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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Leisnoi, Inc. v. Merdes & Merdes, P.C. (2/1/2013) sp-6747

Leisnoi, Inc. v. Merdes & Merdes, P.C. (2/1/2013) sp-6747

        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, email 

        corrections@appellate.courts.state.ak.us. 



                 THE SUPREME COURT OF THE STATE OF ALASKA 



LEISNOI, INC.,                                  ) 

                                                )       Supreme Court No. S-13790 

                Appellant,                      ) 

                                                )       Superior Court No. 3AN-85-16520 CI 

        v.                                      ) 

                                                )       O P I N I O N 

MERDES & MERDES, P.C.,                          ) 

                                                )      No. 6747 - February 1, 2013 

                Appellee.                       ) 

                                                ) 



                Appeal from the Superior Court of the State of Alaska, Third 

                Judicial District, Anchorage, Brian C. Shortell and Sen K. 

                Tan, Judges. 



                Appearances:       Robert K. Reiman, Law Offices of Robert K. 

                Reiman,     Anchorage,      for  Appellant.     Ward     M.   Merdes, 

                Merdes & Merdes, P.C., Fairbanks, Appellee. 



                Before: Fabe, Chief Justice, Carpeneti and Stowers, Justices. 

                [Winfree, Justice, not participating.] 



                STOWERS, Justice. 



I.      INTRODUCTION 



                Leisnoi,   Inc.,   an   Alaska   Native   corporation,   retained   the   law  firm   of 



Merdes & Merdes to represent it in litigation against Omar Stratman over its certification 



of   and   title  to  certain   lands   Leisnoi    claimed    under   the   Alaska    Native    Claims 


----------------------- Page 2-----------------------

Settlement Act.  Leisnoi and Merdes entered a contingency fee agreement under which, 



if Leisnoi was successful in the litigation, Merdes would receive an interest in the lands 



Leisnoi   obtained   or   retained.    The   Stratman   case   was   resolved   in   1992   in   favor   of 



Leisnoi, although Stratman appealed and the related litigation continued for another 



decade.     Leisnoi   challenged   the   validity   of   the   fee   agreement   with   Merdes.  A   bar- 



appointed Arbitration Panel determined that Merdes was not entitled to an interest in the 



land itself, but was entitled to payment equal to a percentage of the adjusted value of 



Leisnoi's property, plus interest. In 1995, upon Merdes's motion, Superior Court Judge 



Brian C. Shortell confirmed the fee award and entered judgment against Leisnoi.                      For 



several years, Leisnoi made payments pursuant to the schedule laid out by the Arbitration 



Panel.  In September 2002, Leisnoi ceased making payments and the judgment went into 



default.   Leisnoi and Merdes subsequently attempted to negotiate a settlement; Merdes 



did not pursue execution during this period. 



                In October 2008, the Stratman litigation finally concluded in Leisnoi's 



favor. The following year, Merdes moved the superior court to issue a writ of execution. 



Leisnoi   opposed   the   motion   on   the   grounds   that   Merdes   had      not   shown    just   and 



sufficient cause for failing to seek a writ of execution within five years of entry of the 



1995 judgment.        Leisnoi subsequently moved for relief from the 1995 judgment under 



Alaska Civil Rule 60(b), arguing among other things that the judgment was void under 



43 U.S.C.  1621(a)'s restrictions on contingency fee contracts involving Alaska Native 



Claims Settlement Act lands.   In January 2010, Superior Court Judge Sen K. Tan issued 



an order denying Leisnoi's Rule 60(b) motion and granting Merdes's motion to execute. 



Six months later, Leisnoi paid Merdes the remaining balance.   Leisnoi now appeals the 



superior court's ruling. 



                                                   -2-                                             6747
 


----------------------- Page 3-----------------------

                 This   case   presents   a   number   of   complex   issues   involving   questions   of 



waiver   and   whether   the   superior   court's   1995   judgment   was   void   or   voidable.      We 



conclude that Leisnoi did not waive its right to appeal by paying Merdes the balance due 



on the judgment.       We conclude that the Arbitration Panel's fee award and the superior 



court's   1995   entry   of   judgment   violated   43   U.S.C.      1621(a)'s   prohibition   against 



attorney contingency fee contracts based on the value of Native lands that were subject 



to the Act.  We conclude that the superior court's 2010 order granting Merdes's motion 



to   execute   on   the   1995   judgment   separately   violated   the   Act's  prohibition   against 



executing on judgments arising from prohibited attorney contingency fee contracts, and 



that order is reversed.  We conclude that, notwithstanding the illegality of the Arbitration 



Panel fee award and the 1995 judgment, Leisnoi is not entitled to relief pursuant to Civil 



Rule 60(b):   We conclude that the 1995 order was voidable rather than void for purposes 



of Civil Rule 60(b), and therefore not subject to attack under Civil Rule 60(b)(4); we also 



conclude that Leisnoi is not entitled to relief under Civil Rule 60(b)(5) or 60(b)(6). 



Accordingly, Merdes must return Leisnoi's payment of the $643,760 balance on the 



judgment, with interest, but Leisnoi is not entitled to recover payments made prior to the 



issuance of the writ of execution.  Merdes may file an action for any fees it believes it is 



entitled to under a theory of quantum meruit. 



