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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Smith v. Kofstad (04/24/2009) sp-6368

Smith v. Kofstad (04/24/2009) sp-6368

     Notice:   This opinion is subject to 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) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA
                                             
MIKE SMITH d/b/a WASILLA )
CONCRETE, )
) Supreme Court No. S- 12679
Petitioner,)
) Superior Court No. 3PA-06- 1044 CI
v. ) District Court No. 3PA- 95-244 CI
)
RAYMOND KOFSTAD, individually) O P I N I O N
and d/b/a BUSCH CONCRETE, and)
MARGUERITE KOFSTAD, ) No. 6368 - April 24, 2009
)
Respondents.)
)
          Petition for Hearing from the Superior  Court
          of   the  State  of  Alaska,  Third  Judicial
          District, Palmer, Eric M. Smith, Judge.

          Appearances: Sarah J. Tugman, Anchorage,  for
          Petitioner.  Patricia Hefferan, Wasilla,  for
          Respondents.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Carpeneti, and Winfree, Justices.

          WINFREE, Justice.


I.   INTRODUCTION
          Alaska  Statute  09.35.020  provides  that  a  judgment
creditor must obtain court permission to execute on a judgment if
more  than  five years have elapsed after entry and  no  previous
execution has been issued.1  Permission will be granted if  there
are just and sufficient reasons for failure to previously execute
on  the judgment.  In this case judgment was issued in 1995,  but
the judgment creditor did not attempt to execute on it for nearly
ten  years.  He explained the delay by alleging that the judgment
          debtor, who died in 2001, lacked assets sufficient to satisfy the
judgment  during that time.  The district court denied permission
to  execute, finding the judgment creditor had made no effort  to
verify  whether assets did in fact exist.  The judgment  creditor
appealed  and  the  superior court affirmed the  district  courts
decision.
          We accepted the judgment creditors petition for hearing
and  now  affirm on an alternative ground:  because ownership  of
the  property  upon which the judgment creditor sought  execution
passed  by  operation of law to the judgment debtors spouse  upon
the judgment debtors death, the effort to execute is futile.
II.  FACTS AND PROCEEDINGS
          I.   Mike Smith, d/b/a Wasilla Concrete, sued Raymond Kofstad,
d/b/a  Busch Concrete, over nonpayment for construction materials
and supplies.  Smith obtained a default judgment against Raymond2
for  $41,589.41 in September 1995.  The judgment was recorded the
next  month in the Palmer Recording District,3 where Raymond  and
Marguerite owned a home as tenants by the entirety.  Raymond died
in January 2001.
          Smith  first sought a writ of execution in August 2005,
almost ten years after entry of judgment and more than four years
after  Raymond died.  Smith filed a motion in the district  court
requesting  leave  to  execute on the Kofstad  home  pursuant  to
Alaska   Rule  of  Civil  Procedure  69(d).4   The   motion   was
accompanied  by  an  affidavit  explaining  that  Smith  had  not
previously  obtained  a  writ of execution  because  he  did  not
believe  that  the  judgment debtor had  assets  with  net  value
capable  of  satisfying a portion of the judgment.5   He  further
stated:   I  also  became aware that the defendant  was  deceased
during  the  Fall of 2000 [sic].  I checked property records  and
discovered  that  a number of IRS liens had been recorded,  which
would have made execution upon the judgment debtors real property
fruitless.   I  believe the IRS liens have since expired.   Smith
served the motion, affidavit, and a summons on Marguerite.6   She
opposed  the  motion,7  and the district court  denied  leave  to
execute without explanation.
          Smith  appealed  the  denial  to  the  superior  court.
Marguerite  then argued that there is no showing that there  were
no  assets  to  execute against while the debtor  was  alive  and
contended  that Smith did not ask a process server to do  a  bank
sweep,  to  seize the permanent fund dividend or take any  action
whatsoever to collect any amount from any source.  Smith did  not
expressly deny these assertions, but argued Marguerite had waived
this defense by not raising it in response to his original motion
for  leave to execute.8  The superior court remanded the case  to
the  district court to make factual findings and to  explain  the
denial of Smiths motion for a writ of execution.
          The  district court then explained that Smiths  reasons
for  delaying  execution  were inadequate:   [Smiths]  subjective
belief  as to the value of decedents assets or decedents position
with the IRS does not justify . . . [Smiths] delay in obtaining a
writ of execution.
          The  superior court affirmed the district courts denial
of   Smiths  motion,  stating  that  Smith  bore  the  burden  of
          demonstrating that [he] made some inquiry regarding available
