from the Superior Court No. 3AN-15-05556 CI of the State of
Alaska, Third Judicial District, Anchorage, Eric A. Aarseth,
Douglas R. McMillan and John W. Colver, Colver &
McMillan, LLC, Anchorage, for Appellant.
D. Friend, Assistant Attorney General, Anchorage, and Jahna
Lindemuth, Attorney General, Juneau, for Appellee. State of
Alaska, Department of Health & Social Services.
appearance by Appellee C Care Services, LLC.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
commercial tenant breached its lease and owed unpaid rent.
The landlord sued and obtained a writ of attachment against
any funds owed the tenant from Alaska's Department of
Health and Social Services (DHSS). DHSS replied to the writ
by stating it owed nothing to the tenant because a recent
audit showed the tenant owed DHSS $ 1.4 million. Without
responding to DHS S's reply the landlord moved for a writ
of execution against DHSS, which the superior court denied
after finding there were no funds to attach. The court denied
the landlord's motion for reconsideration, as well as its
request for a hearing to examine DHSS. The landlord appeals
the denial of its motion for reconsideration and seeks a
remand for a hearing to examine DHSS. We affirm the superior
FACTS AND PROCEEDINGS
a commercial real estate company, leased property to C Care
Services, LLC for a five-year term beginning July 1, 2014.
The following month the federal government apparently shut
down C Care pending a criminal investigation for Medicare and
Medicaid billing fraud. Unable to operate, C Care failed to
pay rent after October 2014.
filed a complaint for breach of contract in March 2015 and
simultaneously moved for a prejudgment writ of attachment
against C Care under Alaska Civil Rule 89 and AS
09.40.010. Arcticorp also sought to attach any funds
DHSS may have owed for services C Care rendered prior to its
forced closure. Arcticorp did not attempt to serve DHSS the
the time Arcticorp filed its complaint, DHSS was seeking to
recover funds it was owed by C Care for Medicaid billing
fraud. After an audit, in mid-March DHSS informed C Care that
Medicaid overpayments made to C Care exceeded $1.4 million.
Before DHSS began its recovery process C Care had an
opportunity to appeal that determination, but it did not. The
decision not to appeal may have been a consequence of a plea
agreement C Care's owner entered into in May in a state
criminal case against her. According to Arcticorp's
summary of the plea agreement, C Care's owner agreed not
to appeal certain overpayment and restitution findings and to
forward any funds received from others to pay C Care's
debt to DHSS.
early April C Care answered Arcticorp's complaint and
admitted to all allegations of breach and money owed. Shortly
thereafter the superior court issued a writ of attachment,
ordering DHSS's accounting department to attach any and
all accounts owed to C Care to satisfy its debt to Arcticorp.
Later that month Arcticorp wrote a letter notifying DHSS of
the writ; it was addressed "To Whom It May Concern"
and mailed to a post office box of the "Alaska
Department of Health and Social Services." Arcticorp did
not attempt to serve the writ on DHSS according to the Civil
Rules. In August C Care confessed judgment in
Arcticorp's favor, and both parties entered a stipulation
and covenant not to execute.
September, five months after the court issued the writ of
attachment, DHSS replied to Arcticorp that no money was owed
C Care and that there were no funds to attach. DHSS explained
that the Office of the Attorney General serves as counsel for
DHSS and that the writ of attachment, although sent to DHSS,
had not been forwarded to the Office of the Attorney General
until August. DHSS further noted that before the writ of
attachment was issued DHSS had audited C Care and determined
C Care owed DHSS over $1.4 million. DHSS's reply included
the affidavit of its medical assistance administrator who
conducted the audit, as well as its correspondence with C
Care concerning the audit results.