II.     FACTS AND PROCEEDINGS 



                 Leisnoi,   Inc.   is   a   Native   corporation   certified   under   the   Alaska   Native 



Claims      Settlement    Act    (ANCSA).1       In   January     1988,   Leisnoi    retained    attorney 



        1        Pub.    L.  No.   92-203,     85  Stat.   688   (1971)    (codified    as  amended      at 



43 U.S.C.  1601-1629h) (2006); see also Stratman v. Leisnoi, Inc., 969 P.2d 1139 

(Alaska 1998) (noting Leisnoi's status as a certified village   corporation pursuant to 

ANCSA). 



                                                   -3-                                                6747 


----------------------- Page 4-----------------------

Ed   Merdes   to   represent   it   in   litigation   against   Omar   Stratman.    Stratman   sought   to 



compel Leisnoi to comply with the terms of a prior settlement with Koniag, Inc., another 



Native corporation from which Leisnoi had been demerged in 1983, under which Koniag 



had agreed to sell certain lands on Kodiak Island to Stratman.2                    Leisnoi, which had 



received a 1985 patent to the surface rights of the land at issue, refused to honor the 



settlement.3 



                 Merdes and Leisnoi entered into a contingency fee agreement providing 



that if the litigation proved successful, Merdes would be "remunerated by the Client 



conveying to him an undivided thirty percent . . . interest in all lands and/or settlement 



the Client succeeds in obtaining and/or retaining by virtue of said litigation," along with 



any attorney's fees awarded by the court.             In 1992, the case was resolved in favor of 



Leisnoi, which kept title to its lands.4        (Stratman appealed, and the litigation continued 



                                          5 

until its final resolution in 2008. )          Merdes filed a Notice of Attorney's Lien in the 



Alaska Supreme Court on July 20, 1992, purporting to place a lien on the approximately 



19,000 acres of real property that was the subject of the litigation.                Leisnoi challenged 



the   validity    of  the  fee   agreement     and   requested     arbitration    with   the  Alaska     Bar 



Association's Fee Review Committee ("Arbitration Panel"). 



        2        Stratman, 969 P.2d at 1140. 



        3        Id. 



        4        Ed Merdes died in 1991.          Merdes & Merdes, P.C., continued to represent 



Leisnoi and subsequently sought fees on Ed Merdes's behalf.                   "Merdes" is used in this 

opinion   to   refer   collectively   to   Ed   Merdes,   his   estate,   and   Merdes   &   Merdes,   P.C. 

(represented in this matter by Ward Merdes, Ed Merdes's son). 



        5        Stratman   v.   Leisnoi,   Inc.,   545   F.3d   1161   (9th   Cir.   2008),  cert.   denied 



Stratman v. Salazar, 129 S.Ct. 2861 (June 29, 2009). 



                                                    -4-                                               6747
 


----------------------- Page 5-----------------------

                The Arbitration Panel held a hearing in May 1994 at which both parties 



presented evidence and argument.            The Arbitration Panel found that Merdes did not 



adequately explain the contingency fee agreement to Leisnoi's Board of Directors and 



failed to "make sure that the board . . . understood that [Merdes] would end up being a 



co-owner   of   an   undivided   30%   interest   in   the   land"   -   a   situation   that   could   cause 



Leisnoi to lose its tax exemption on the land.             The Arbitration Panel also found that 



Merdes had, without Leisnoi's knowledge or consent, improperly agreed to divide his 



fees with other attorneys he hired to help with the case.              The Arbitration Panel noted, 



however, that "Ed Merdes . . . did fight an uphill battle and achieved the best possible 



outcome on behalf of the client" and "took a considerable risk that his time would be 



completely uncompensated." 



                The Panel declined to award Merdes a 30% interest in the land itself.  But 



it found that 30% was a "reasonable percentage" and awarded $721,000 in attorney's 



fees, plus interest, payable in $100,000 yearly installments. It appears to have calculated 



this amount by taking 30% of the value of the land after substantially discounting that 



value to reflect clouds on Leisnoi's title, the portion of the land subject to pre-existing 



low-rent   grazing     leases,   and   payments     made    by  Leisnoi   to  Merdes     pursuant   to   a 



modification not clearly agreed to by the Leisnoi board. Interest was to accrue at 8% per 



annum, except that any payments in default would accumulate interest at 10.5% per 



annum.      The   Panel   also   ordered   Leisnoi   to   pay   Merdes   $55,000   in   court-awarded 



attorney's fees.    Both parties subsequently filed applications for modification with the 



Arbitration   Panel;   in   an   August   1994   decision,   the   Arbitration   Panel   clarified   the 



applicable interest rates and declined to modify the panel-awarded attorney's fee amount. 



It noted: 



                                                   -5-                                             6747
 


----------------------- Page 6-----------------------

                The panel does not agree with Leisnoi's characterization that 

                the arbitration award in this matter set aside or voided the 

                contingent fee contract between Merdes and Leisnoi.  The 

                panel specifically refused to void the contract or award fees 

                based on hourly rates . . . .     Rather . . . the arbitration award 

                interpreted     the  contingent     fee  contract   to  not  be   a  30% 

                ownership   interest   in   land,   but   a   security   interest   or   lien 

                against the land . . . .   The arbitration award is an attempt to 

                allow   Leisnoi   to   preserve   its   lands   by   buying   out   Merdes 

                from the attorney's lien. 