assets during the five year period and that Smith did nothing  to
execute  on  the debt, or even to ascertain what assets  were  or
were not available to do so, until after January 2001.  The court
concluded  that Smith had not demonstrated a fair and  sufficient
reason to relax the five-year deadline for execution.
          We  accepted  Smiths  petition for hearing,  and  later
asked  the parties to address whether, in light of Raymonds death
and  the  extinguishment of his interest in the  tenancy  by  the
entirety, Smith could execute on the Kofstad home.
III. STANDARD OF REVIEW
          When there has been an appeal to the superior court  as
an   intermediate  court  of  appeal,  we  approach  the   issues
independently.  9  We may affirm a judgment on any  grounds  that
the  record  supports, even grounds not relied on by the  [lower]
court.10
IV.  DISCUSSION
          I.   A judgment creditor generally can obtain a writ of execution
as a matter of course within five years of the judgment.11  There
is   no  definitive  time  limitation  on  the  commencement   of
executions of judgment,12 but if the judgment creditor  does  not
seek  a  writ  of execution within five years, no  execution  may
issue except by order of the court in which judgment is entered.13
The  court  shall  grant leave to execute only if  it  determines
there  are just and sufficient reasons for the failure to  obtain
the  writ  of  execution within five years  after  the  entry  of
judgment.14  We have held that a judgment debtors previous lack of
assets  that  could  satisfy  the judgment,  rendering  execution
futile,  is  a  just  and sufficient reason to  permit  leave  to
execute under AS 09.35.020 .15
          The  parties disagree whether, as a matter  of  law,  a
judgment  creditor  must diligently try to  verify  the  lack  of
assets  during the five year period to merit permission to  later
execute  on  the judgment.  But because execution is  now  futile
when  Raymond  died and Marguerite took full ownership  of  their
home  by operation of survivorship, Smiths ability to execute  on
Raymonds  share  of the property was extinguished   we  need  not
reach the question raised by the parties.
          When  an  individual judgment debtor dies, his  or  her
property generally is transferred through probate proceedings  to
heirs  or  devisees,  subject  to  creditor  claims  against  the
decedent.16   If  a  judgment creditor has an  existing  lien  on
specific property owned by the judgment debtor, the lien survives
the  judgment  debtors  death and can be  foreclosed  as  if  the
judgment  debtor were still living.17  Alternatively the judgment
creditor can file a claim in the probate proceedings to have  the
debt satisfied from the decedents estate.18
          But  when  property  is owned by husband  and  wife  as
tenants by the entirety and one spouse dies, the decedents  share
in  the  property  does not pass through probate.   Instead,  the
decedents share is extinguished at death and the surviving spouse
takes full ownership of the property by operation of law from the
original  conveyance:  The common law theory . . .  is  that  the
decedents interest vanishes at death, and therefore no probate is
          necessary because no interest passes to the survivor at death.19
When  the  decedents  share  in unsevered  survivorship  property
extinguishes,  so  therefore must the putative  interest  of  any
creditor  in  that property.  Courts in other jurisdictions  have
uniformly assumed, if not expressly stated, that with respect  to
unsevered  survivorship property, the death of a judgment  debtor
and  the consequent destruction of the judgment debtors share  in
the property also destroys any interest of a judgment creditor in
that  share.20   This  is an issue of first impression  for  this
court.21
          We  hold,  in  accordance with the uniform practice  in
other  jurisdictions  and  with  the  logic  of  tenancy  by  the
entirety,  that:   (1) recording a judgment  against  a  judgment
debtor,  thus creating a judgment lien against property owned  by
the  judgment  debtor, does not sever a tenancy by  the  entirety
between  the  judgment  debtor and spouse,  and  (2)  a  judgment
creditors interest, if any, in a judgment debtors interest in  an
unsevered  tenancy  by  the  entirety is  extinguished  when  the
judgment  debtor  predeceases the spouse.22  We  observe  that  a
judgment  creditor  may take action to sever  a  tenancy  by  the
entirety:
          If  an individual and another own property in
          this state as tenants in common or tenants by
          the  entirety,  a creditor of the  individual
          .  .  . may obtain a levy on and sale of  the
          interest  of the individual in the  property.
          A  creditor  who has obtained a  levy,  or  a
          purchaser  who has purchased the  individuals
          interest  at the sale, may have the  property
          partitioned   or  the  individuals   interest
          severed.[23]
          
