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Schacht v. Kunimune

Supreme Court of Alaska

March 15, 2019


          Appeal from the Superior Court No. 3AN- 17-06669 CI of the State of Alaska, Third Judicial District, Anchorage, Frank A. Pfiffner, Judge.

          Robert M. Libbey, Robert M. Libbey Law Office, Anchorage, for Appellant.

          David W. Pease, Burr, Pease & Kurtz, PC, Anchorage, and D. Jason Davis, Davis Law Group, PLC, Pacific Palisades, California, for Appellee.

          Before: Bolger, Chief Justice, Winfree, Stowers, and Carney, Justices.




         A son opened joint checking and savings accounts with his father. A few years later the son was injured in a car accident, settled his claim against the other driver, and deposited the settlement check into his joint savings account. A creditor of the father later levied the joint accounts and obtained approximately $90, 000 - essentially all of it traceable to the son's settlement money - in partial satisfaction of the creditor's judgment against the father. The son intervened in the collection action, arguing that the money should be returned to him because he was the equitable owner of the funds in the accounts.

         After the superior court's evidentiary hearing on the son's claims, but before the court issued its ruling, the son sent a letter asking the court to consider AS 13.33.201-.227 as supplemental legal authority. The cited statutes provide that, in a dispute between joint account owners and creditors and absent clear and convincing evidence to the contrary, the funds in a joint account generally belong to the owners in accordance with their net contributions to the account.[1] Without mentioning the statutes the son cited, the superior court subsequently held by a preponderance of the evidence that the creditor could levy the joint accounts in their entireties because the financial institution's account agreement the father and son signed provided that they each owned the accounts "jointly and equally ... regardless of their net contributions."

         We vacate the superior court's decision and remand for further proceedings because we conclude that: (1) the son did not waive his argument regarding AS 13.33.21 l's applicability; (2) the statute applies to determine the ownership interests of joint account owners in a dispute involving a third-party creditor; and (3) the correct standard of proof was not applied and the requisite statutory findings were not made.


         A. The Joint Bank Accounts

         In July 2013 Desmond Schacht opened joint checking and savings accounts with his father, Kenneth Schacht, at Alaska USA Federal Credit Union. Desmond signed Alaska USA's Master Joint Account Agreement as the "member" on the accounts, and Kenneth signed as the "joint owner." Under the Agreement only the "member" was permitted to "add, remove[, ] or change the status of other joint owners after compliance with applicable Credit Union procedures." The Agreement did not otherwise provide that the member and joint owner would have different rights with respect to the accounts. Regarding account ownership, the Agreement provided:

[T]he member and other joint owners agree that all sums now paid on any account, or which may be paid in on such accounts in the future, by any or all of the joint owners to their credit as such joint owners, together with all earnings and other additions, are and shall be owned by them jointly and equally with right of survivorship regardless of their net contributions. . . . All accounts covered by this agreement shall be subject to withdrawal or receipt by any of the joint owners, regardless of their net contributions, and payment to any of them... shall be valid and shall discharge the Credit Union from any further liability for such payment. (Emphases added.)

         In August 2016 Desmond was injured in a car accident when another driver crossed into his lane. He settled his claim against the other driver, and in April 2017 he received a $126, 000 settlement check. He deposited the money in his joint savings account that same month. Immediately before the deposit, the joint savings account's balance was $0 and the joint checking account's balance was $18.27.

         B. Creditor's Lawsuit Against Kenneth

         Terry Kunimune and Kenneth met in September 2011 in California to discuss a possible joint business venture in Alaska. Apparently, Terry loaned Kenneth $120, 000 in January 2012, and Kenneth signed a promissory note agreeing to repay Terry the full loan amount by December 31, 2012.

         In March 2014 Terry sued Kenneth in California for breach of contract, requesting the entire principal balance plus interest, attorney's fees, and costs. Kenneth never participated in that case. In June 2016 the California court entered a default judgment in the amount of $ 1 6 1, 5 1 7 - the amount of principal, pre-judgment interest, and allowable court costs. Post-judgment interest began accruing at the rate of 10% yearly.

         Terry filed his California judgment in the Anchorage superior court in May 2017. He then obtained a writ of execution for $179, 463.75 - the amount of the original judgment plus post-judgment interest and costs. In July 2017 Terry served the writ on Alaska USA, and Desmond and Kenneth's joint bank accounts were levied in the amount of $89, 297.13 in partial satisfaction of Terry's judgment. That same day Desmond removed Kenneth as a joint account owner.