                In January 1995, in response to a motion by Merdes, the superior court 



issued an order confirming the Arbitration Panel's award of fees and entered judgment 



for attorney's fees to Merdes against Leisnoi.  That same year, Leisnoi made payments 



totaling $100,000.      It continued to make annual $100,000 payments for the next five 



years, followed by two $50,000 payments in October 2001 and April 2002.                          (These 



$50,000 payments covered the installment due September 1, 2001, which Leisnoi had 



not paid when it was due.)  At that point, Leisnoi, which still had payments outstanding 



to   cover the substantial interest accrued on the judgment, ceased making payments. 



Leisnoi later explained that "the continued expense of litigation in defense of its property 



. . . prevented it from making further payment."             The obligation under judgment went 



into default as of September 1, 2002. 



                Over the next several years, Merdes attempted to negotiate with Leisnoi 



regarding its unpaid fees.        Leisnoi appears to have been   open   to negotiation, and it 



repeatedly   thanked   Merdes   for   being   patient   and   indicated   that   payments   would   be 



forthcoming   when   funds   were   available.        For   example,   in   April   2002,   an   attorney 



representing Leisnoi wrote to Merdes, 



                I want to thank you in advance for your patience.               As you 

                know, [Leisnoi is] still in difficult financial circumstances, 

                but there is hope that this picture may change.   If so, I will be 

                recommending         to  the  Board    that   the  remaining     amount 



                                                   -6-                                             6747
 


----------------------- Page 7-----------------------

                outstanding be paid in full [if] and when funds are available 

                to do so. 



Leisnoi generally did not dispute the validity of the judgment awarded to Merdes and 

actively proposed settlement arrangements.6  Merdes did not pursue execution during this 



period;   Ward   Merdes   explained   in   an   affidavit,   "I   have   held-off   execution   largely 



because of negotiations with Leisnoi, Inc., and because it was unclear that Leisnoi, Inc. 



would even continue to exist - until its recent success in the Stratman decertification 



litigation.   Prudence has dictated that Merdes, by necessity, seek to avoid . . . direct 



involvement in Stratman's protracted litigation with Leisnoi, Inc." 



                Merdes recorded the 1995 superior court judgment against Leisnoi in the 



Kodiak Recording District in May 2007.             On October 6, 2008, the Ninth Circuit ruled 

in favor of Leisnoi in its litigation against Stratman.7           Merdes moved for the superior 



court to issue a writ of execution on January 27, 2009.               Leisnoi opposed the motion, 



arguing that Merdes had not shown just and sufficient cause for failing to seek a writ of 



execution within five years of entry of judgment.             Leisnoi also moved to expunge the 



notice of attorney lien and judgment lien filed by Merdes.  Leisnoi subsequently moved 



for relief from the 1995 judgment under Civil Rule 60(b), arguing that the judgment was 



void under 43 U.S.C.  1621(a), that enforcement of the judgment was no longer just or 



equitable,   and   that   Leisnoi's   prior   board   of   directors   failed   to   properly   protect   the 



        6       Leisnoi's     president    commented      in  a  February     2008   letter  that  "[t]he 



corporation did not agree with the arbitration and had many questions regarding the 

outcome.   To date we have paid your firm well over [$]300,000.   We feel your firm has 

been     more    than   compensated."        However,       Merdes     and   Leisnoi's    lawyer     later 

corresponded regarding further satisfaction of the judgment by means of a transfer of 

Leisnoi's interest in a joint venture. 



        7       Stratman v. Leisnoi, Inc., 545 F.3d 1161 (9th Cir. 2008). 



                                                   -7-                                             6747
 


----------------------- Page 8-----------------------

interests of the Native corporation.  Merdes replied to Leisnoi's opposition and opposed 



the Rule 60(b) motion. 



                On January 13, 2010, the superior court issued an order denying Leisnoi's 



Rule 60(b) motion, granting Merdes's motion to execute, and granting Leisnoi's motion 



to expunge the judgment lien and attorney lien.   Leisnoi subsequently settled the claims 



of the other attorneys hired by Merdes.  In July 2010, Leisnoi paid Merdes $643,760, the 



remaining balance owed.  Leisnoi claims that it "was forced to borrow the funds" to pay 



and   did   so   to   remove   clouds   from   its   land   title   "[s]o   that   it   could   pursue   business 



opportunities."     Leisnoi now appeals the superior court's January 2010 order. 



III.    STANDARD OF REVIEW 



                "The   standard   for   review   of   an   order   denying   a   Rule   60(b)   motion   is 



whether the superior court abused its discretion.          Reversal is justified only if this court 

concludes the trial court was clearly mistaken."8           "We will find an abuse of discretion 



only where the record as a whole leaves us with a definite and firm conviction that a 

mistake has been made."9          However, "no question of the lower court's discretion is 



presented by a Rule 60(b)(4) motion [seeking relief from a void judgment] because the 

validity of a judgment is strictly a question of law."10            We review   questions   of   law 



de novo.11 



        8       Grothe v. Olafson, 659 P.2d 602, 611 (Alaska 1983) (citing McCracken v . 



Davis , 560 P.2d 771 (Alaska 1977)). 



        9       Wooten v. Hinton, 202 P.3d 1148, 1151 (Alaska 2009). 



        10      Aguchak v. Montgomery Ward Co. , 520 P.2d 1352, 1354 (Alaska 1974). 



        11      See, e.g., Jacob v. State, Dep't of Health and Soc. Servs ., 177 P.3d 1181, 



1184 (Alaska 2008) ("We apply our independent judgment to questions of law, adopting 

'the rule of law most persuasive in light of precedent, reason, and policy.' " (quoting 

                                                                                       (continued...) 