Severance  terminates  a  tenancy  by  the  entirety,  nullifying
survivorship24 and thus protecting a judgment creditors  interest
in  the  judgment debtors share of the property.  We  express  no
opinion  on  when  in  the execution process  a  tenancy  by  the
entirety is actually severed.  Smith never attempted to  levy  on
the  Kofstads  home  prior to Raymonds death,  and  the  Kofstads
tenancy  by  the entirety therefore remained unsevered;  Raymonds
death consequently extinguished his interest in the home.
          Because Smith is unable to execute on the Kofstad home,
his  application under AS 09.35.020 for leave to execute  on  the
home is futile.
V.   CONCLUSION
          We  AFFIRM  the decision of the superior court  on  the
alternative ground set forth above.
_______________________________
     1    AS 09.35.020 provides:

          When a period of five years has elapsed after
          the   entry   of  judgment  and  without   an
          execution  being issued on the  judgment,  no
          execution  may issue except by order  of  the
          court  in  which  judgment is  entered.   The
          court  shall  grant the motion if  the  court
          determines that there are just and sufficient
          reasons for the failure to obtain the writ of
          execution  within five years after the  entry
          of judgment.
          
     2    Because this case concerns both Raymond Kofstad and his
wife,  Marguerite Kofstad, we will refer to the Kofstads by their
first names for clarity.

     3     AS  09.30.010  provides,  in  part,  that  a  recorded
judgment  becomes a lien upon the real property of the  defendant
that  is  in  the  recording district, that is  not  exempt  from
execution,  and  that is owned by the defendant at  the  time  or
acquired by the defendant afterward.

     4    Alaska R. Civ. P. 69(d) provides in relevant part:

          (d)  Execution After Five Years.  Whenever  a
          period of five years shall elapse without  an
          execution  being  issued on  a  judgment,  no
          execution shall issue except on order of  the
          court in the following manner:
          
          (1) The judgment creditor shall file a motion
          supported  by affidavit with the court  where
          the judgment is entered for leave to issue an
          execution.   The  motion and affidavit  shall
          state  the  names  of  the  parties  to   the
          judgment, the date of its entry, the  reasons
          for failure to obtain a writ for a period  of
          five  years and the amount claimed to be  due
          thereon  or the particular property of  which
          possession  was  adjudged  to  the   judgment
          creditor remaining undelivered.
          
     5     Smiths motion requested leave to issue an execution in
this action, but did not specify that Smith sought to execute  on
the  Kofstad  home.  Smiths supporting affidavit  made  clear  he
intended  to execute on the home:  I understand and believe  that
the judgment debtor owned real property with his wife, Marguerite
Kofstad,  and  that  the property remains subject  to  execution.
Smiths  brief confirms he sought to execute on the home to  which
the debtor and his wife took title in 1975.

     6    Alaska R. Civ. P. 69(d)(2) provides:

          Upon  filing  such motion and  affidavit  the
          judgment creditor shall cause a summons to be
          served  on  the judgment debtor in accordance
          with  the provisions of Rule 4.  In the event
          the  judgment debtor is deceased, the summons
          may  be  served  upon  the  judgment  debtors
          representative.  The summons shall state  the
          amount claimed or the property sought  to  be
          recovered under the judgment.
          
Although  the  record suggests that no probate  proceedings  were
initiated after Raymonds death and Marguerite therefore  was  not
the  formal  personal representative of his estate,  the  parties
apparently  assumed  without much question  that  Marguerite  was
Raymonds  representative  for  purposes  of  Rule  69(d)(2).   We
express no opinion on this issue.

     7    Alaska R. Civ. P. 69(d)(3) provides:

          The  judgment debtor, or, in the event of his
          death,  the  judgment debtors representative,
          may  file and serve a verified answer to such
          motion  within the time allowed to  answer  a
          complaint,  alleging  any  defense  to   such
          motion   which   may  exist.   The   judgment
          creditor may file and serve a verified  reply
          to  such answer.  The judgment debtor  waives
          all   defenses  and  objections   which   the
          judgment debtor does not present by answer as
          herein provided.
          
     8    See id.

     9     Hallam  v.  Holland Am. Line, Inc., 27 P.3d  751,  753
(Alaska  2001) (quoting Frontier Saloon, Inc. v. Short, 557  P.2d
779, 781(Alaska 1976)).

     10     Van  Sickle v. McGraw, 134 P.3d 338, 341 n.10 (Alaska
2006).

     11     AS  09.35.010 (A writ of execution may be  issued  in
favor  of  . . . [the] party in whose favor a judgment  is  given
that  requires the payment of money.); State, Dept of Rev., Child
Support  Enforcement Div. v. Demers, 915 P.2d 1219, 1220  (Alaska
1996)  (The plain language of [AS 09.35.010] gives the  court  no
discretion to decide whether to issue a writ of execution once  a
valid  judgment  for  the payment of money  has  been  entered.).
After  Demers  was  decided AS 09.35.010  was  amended  to  allow
issuing  the state writs of execution on behalf of crime  victims
who  received  restitution judgments, but  the  portion  of  text
interpreted in Demers was not substantively altered.  See Ch. 92,
2, SLA 2001.

