In order to get Alkan to release the lis pendens, which she thought was a lien, Martha gave Alkan an affidavit. The affidavit provided:

1. I did not have any knowledge, nor did I receive the proceeds of any theft by Mitchell Asher from Alkan Shelter LLC.
2. I am the sole and exclusive owner of the property identified in the lis pendens filed by Alkan Shelter LLC (hereinafter the property).
3. The funds used to purchase the property were solely and exclusively my money and Mitchell Asher had no concealed interest in these funds. I did not purchase the property for Mitchell Asher and Mitchell Asher had no legal or equitable interest in the property.

Alkan then released the lis pendens.

The trial court found that Martha lied in this affidavit in order to " defraud Alkan Shelter by hiding money [Mitch] stole from Alkan Shelter, that Alkan Shelter at that point in the litigation reasonably relied on the representation and dismissed the lis pendens voluntarily, and suffered the lack of those funds being secured and available to settle claims for this litigation." The court made this finding by clear and convincing evidence, and wrote: " The court also finds by clear and convincing evidence that Martha Asher was recklessly indifferent to the rights of Alkan Shelter and the conduct by Martha Asher was outrageous in nature."

B. Proceedings

In February 2004 Alkan sued Mitch and Martha for damages. The complaint alleged that Mitch embezzled money from Alkan. It alleged that the house

belongs to defendant Mitchell Asher, but has fraudulently been placed in the name of Martha Liliana Asher for the purpose of avoiding creditors and making the defendant Mitchell Asher judgment proof....

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Defendant Mitchell Asher is the true owner of the above-referenced described (sic) real estate and said real estate should be available to pay for the thefts by defendant Mitchell Asher from Alkan Shelter.... Funds embezzled from Alkan Shelter, LLC were used to purchase, or have been invested in, the above-referenced real estate and ...

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