                                                  -8-                                            6747
 


----------------------- Page 9-----------------------

                 The superior court's decision to issue a writ of execution more than five 

years after entry of judgment is a mixed question of law and fact.12              Questions of law are 



reviewed de novo, and questions of fact are reviewed for clear error.13 



IV.	    DISCUSSION 



        A.	      Leisnoi Did Not Waive Its Right To Appeal By Paying The Judgment 

                 Against It. 



                 Merdes   argues   that   Leisnoi   waived   its   right   to   appeal   by    voluntarily 



satisfying the judgment against it in July 2010.  Merdes contends that Leisnoi's "cryptic 



unsworn      assertion"     that  it  paid  the   judgment     "so   that   it  could   pursue    business 



opportunities" is insufficient to overcome the presumption of voluntary payment, and 



further,   that   Leisnoi   could   have   deposited   its   funds   into   the   registry   of   the   court   or 



otherwise indicated that it was paying under protest.  Merdes cites to a number of cases 



from other jurisdictions for the proposition that "when a judgment debtor voluntarily 

satisfies the judgment in full, he waives any right to appeal."14           Leisnoi replies that it had 



limited options in response to Merdes's pursuit of execution upon the judgment: It could 



        11(...continued) 



Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979))). 



        12	     McLaughlin v. Okumura , 223 P.3d 93, 97 (Alaska 2009) (citing Brotherton 



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



        13	     Id. 



        14      See, e.g., Haberer v. Newman , 549 P.2d 975, 976 (Kan. 1976) (holding that 



a party who voluntarily complied with trial court judgment by surrendering possession 

of   real   estate   could   not   obtain   appellate   review);  Ramsey   Fin.   Corp.   v.   Haugland , 

719 N.W.2d 346, 350 (N.D. 2006) (holding that "voluntary payment of or acquiescence 

in a judgment waives   the right to appeal"); Mitchell v. Lindly , 351 P.2d 1063, 1067 

(Okla. 1960) (holding that a judgment, once satisfied, may not be vacated, "especially 

when . . . the satisfaction is not claimed to have been involuntary or made under any 

mistake . . . of fact"). 



                                                    -9-	                                             6747
 


----------------------- Page 10-----------------------

do nothing and allow Merdes to collect the judgment; it could seek a stay of enforcement 



of the judgment by posting a supersedeas bond; or it could pay the judgment.                    Leisnoi 



characterizes   the   first   two   options   as   so   undesirable   -   based   on   both   the   potential 



"embarrassment" and disruption of its business associated with involuntary collection 



procedures and the high cost of posting a supersedeas bond - that it had no choice but 



to pay the judgment. 



                We have not directly discussed the question when payment of a judgment 



will result in waiver of the right to appeal.         Some jurisdictions hold that payment of an 

adverse judgment is compulsory.15          Thus, payment of such a judgment is not "voluntary" 



        15      See Stone v. Regents of Univ. of Calif., 92 Cal. Rptr. 2d 94, 100 (Cal. App. 



1999) (" '[P]ayment of a judgment must be regarded as compulsory, and therefore as not 

releasing errors, nor depriving the payer of his right to appeal . . . unless payment be by 

way   of   compromise   and   settlement   or   under   an   agreement   not   to   appeal   or   under 

circumstances leaving only a moot question for determination.' " (quoting Reitano v. 

Yankwich, 237 P.2d 6 (Cal. 1951))); Long v. Tranka, 496 N.E.2d 1238, 1240 (Ill. App. 

1986) ("[I]n an ordinary civil case a judgment debtor does not lose the right to appeal by 

paying the amount of the judgment since payment is considered to be compulsory, even 

if made prior to execution."); Dreamers, LLC v. Don's Lumber & Hardware, Inc. , 366 

S.W.3d 381, 384 (Ky. 2011) (quoting Moss v. Smith , 361 S.W.2d 511, 514 (Ky. 1962) 

and citing Stairs v. Riley, 208 S.W.2d 961 (Ky. 1948)) (stating it is clear that payment 

of an adverse judgment does not thereby waive the right to appeal but that payment can 

waive the right to appeal where the payment is part of a settlement or compromise); see 

also FCC Constr. Inc. v. Casino Creek Holdings, Ltd., 916 P.2d 1196, 1198-99 (Colo. 

App 1996) (citing Reserve Life Ins. Co. v. Frankfather , 225 P.2d 1035 (Colo. 1950)) 

(holding   that compliance with   court order for a foreclosure sale was   not   voluntary, 

though defendant-appellant did not seek a stay of the sale or redeem property, because 

"mere     compliance      with   court    decree,   in  itself,  does   not   demonstrate      voluntary 

compliance").  See generally E.H. Schopler, Annotation, Defeated Party's Payment or 

Satisfaction   of,   or   Other   Compliance   with,   Civil   Judgment   as   Barring   His   Right   to 

Appeal , 39 A.L.R.2d 153,  5[b] (1955, Supp. 2012) (stating that most jurisdictions 

conclude that payment of an enforceable judgment before issuance of execution does not, 

in itself, bar the payer's right to appeal). 