         C. Desmond's Intervention In The Creditor's Lawsuit

         Following the levy Desmond filed a request for bond and hearing pursuant to AS 09.35.130.[2] Desmond then filed a third-party claim and affidavit of ownership stating that he was the "sole equitable owner" of the funds in the joint bank accounts that had been levied. The superior court held an evidentiary hearing over two days in October and November 2017 to consider Desmond's claims.

         Kenneth testified that he opened joint accounts with Desmond to help him "manage his accounts]" and so that Kenneth could easily make deposits to help Desmond with his expenses. Kenneth believed when they set up the accounts that he would have to go to a bank branch to transfer money if he were not a joint owner. Kenneth testified that he never had a debit card or checks associated with the joint accounts, set up online access for the accounts, or received monthly account statements. He claimed he did not consider himself the owner of the funds in the joint accounts.

         Desmond's testimony was consistent with his father's. Desmond testified that he opened the joint accounts with the understanding that they would "provid[e] easy access for funds to be transferred to [his] accounts]" by his father "for [his] support." Desmond said his understanding was that any amounts deposited into his checking account by his father were "intended for [him]," and he had "no obligation to pay [the money] back." Desmond also stated that he did not know about the judgment against his father or his father's business dealings with Terry.

         At the close of the evidentiary hearing, the superior court took the matter under advisement, noting it would research legal authority relating to a creditor's garnishment of jointly held property. One week after the hearing, but before the court had ruled on Desmond's claims, he sent the court a letter, pursuant to Alaska Civil Rule 77(/), [3] citing supplemental authorities for the court to consider regarding a third-party creditor's rights against a non-debtor joint owner of a bank account. Desmond cited AS 13.33.201-.227, [4] probate code sections applying to single- and multiple-party accounts. This was the first time Desmond had specifically argued that AS 13.33.201-.227 applied to this dispute. Terry did not respond to the letter.

         The superior court issued its findings of fact and conclusions of law in December 2017. Although it stated that "Desmond had contributed essentially all of the funds seized from the two joint accounts as a result of his settlement check," the court applied the preponderance of the evidence standard and held that the Agreement controlled the dispute. Because the Agreement provided no limitations on Kenneth's ownership or ability to access funds in the accounts, the court held that "Terry, as [Kenneth's] creditor, stands in no worse position with regard to the joint accounts] and may garnish up to the entire amount of the funds." The court concluded that Kenneth could not, in an "attempt to limit Terry's rights as [Kenneth's] creditor," "claim a lesser interest in the joint accounts]" than the Agreement provided.

         Desmond filed a motion under Alaska Civil Rule 52(b) requesting that the superior court amend its findings. He made "specific objection[s]" to the findings off act and conclusions of law that he thought were inconsistent with AS 13.33.211. The court denied the motion.

         Desmond also filed a reconsideration motion, arguing that an American Law Reports article[5] the court cited in its conclusions of law supported his position that he was the equitable owner of the funds. The superior court denied Desmond's reconsideration motion without explanation.

         Desmond appeals.


         "We review de novo questions of law, including the interpretation of a statute, adopting the rule of law most persuasive in light of precedent, reason, and policy."[6]


         A. Desmond Preserved His Argument That AS 13.33.211 Applies.

         Terry argues that Desmond forfeited his argument that AS 13.33.211 applies to this dispute by failing to raise it before the superior court. Terry correctly notes that Desmond referenced the statute for the first time in a letter citing supplemental authorities - sent pursuant to Rule 77(/)-after the evidentiary hearing had concluded. Terry argues that Desmond's letter was improper, alleging that it was not sent in connection with a motion as required under Rule 77(/). Terry also contends that the arguments in Desmond's motion requesting amendment of the superior court's findings and his motion for reconsideration were untimely.

         We reject Terry's contention that Desmond's letter was not permitted by Rule 77(/). The rule permits parties to provide the superior court supplemental legal authority relating to a previously filed memorandum or to a point made at oral argument.[7]Desmond's letter provided supplemental authority relating to both previous memoranda he had filed and points he had made at the evidentiary hearing. We therefore must conclude that Desmond has not forfeited his argument that AS 13.33.211 applies to this dispute. Forfeiture rules are based on the principle that it is unfair to the trial court and unjust to the opposing litigant for an appellate court to rule on a ground that was not presented below.[8] In this case there is no such unfairness or injustice. Desmond's Rule 77(/) letter alerted the superior court to the statute's existence before the court issued its findings of fact and conclusions of law. Because Terry was permitted to respond[9] to Desmond's letter and the superior court was able to consider the statute before ruling on his claims, he properly raised the argument before the superior court. This also resolves Terry's contentions that Desmond's arguments in his post-judgment motions were untimely.

         B. Alaska Statute 13.33.211 Governs The Ownership Interests Of Joint Account Owners In A ...

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