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McLaughlin v. Okumura

Supreme Court of Alaska

December 11, 2009

Lorimer L. and Pamela F. McLAUGHLIN, Appellants,
v.
Masayoshi OKUMURA, Appellee.

Rehearing Denied Jan. 29, 2010.

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[Copyrighted Material Omitted]

Page 95

Robert John, Law Office of Robert John, Fairbanks, for Appellants.

Masayoshi Okumura, pro se, Tokyo, Japan.

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

OPINION

FABE, Chief Justice.

I. INTRODUCTION

Upon learning that judgment debtors Lorimer and Pamela McLaughlin were about to receive settlement proceeds related to the malpractice of their former attorney Arthur Robson, judgment creditor Masayoshi Okumura renewed his efforts to execute on his fraud judgment against them after nine years of inactivity. The superior court granted Okumura's motion for a new writ of execution, allowing him to execute on the McLaughlins' settlement proceeds. Attorney Michael MacDonald, who claimed to have assisted in obtaining those settlement proceeds, moved to have his 40% contingency fee subtracted from the proceeds prior to Okumura's levy, and the superior court denied his request. The superior court also refused to prevent Okumura from executing against a piece of real estate owned by the McLaughlins. The McLaughlins appeal each of these three decisions.

Because Okumura's reasons for not executing sooner were sufficient, we affirm the superior court's grant of Okumura's new writ of execution. For the same reason, we affirm the superior court's subsequent refusal to prevent Okumura from executing on the debtors' real estate. And because MacDonald has not adequately demonstrated that he has a claim to 40% of the McLaughlins' settlement proceeds, we also affirm the superior court's denial of his requested fee.

II. FACTS AND PROCEEDINGS

A. Background Facts and Prior Proceedings[1]

Lorimer and Pamela McLaughlin purchased a historic gold camp near Fairbanks

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in 1982 and lost title to it via foreclosure in 1990 due to malpractice by their attorney, Arthur Robson. Believing that they still had viable title, the McLaughlins, still represented by Robson, contracted with foreign investor Masayoshi Okumura to build an " Aurorium" facility on the land where tourists could view the Northern Lights. Apparently acting on Robson's advice, the McLaughlins did not tell Okumura about the foreclosure. The land was repossessed and Okumura sued the McLaughlins. Robson defended the McLaughlins without revealing his own culpability, and in 1993 Okumura obtained a total judgment of $1,008,536.05 against the McLaughlins for fraud.

Still represented by Robson, the McLaughlins filed for Chapter 7 bankruptcy in 1993. The McLaughlins' debt to Okumura was not discharged in their bankruptcy case because it was considered to have resulted from fraud.[2] Okumura has levied on his judgment against the McLaughlins, but the judgment has not yet been entirely satisfied.

While the McLaughlins' bankruptcy case was pending, Okumura sued Robson for his role in the botched Aurorium deal. Robson was defended in that suit by law firm Hughes, Thorsness, Gantz, Powell & Brundin (" Hughes Thorsness" ). It would later be alleged that in the course of its representation of Robson and in furtherance of Robson's fraudulent scheme to avoid personal liability, Hughes Thorsness prepared for Robson's signature a pleading in the McLaughlins' bankruptcy case withdrawing the McLaughlins' motion to clarify that they still owned legal malpractice claims against Robson.[3] This withdrawal was later reversed and the bankruptcy court held that Robson could be sued by the McLaughlins and their bankruptcy estate, but this did not occur until after Robson had already settled with Okumura for $900,000 and thereby exhausted his liability insurance. Okumura's judgment against the McLaughlins was deemed partially satisfied and reduced by $900,000 due to Okumura's settlement with Robson.

The McLaughlins subsequently sued Robson for malpractice and fraud, subject to a court-approved agreement that any recovery would be split evenly between them and their bankruptcy estate. Attorney Michael MacDonald pursued the claim under a contingency fee agreement. The McLaughlins obtained a $3,571,429.33 judgment against Robson in 2001, which we affirmed on appeal in 2002.[4]

Robson's liability insurance already having been exhausted, the McLaughlins executed on Robson's assets, including his unlitigated claims for contribution against attorney Ken Lougee and law firm Hughes Thorsness.[5] The McLaughlins asserted that Robson had claims for contribution against Lougee and Hughes Thorsness for the role they allegedly played in the malpractice and fraud that ultimately resulted in the McLaughlins' judgment against Robson.

Accordingly, the McLaughlins and their bankruptcy trustee sued Lougee and Hughes Thorsness as assignees of Robson's claims for contribution. Attorney Michael Flanigan pursued these claims under a 40% contingency fee agreement approved by the bankruptcy court. Following a dismissal, appeal, reversal, and remand,[6] in 2006 the parties agreed to a settlement. The bankruptcy trustee sought permission from the bankruptcy

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court to settle the claims against Lougee and Hughes Thorsness for $160,000. Forty percent of the settlement proceeds were to go to Flanigan pursuant to his fee agreement, with the remainder to be split evenly between the McLaughlins and their bankruptcy estate. The bankruptcy court approved this arrangement in December 2006.

B. This Case

The current controversy arose when Okumura renewed his attempts to collect on his 1993 judgment against the McLaughlins after receiving notice of the Lougee settlement in late 2006. Okumura moved for a new writ of execution and a writ of attachment against the McLaughlins' anticipated share of the Lougee settlement proceeds. Superior Court Judge Mark I. Wood granted Okumura's motion for a writ of execution, which was issued in February 2007. The McLaughlins appeal, arguing that Okumura was not entitled to a new writ because he had not shown good cause for his delaying execution on the judgment against them for more than five years.

Subsequently, MacDonald, who had represented the McLaughlins in their malpractice suit against Robson, filed a motion requesting that 40% of the McLaughlins' share of the Lougee settlement be released directly to him as attorney's fees rather than being subject to execution by Okumura. The superior court denied this request, and the McLaughlins appeal.

Finally, in May 2007 Okumura attempted to execute against a piece of real property held by Pamela McLaughlin, and the McLaughlins moved to quash Okumura's writ of execution and cancel the public sale of the property. The superior court denied their motion and the McLaughlins appeal, arguing once again that Okumura had not shown good cause for delaying execution on the judgment against them for more than five ...


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