                                                  -10-                                             6747
 


----------------------- Page 11-----------------------

and   only   waives   the   right   to   appeal   if   the   payment   was   part   of   a   compromise   or 

settlement     or  if  payment    makes     it  impossible   to  render    effective   relief.16 Other 



jurisdictions hold that mere payment of an adverse judgment before the issuance of an 

execution may bar an appeal.17        We agree with the U.S. Supreme Court that "[t]here can 



        16      See Graddick v. Newman, 453 U.S. 928, 945 n.1 (1981) (citing Bakery 



Drivers Union v. Wagshal , 333 U.S. 437, 442 (1948)); Cahill v. New York, N. H. & H. 

R. Co., 351 U.S. 183, 184 (1956); Life Investors Ins. Co. of Am. v. Fed. City Region, Inc. , 

687 F.3d 1117, 1121 (8th Cir. 2012) (citations omitted); Stanton Rd. Assocs. v. Lohrey 

Enters. , 984 F.2d 1015, 1020 (9th Cir. 1993) (citing U.S. for Use of Morgan & Son Earth 

Moving, Inc. v. Timberland Paving & Constr. Co. , 745 F.2d 595, 598 (9th Cir. 1984)); 

Elkin v. Fauver , 969 F.2d 48, 54 (3d Cir. 1992) (citations omitted); Matter of Latham , 

823 F.2d 108, 111 (5th Cir. 1987) (citing Cahill, 351 U.S. at 183); Hill v. Whitlock Oil 

Servs., Inc., 450 F.2d 170, 172 (10th Cir. 1971) (citations omitted); Uyeda v. Brooks, 348 

F.2d 633, 635 (6th Cir. 1965); Del Rio Land, Inc. v. Haumont , 514 P.2d 1003, 1006 

(Ariz. 1973) (citations omitted) (holding that involuntary payment would not bar appeal, 

and "the existence of the judgment is a sufficient condition and threat which, together 

with other factors, may be sufficient to show that the compliance was involuntary"); 

Stone, 92 Cal. Rptr. 2d at 100; Grant v. Wester, 679 So. 2d 1301, 1305 n.4 (Fla. Dist. 

App.   1996);   Long,  496      N.E.2d    at   1240;   Dreamers,   366    S.W.3d   at   384   (citations 

omitted); Fitzgerald Bros. Brewing Co. v. 825 Broadway Rest. , 20 N.Y.S.2d 192, 193 

(N.Y. App. Div. 1940) (citations omitted); Redevelopment Comm'n of Winston-Salem 

v.  Weatherman, 208 S.E.2d 412, 415   (N.C. 1974);               Heer v. State , 432 N.W.2d 559, 

564-65   (S.D.   1988); see   also   Corley   v.   Rosewood   Care   Ctr.,   Inc.,   142   F.3d   1041, 

 1057-58 (7th Cir. 1998); Doe v. Brookline Sch. Comm ., 722 F.2d 910, 914-15 (1st Cir. 

 1983); FCC   Constr.   Inc.,   916   P.2d   at   1198-99   (citations   omitted).     See   generally 

Schopler, supra note 15. 



        17      See Imperial Body Works, Inc. v. Nat'l Claims Serv., Inc., 279 S.E.2d 534, 



535 (Ga. App. 1981) (holding that compliance with judgment constituted waiver when 

there was no execution); Haberer, 549 P.2d at 979 (holding that compliance with a 

judgment, even after issuance of an execution, may bar an appeal because "anything 

which savors of acquiescence in a judgment cuts off the right of appeal"); Braswell v. 

Morris , 275 So.2d 189, 192 (La. App. 1972) (holding that payment of judgment waived 

the right to appeal because the payment contained no indication of intent to reserve the 

                                                                                        (continued...) 



                                                  -11-                                            6747
 


----------------------- Page 12-----------------------

be no question that a debtor against whom a judgment for money is recovered may pay 



that judgment and bring a writ of error to reverse it, and if reversed can recover back his 

money."18     As the Sixth Circuit explained, 



                 [A] defeated party's compliance with a . . . [trial] court ruling 

                does not bar him from appealing unless his compliance has 

                made it impossible for the appellate court to grant effective 

                relief.   This is true even if the defeated party has failed to 

                avail    himself   of   an  opportunity     to  obtain   a  stay  of  the 

                proceedings or a supersedeas.[19] 



                We   conclude   a   rule   providing   that   payment   of   an   adverse   judgment   is 



involuntary properly protects the judgment debtor's right to appeal and the creditor's 



interest in prompt payment.   This rule also minimizes the accrual of interest and the cost 

of enforcing a judgment.20 



        17(...continued) 



right to appeal); Tong v. Miller, 204 N.W. 108, (Mich. 1925); Ramsey Fin. Corp. , 719 

N.W.2d at 349-50 (holding that voluntary payment waives the right to appeal and a 

presumption arises that payment of a judgment was voluntary when there is no showing 

besides   that   there   was   acquiescence   to   a   judgment);   Lyon   v.   Ford   Motor   Co.,   604 

N.W.2d 453, 458 (N.D. 2000) (concluding that Ford had voluntarily paid the judgment 

when Ford paid before any execution or legal proceedings to collect the judgment); 

Jackson v. S.C. State Fair Ass'n , 96 S.E. 116, 116 (S.C. 1918).  See generally Schopler, 

supra note 15, at  5[c]. 



