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Denali Federal Credit Union v. Lange (10/17/96), 924 P 2d 429
Notice: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring
errors to the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, phone (907) 264-0607, fax (907)
THE SUPREME COURT OF THE STATE OF ALASKA
DENALI FEDERAL CREDIT UNION, )
formerly known as ALASKA ) Supreme Court No. S-6610
RAILROAD FEDERAL CREDIT UNION,)
Appellant, ) Superior Court No.
) 3AN-86-14997 CIV
SUSANNE LANGE, ) O P I N I O N
Appellee. ) [No. 4413 - October 17, 1996]
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
John Reese, Judge.
Appearances: Roy Longacre, Longacre &
Associates, Anchorage, for Appellant. Jill
Dean, Law Office of Jill Dean, Anchorage, for
Appellee Susanne Lange.
Before: Compton, Chief Justice, Rabinowitz,
Matthews and Eastaugh, Justices. [Fabe,
Justice, not participating]
COMPTON, Chief Justice.
Denali Federal Credit Union (Denali) appeals the superior
court's denial of its motion for a writ of execution. We reverse.
II. FACTS AND PROCEEDINGS
In May 1985 Denali (formerly the Alaska Railroad Federal
Credit Union) filed a civil action against William Lange, Lange's
business partner Ted Hanson, and their partnership, Nugget
Properties. Denali alleged the defendants were in default on loans
totaling over $1 million.
In August 1985 William Lange conveyed his interest in
four properties to his wife, Susanne Lange, for $10. She, in
return, assumed personal responsibility for business debts of
William Lange's unrelated to this action. There is evidence in the
record that one of the four properties was worth $700,000.
In November 1985 William Lange and Hanson signed a
confession of judgment for $1,070,000, plus interest, in Denali's
favor. Denali agreed not to seek entry of judgment if William
Lange and Hanson met the payment schedule established by the
parties' settlement. William Lange and Hanson failed to make the
first payment under the settlement schedule. Denali moved for
entry of judgment. In February 1987 the superior court entered
judgment against William Lange and Hanson for $1,187,700.
In 1991 Restaurants Northwest Inc. (RNI), a restaurant
franchisee in which William Lange owned an interest, filed for
bankruptcy. The bankruptcy proceeding focused in part on whether
William Lange's 1985 transfer of property to his wife violated
RNI's right of first refusal to one of the properties. In the
context of that issue, the bankruptcy court stated:
Maybe what the implication here is that
[William Lange] was in severe financial
trouble, and [Susanne Lange] just wanted to
get everything in her name because it was
better for them. . . . I think they were
trying to hide this from their creditors, but
what they really did was transfer it to Mrs.
Lange. And it was a transfer for essentially
no consideration. It wasn't a, quote,
purchase in the real world. It was just a
transfer for their various purposes, which
were distinct. She thought she had an
interest in it. Secondly, she wanted to
protect her family. Thirdly, it apparently
wasn't going to hurt Mr. Lange anyway 'cause
[sic] he was about to lose it. And fourthly,
the [RNI] document didn't prevent transfer, it
only . . . provided for a purchase.
In September 1993 Denali moved for a writ of execution on
the 1987 judgment against two of the properties William Lange had
conveyed to his wife. Denali alleged the conveyance was
fraudulent. Susanne Lange moved for and was granted leave to
intervene. She requested a jury trial on the question whether
William Lange had any remaining interest in the properties.
The superior court denied Denali's motion without
explanation or an evidentiary hearing. Denali appeals.
A. Appellate Jurisdiction
Susanne Lange argues that this court does not have
jurisdiction to hear Denali's appeal because the superior court did
not enter a final judgment. See Alaska R. App. P. 202(a) ("An
appeal may be taken to the supreme court from a final judgment
entered by the superior court . . . ."). The finality rule "does
not necessarily require the entry of a final judgment." Borg-
Warner Corp. v. AVCO Corp., 850 P.2d 628, 635 (Alaska 1993). To
determine finality, "the reviewing court should look to the
substance and effect, rather than form, of the rendering court's
judgment . . . ." Greater Anchorage Area Borough v. City of
Anchorage, 504 P.2d 1027, 1030-31 (Alaska 1972), overruled on other
grounds by City and Borough of Juneau v. Thibodeau, 595 P.2d 626,
629 (Alaska 1979). A final, appealable "judgment"is one that,
however denominated, "disposes of the entire case and ends the
litigation on the merits." Borg-Warner Corp., 850 P.2d at 634.
The superior court may have denied Denali's motion with
the understanding that it could not be granted without first
adjudicating the fraudulent conveyance issue. However, once the
motion was denied, "there was nothing that [Denali] could do to
further prosecute the action it had commenced." City of Fairbanks
v. Electric Distribution System, 413 P.2d 165, 168 (Alaska 1966).
The denial of Denali's motion therefore had the effect of disposing
of the case and ending the litigation. See Mallonee v. Grow, 502
P.2d 432, 434 n.2 (Alaska 1972) ("The effect of [denying a motion
for a writ of execution] is that the plaintiff could not thereafter
collect his judgment by execution."). The superior court's order
"was a final judgment and appealable as such." City of Fairbanks,
413 P.2d at 168; see Mallonee, 502 P.2d at 435 ("Since the order
was a final one terminating the proceeding, we regard it as a final
judgment from which an appeal may be taken.").
B. The Fraudulent Conveyance Issue
When a third party claims an interest in property against
which a judgment creditor seeks to execute, the superior court must
first determine the interests of the third party claimant. See
Keltner v. Curtis, 695 P.2d 1076, 1079 n.4 (Alaska 1985). After
this determination is made, "buyers at the execution sale will be
certain that the judgment debtor is the sole owner of the property,
and thus will not be discouraged from bidding what they think is
the full value of the property." Id. In the present case Susanne
Lange argued that she, and not judgment debtor William Lange, owned
the property against which Denali sought to execute. In response,
Denali raised genuine issues of material fact regarding whether
William Lange's conveyance to Susanne Lange was fraudulent. See
Burgess v. Burgess, 710 P.2d 417, 421 (Alaska 1985) ("[A] fraud is
committed when one spouse, without consideration, transfers
property to the other in order to place the property beyond the
reach of creditors."). The fraudulent conveyance issue should have
been resolved before the court ruled on Denali's motion. Keltner,
695 P.2d at 1079 n.4.
Furthermore, resolution of the fraudulent conveyance
issue should have been by jury trial, since that is what Susanne
Lange demanded. Cf. Keltner, 695 P.2d at 1079 ("[A] party to a
proceeding adjudicating ownership of personal property should be
entitled to a jury trial."). A jury trial demand, once made, may
not be withdrawn without the consent of the other parties to the
action. Alaska R. Civ. P. 38(d); see Hill v. Vetter, 525 P.2d 529,
531 (Alaska 1974). On remand, absent such consent from Denali, the
fraudulent conveyance issue must be tried by a jury.
The superior court's denial of Denali's motion for a writ
of execution is REVERSED. This case is REMANDED for a jury trial
on the issue of whether William Lange's conveyance to Susanne Lange
REVERSED and REMANDED.