     12     Brotherton v. Brotherton, 142 P.3d 1187, 1189 (Alaska
2006).

     13    AS 09.35.020.

     14    Id.

     15     Magden v. Alaska USA Fed. Credit Union, 36 P.3d  659,
662 (Alaska 2001).

     16    AS 13.16.005.

     17     AS  09.35.060  (If  the judgment  debtor  dies  after
judgment,  execution may be issued on the judgment in the  manner
and with the effect as if the debtor were still living, except as
provided in AS 13.16.505.); AS 13.16.505 (No execution may  issue
upon  nor may any levy be made against any property of the estate
under   any   judgment   against  a  decedent   or   a   personal
representative,  but  this  section shall  not  be  construed  to
prevent the enforcement of mortgages, pledges, or liens upon real
or personal property in an appropriate proceeding.).

     18    AS 13.16.020; AS 13.16.465.

     19     4  James H. Backman et al., Thompson on Real Property
33.02,  at 121 (David A. Thomas ed., 2d ed. 2004) (quoting  Jesse
Dukeminier & Stanley M. Johanson, Wills, Trusts, and Estates  350
(6th  ed.  2000)  (internal quotation marks omitted));  accord  7
Richard  R.  Powell, Powell on Real Property   51.03(3)  (Michael
Allan  Wolf  ed.,  2008)  (Survivorship is  central  to  a  joint
tenancy.  The joint tenant who survives the other cotenants takes
the entire estate; the estates of deceased joint tenants have  no
interest.  Theoretically the survivors interest attaches by means
of the original conveyance, not by transfer from the decedent.).

     20     See  Francis M. Dougherty, Judgment Lien or  Levy  of
Execution  on  One  Joint Tenants Share or Interest  as  Severing
Joint  Tenancy, 51 A.L.R. 4th 906  2(a) (1987) (On  occasion  the
question  has  arisen whether the mere filing or docketing  of  a
judgment lien, without levy or execution, severs a joint tenancy.
It  appears  that  all of the courts which have  considered  this
issue  in  situations  where  the  debtor-tenant  died  prior  to
execution, sale, or expiration of the period of redemption  after
sale  have  concluded  that the lien  did  not  sever  the  joint
tenancy, reasoning that upon the death of the debtor that  partys
interest went to the survivor and therefore there was no property
interest  to which the lien could attach.); see also 20 Am.  Jur.
2d  Cotenancy and Joint Ownership  31 (2008) (stating  that  mere
docketing  of judgment against joint tenant does not sever  joint
tenancy,  and that if judgment debtor dies prior to severance  of
joint tenancy, surviving tenant is sole owner and not subject  to
lien).

     21     In  Zok  v. Estate of Collins, 84 P.3d 1005,  1006-08
(Alaska 2004), we considered an appeal by a judgment creditor who
claimed  the judgment debtor had fraudulently transferred  assets
to a trust.  The judgment debtor died before the judgment against
him  was issued.  His estate argued that even if assets had  been
fraudulently transferred, the judgment creditor could not prevail
because those assets had passed to the judgment debtors spouse by
right of survivorship, out of the judgment creditors reach.   Id.
at 1009.  We decided the appeal on other grounds.  Id.

     22     We  note  that  a  judgment  debtor  owning  property
individually or as a tenant in common with a spouse cannot  avoid
an  existing  lien  against  the  judgment  debtors  interest  by
conveying  the  property  to  both  spouses  as  tenants  by  the
entirety.  See AS 09.30.020 (stating that [a] conveyance of  real
property  or interest in real property is void against a judgment
lien that is recorded before the conveyance is recorded).

     23      AS  09.38.100(a);  see  also  AS  09.38.010  (noting
interplay of homestead exemption to execution on spousal interest
in  property held as an entirety estate when the property is used
as a principal residence).

     24     See Powell, supra note 18,  51.04(1) (A joint tenancy
can  be severed by a unilateral act of one of the tenants .  .  .
that  operates  to destroy or terminate any one or  more  of  the
essential  unities, and such act effects conversion of the  joint
tenancy into a tenancy in common and destruction of the right  of
survivorship.).   The analogy is drawn to joint tenancy  because,
at  common law, an individual tenant could not sever a tenancy by
the  entirety by unilateral act, except by obtaining  a  divorce.
Thompson,  supra  note  18,  33.08(b), at 158.   AS  09.38.100(a)
differs from the common law by allowing severance of a tenancy by
the entirety through the judgment execution process.

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