        18      Mancusi v. Stubbs , 408 U.S. 204, 207 (1972) (quoting Dakota Cnty. v. 



Glidden, 113 U.S. 222, 224 (1885)) (internal quotation marks omitted) (holding that 

compliance with judgment did not bar appeal even though petitioner had not sought a 

stay), superseded by statute on other grounds ; see also Bakery Drivers Union , 333 U.S. 

at 442 (holding that when the union lifted its boycott to comply with the injunction, it did 

not thereby bar appeal). 



        19       Uyeda, 348 F.2d at 635. 



        20      See Peoples Trust & Sav. Bank v. Sec. Sav. Bank, 815 N.W.2d 744, 754 



                                                                                         (continued...) 



                                                  -12-                                             6747
 


----------------------- Page 13-----------------------

                Here, Merdes has failed to show that Leisnoi's payment indicated an intent 



to compromise or settle.       And we can discern no intent of Leisnoi to waive its right to 



appeal the judgment.  Because we hold that payment of an adverse judgment entered by 



a court in the absence of a compromise or settlement is involuntary as a matter of law, 



we conclude that Leisnoi's payment was involuntary, and Leisnoi did not waive its right 



to appeal. 



        B.	     The Arbitration Panel's Fee Award, The Superior Court's Entry Of 

                Judgment,       And    The    Superior     Court's    Issuance     Of   The   Writ    Of 

                Execution Violated 43 U.S.C.  1621(a). 



                Leisnoi argues that its fee agreement with Merdes, the Arbitration Panel's 



fee award, the superior court's 1995 entry of judgment, and the superior court's 2010 



issuance of the writ of execution violated 43 U.S.C.  1621(a).                 That statute, part of 



ANCSA, provides: 



                None . . . of the lands granted by [ANCSA] to the Regional 

                and Village Corporations and to Native groups or individuals 

                shall    be  subject    to  any   contract   which     is  based   on   a 

                percentage   fee   of   the   value   of   all   or   some   portion   of   the 

                settlement granted by this Act.        Any such contract shall not 

                be enforceable against any Native . . . or any Regional or 

                Village Corporation and the revenues and lands granted by 

                this Act shall not be subject to lien, execution or judgment to 

                fulfill such a contract.[21] 



        20(...continued) 



(Iowa   2012);    Grand     River   Dam   Auth.   v.   Eaton,   803   P.2d   705,   709   (Okla.   1990) 

(citations omitted). 



        21      43 U.S.C.  1621(a) (2006). 



                                                  -13-	                                           6747
 


----------------------- Page 14-----------------------

Leisnoi contends that this statute prohibited the contingency fee contract and the superior 

court's actions ("execution or judgment to fulfill such a contract"22), making it error for 



the superior court to enter judgment on the fee award and to grant Merdes's motion for 



issuance of a writ of execution.   The preliminary question is whether the fee agreement, 



as interpreted by the Arbitration Panel, violated 43 U.S.C.  1621(a).                  Leisnoi did not 



raise this issue before the Arbitration Panel. 



                 1.      Arbitration award 



                 As Leisnoi points out, the superior court's 2010 order implied that the 



statute was applicable to the contract between Merdes and Leisnoi, as interpreted by the 



Arbitration Panel:      The superior court noted that "the Arbitration Award decision was 



clear that the monetary award was based on its estimate of 30% of the value of Leisnoi's 



land.    There   is   no   question   that   the   $721,000   [award   to   Merdes]   was   'based   on   a 

percentage fee of the value of all or some portion of the settlement granted.' "23               Merdes, 



on the other hand, argues that Leisnoi "successfully convinced the Arbitration Panel that 



the fee agreement is unenforceable . . . as written" and "[t]he fact that the Panel struck 



down the agreement for reasons other than one based on  1621(a) does not change the 



fact   that   Leisnoi   got   what    it  petitioned   for:  a  ruling   abrogating     the  agreement's 



percentage-fee term and an independently calculated monetary fee based on fairness and 



reasonableness."       Merdes contends that section 1621(a) does not take away the power 



of the Arbitration Panel or superior court to award reasonable attorney's fees, and claims 



that Leisnoi's position implies Merdes has already received sufficient payment. 



        22      Id. 



        23       The   superior   court   went   on   to   conclude   that,   although   the   statute   was 



applicable, it did not deprive the court of jurisdiction to decide the claim and therefore 

did not render the judgment void under Civil Rule 60(b)(4) or block the issuance of a 

writ of execution. 



                                                   -14-                                              6747
 


----------------------- Page 15-----------------------

                 Leisnoi     is  correct   that  the  Arbitration     Panel's    award    fell  within   the 



parameters prohibited by 43 U.S.C.  1621(a). And it is clear that the original agreement 



between Merdes and Leisnoi violated the statute: It was based on a percentage fee of the 



value of Leisnoi's ANCSA lands.              Contrary to Merdes's argument that the Arbitration 



Panel abrogated the contract's percentage fee award and "independently calculated [a] 



monetary fee," the Arbitration Panel itself stated that it had "specifically refused to void 



the contract . . . .   Rather . . . the arbitration award interpreted the contingent fee contract 



to not be a 30% ownership interest in land, but a security interest or lien against the land 



. . . ." In other words, the Arbitration Panel essentially enforced the contingency fee 



contract   -     making   what   it   viewed     as   a   minor   adjustment   to   avoid   the   problems 



associated   with   giving   Merdes   co-ownership   in   the   land   itself   -   and   thus   violated 



43 U.S.C.  1621(a).         (The adjustment made by the Arbitration Panel was arguably an 



independent violation of section 1621(a) to the extent it subjected ANCSA lands to a lien 



in order to fulfill the contingency fee contract.) 