October, after receiving DHSS's reply, Arcticorp
requested an entry of a final judgment on confession against
C Care; the court entered the final judgment in December.
moved for a writ of execution against DHSS in May 2016, eight
months after DHSS had indicated there were no funds to attach
in response to Arcticorp's writ. The court denied the
motion. It found credible DHSS's explanation that no
funds were payable to C Care. The court reasoned that
"[b]ecause no funds exist and because [DHSS] bears no
duty otherwise to pay the defendant's debts, entry of the
requested order would be futile." The court also
observed that Arcticorp had not properly served DHSS the
original motion for a writ of attachment, delaying the
court's receipt of important information until after it
entered the writ of attachment and denying DHSS "due
process within which to confirm or deny that such funds
existed." But the court noted DHSS had not asked that
the writ be vacated.
moved for reconsideration, advancing three arguments. First,
Arcticorp had no duty to serve the motion for a writ of
attachment on DHSS because DHS S was not a required party to
the action. Second, the court should ignore DHS S's reply
because DHSS, a non-party, had not properly intervened under
Alaska Civil Rule 24. Finally, DHSS had not met its burden to
show that it owed C Care no funds. Arcticorp also requested a
garnishee proceeding, requiring DHSS to "show cause and
submit evidence in support of [its] position" that it
owed C Care no funds. The court invited C Care and DHSS to
respond to Arcticorp's motion, but neither did so.
superior court denied Arcticorp's motion for
reconsideration. The court found Arcticorp had not provided
DHSS proper notice of the original motion for a writ of
attachment and characterized Arcticorp's Rule 24
intervention argument as "absurd," given that it
"invited DHSS['s] participation in the case when it
sought the [w]rit of [attachment." Questioning
Arcticorp's standing to "challenge DHSS['s]
determination that it does not owe [C Care] money," the
court rejected Arcticorp's "contention that the
burden of proof falls on DHSS." The court held that DHSS
had provided "sufficient evidence to show that execution
is not warranted" and that, although the "[w]rit...
froze any money DHSS might owe" C Care, "the [w]rit
did not establish that in fact DHSS actually held money owed
to [C Care]."
seeks reversal of the order denying its motion for
reconsideration, arguing that DHSS failed to timely intervene
under Rule 24. Arcticorp also seeks remand for a garnishee
proceeding to examine DHSS.
STANDARD OF REVIEW
respective burdens to be borne by 'garnisher' . ..
and 'garnishee'" involve questions of statutory
interpretation. We apply our independent judgment to such
questions, reviewing a court's interpretation of statutes
de novo and "adopting the rule of law that is most
persuasive in light of precedent, reason, and
policy." We also apply our "independent
judgment to decide whether it was error not to hold an
evidentiary hearing" to resolve a disputed factual
begin our analysis with an overview of writs of attachment
and garnishee proceedings. After a civil action commences,
Rule 89 permits a plaintiff to apply to the court to
"attach" the property of the defendant "as
security for satisfaction of a judgment that may be
recovered." The plaintiff must file a motion with an
affidavit showing the existence of a contractual debt and the
plaintiffs right to recover it. A court may issue the writ of
attachment only after the defendant is (1) served notice of
the motion and a copy of the affidavit, and (2) given an
opportunity for a judicial hearing.At the hearing the plaintiff
must "establish by a preponderance of the evidence the
probable validity of the plaintiffs claim for relief in the
action and the absence of any reasonable probability that a
successful defense can be asserted by the
defendant."Upon this showing the court must issue a
writ of attachment against the defendant, which "shall
be directed to a peace officer and shall require the peace
officer to attach and safely keep property of the defendant
not exempt from execution." Debts owed by third
parties to the defendant may be attached.
debtors holding property that cannot be taken into custody
must be served a writ of attachment and a notice specifying
the property attached. Upon service of the writ and notice,
AS 09.40.060 provides that the third party "shall within
a reasonable time and in any event within 24 hours furnish
... a statement designating the amount and description of any
personal property ... belonging to the defendant, or any debt
the person owes to the defendant." If the plaintiff is
unsatisfied by the third party's response, or the third