                 2.      Entry of judgment 



                 Leisnoi     argues    that  the   1995    judgment     was    entered    in  violation    of 



43 U.S.C.   1621(a)'s prohibition on "judgment[s] to fulfill . . . contract[s] [for ANCSA 



lands]."  Merdes responds that Leisnoi failed to present this argument to the Arbitration 



Panel or superior court before the 1995 judgment was entered, effectively waiving it. 



Merdes also generally contends that the statute does not deprive states of their power to 



award reasonable attorney's fees. 



                 Whether the entry of judgment on the illegal contract constitutes a separate 



violation of 43 U.S.C.  1621(a) depends on whether the statute is viewed as creating a 



defense that must be raised by the parties or, alternatively, an independent obligation on 



the court's part to decline to enforce the illegal contingency fee contract regardless of 



what   the   parties   argue.   Leisnoi   takes   the   latter   position,   arguing   that   the   statute's 



                                                    -15-                                              6747
 


----------------------- Page 16-----------------------

characterization of contingency fee agreements as unenforceable reflects an intent to 



protect   Alaska   Natives   and   Native   corporations   from   the   effects   of   contingency   fee 



contracts "even if they fail[], by incompetence, neglect, mistake or otherwise, to raise the 



statute as a defense in an action to enforce such agreements." 



                We have held that courts have "no power, either in law or equity, to enforce 

an   agreement   which      directly   contravenes   a   legislative   enactment,"24    and    we  have 



affirmed the superior court's refusal to enforce certain contracts on these grounds in 

cases where the illegality of a contract was raised by one of the parties.25  While Alaska 



case law does not appear to address whether the superior court can or must decline to 



enforce illegal contracts where illegality is not raised, this issue has been addressed by 



other authorities.    The Restatement First of Contracts provides: 



                Illegality, if of a serious nature, need not be pleaded.            If it 

                appears in evidence the court of its own motion will deny 

                relief   to  the  plaintiff.  The     defendant    cannot    waive   the 

                defense if he wishes to do so.        Indeed, if the court suspects 

                illegality, it may examine witnesses and develop facts not 

                brought out by the parties, and thereby establish illegality that 

                precludes recovery by the plaintiff.[26] 



        24      Pavone v. Pavone , 860 P.2d 1228, 1231 (Alaska 1993) (citing Hemmen v. 



State, 710 P.2d 1001, 1003 (Alaska 1985)). 



        25      See, e.g., Jimerson v. Tetlin Native Corp. , 144 P.3d 470, 472-74 (Alaska 



2006) (affirming the superior court's refusal to enforce a settlement agreement that a 

Native corporation claimed was unenforceable under ANCSA 7(h)(1)(B)'s prohibition 

on alienation of ANCSA stock); Pavone , 860 P.2d at 1232 (affirming the superior court's 

holding that a father could not force his son to return a fishing permit because the son's 

oral     promise     to   do    so    contravened      the    permit    retransfer    restrictions     of 

AS 16.43.150(g)(2), where the son raised the illegality of the contract as a defense). 



        26      RESTATEMENT         (FIRST)    OF  CONTRACTS           600   cmt.   a  (1932).     The 



Restatement goes on: "If, however, the illegality is not serious, and neither public policy 

                                                                                        (continued...) 



                                                  -16-                                            6747
 


----------------------- Page 17-----------------------

Decisions      from    other   jurisdictions    have    similarly   stated   that  courts    may    have   an 



independent obligation not to enforce contracts that are contrary to statute or illegal on 

public   policy   grounds.27      In   some   cases,   courts   have   drawn   a   distinction   between 



illegality that is not apparent on the face of the contract (e.g., illegality arising from 



circumstances outside the four corners of the contract), which they have held must be 



pleaded   as   a   defense,   and   illegality   that   appears   in   the   contract,   which   need   not   be 

pleaded.28 



        26(...continued) 



nor statute clearly requires denial of relief, courts refuse to give effect to facts showing 

illegality unless those facts . . . are pleaded by the defendant." Id. ; see also 5 WILLISTON 

ON CONTRACTS  12:5 (4th ed. 2009). 



        27       See, e.g., Bovard v. Am. Horse Enters., Inc. , 247 Cal. Rptr. 340, 343 (Cal. 



App. 1988) ("Whenever a court becomes aware that a contract is illegal, it has a duty to 

refrain from entering an action to enforce the contract."); Russell v. Soldinger , 131 Cal. 

Rptr. 145, 150 (Cal. App. 1976) ("It is . . . well settled that if the question of illegality 

develops   during   the   course   of   a   trial,   a   court   must   consider   it   whether   pleaded   or 

not . . . ."); Quiring v. Quiring, 944 P.2d 695, 701-02 (Idaho 1997) ("[I]n Idaho a court 

may not only raise the issue of whether a contract is illegal sua sponte, but it has a duty 

to raise the issue of illegality, whether pled or otherwise, at any stage of the litigation.") 

(internal citations omitted); Jones v. Chavalier , 579 So.2d 1217, 1218 (La. App. 1991) 

(holding that "a contract which violates a rule of public order . . . is absolutely null, and 

unenforceable" and "[t]he absolute nullity of such a contract may be declared by the 

court on its own initiative") (citing LA . CIV . CODE ANN . art. 2030 (1985)). 



        28       See Washington Capitols Basketball Club, Inc. v. Barry, 419 F.2d 472, 477 



(9th Cir. 1969) ("As no illegality of the contract is disclosed by the plaintiff's complaint 

or the contract itself, illegality is an affirmative defense and defendants-appellants have 

the burden of pleading and proof."); Flynn Bros., Inc. v. First Med. Assoc. , 715 S.W.2d 

782, 784 (Tex. App. 1986) ("Where the illegality of the contract appears on the face of 

the contract or the illegality appears from the evidence necessary to prove the contract, 

an affirmative pleading of illegality is unnecessary and the question of illegality can be 

raised   at   any   stage   of   the   proceeding,   or   may   be   raised   by   the   appellate   court   sua 

                                                                                            (continued...) 



                                                    -17-                                               6747
 


----------------------- Page 18-----------------------

                Here, the illegality of the contingency fee agreement between Merdes and 



Leisnoi is "of a serious nature":         The agreement directly violates an important federal 



statute,   the   Alaska   Native   Claims   Settlement   Act,   jeopardizing   the   Native   property 



interests that 43 U.S.C.  1621(a) is intended to protect.            Under the standards used by 



most jurisdictions, the fact that Leisnoi did not plead illegality before the Arbitration 



Panel or the superior court in opposition to Merdes's 1995 motion to enforce the fee 



award does not amount to waiver of 43 U.S.C.  1621(a)'s prohibition against ANCSA 



attorney fee contingency contracts. Thus, the entry of judgment constituted a violation 



of 43 U.S.C.  1621(a).       While Merdes is correct that section 1621(a) does not deprive 



an   arbitration   panel   or   state   court   of   the   power   to   independently   award   reasonable 



attorney's fees, that is not what happened in this case; rather, by entering judgment 



pursuant to the arbitration award, the superior court enforced a contingency fee contract 



that is illegal under ANCSA. 



                3.      Writ of execution 



                This same prohibition on contingency fee contracts pertaining to ANCSA 



lands and the judgment thereon applied to the superior court's 2010 issuance of its writ 



of execution on the illegal judgment. The issuance of the writ of execution violated 



43 U.S.C.  1621(a) just as the 1995 entry of judgment did:               This statute provides both 



        28(...continued) 



sponte."); 5 WILLISTON ON CONTRACTS   12:5 (4th ed. 2009). The First Restatement of 

Contracts   provides   the   following   illustration   of   when   an   illegality   must   be   pleaded 

because it is not apparent on the face of the contract: "A and B enter into a written 

bargain for the erection of a building.         The bargain is legal on its face, but it is orally 

agreed   that   B,   the   builder,   may   use   for   a   small   portion   of   the   work   materials   not 

permitted by the building law. In an action on the contract, after the erection of the 

building, the illegality cannot be proved unless it has been pleaded."                 RESTATEMENT 

(FIRST) OF  CONTRACTS  600 cmt. a, illus. 1 (1932). 



                                                  -18-                                             6747
 


----------------------- Page 19-----------------------

that   "[n]one    .   .   .   of   the  lands  granted  by  [ANCSA]   to  the  Regional    and   Village 



Corporations and to Native groups . . . shall be subject to any contract which is based on 



a percentage fee of the value of . . . some portion of the settlement granted by this Act" 



and "[a]ny such contract shall not be enforceable . . . [and] shall not be subject to lien, 



execution or judgment to fulfill such a contract."           (Emphasis added.)29 



                Just as it was error for the Arbitration Panel to make its fee award and for 



the superior court to enter judgment on that award in 1995, it was error for the superior 



court in 2010 to issue an order purporting to authorize Merdes to execute on the illegal 



judgment.     We therefore reverse the court's order issuing the writ of execution. 



        C.	     Leisnoi Was Not Entitled To Relief From Judgment Under Civil Rule 

                60(b). 



                Because we hold that the writ of execution was illegally issued, Leisnoi is 



entitled to recover the balance it paid on the judgment after the writ of execution was 



issued.  However, our discussion does not end here.  Leisnoi argues that it is entitled to 



relief from the 1995 judgment under Civil Rule 60(b), which would entitle Leisnoi to 



recover all payments made to Merdes following the 1995 entry of judgment.                     We must 



therefore determine whether Leisnoi is entitled to relief under Civil Rule 60(b). 



                Civil Rule 60(b) provides: 



                On motion and upon such terms as are just, the court may 

                relieve a party or a party's legal representative from a final 

                judgment, order, or proceeding for the following reasons:  (1) 

                mistake,     inadvertence,     surprise   or  excusable    neglect;   (2) 

                newly discovered evidence which by due diligence could not 

                have been discovered in time to move for a new trial under 

                Rule     59(b);   (3)  fraud   .  .  .  ,  misrepresentation,   or  other 

                misconduct of an adverse party; (4) the judgment is void; 



        29      Leisnoi raised illegality in opposition to Merdes's motion for issuance of 



a writ of execution; Merdes does not argue that Leisnoi waived this argument. 



                                                  -19-	                                              6747 


----------------------- Page 20-----------------------

                 (5) the judgment has been satisfied, released, or discharged, 

                 or a prior judgment upon which it is based has been reversed 

                 or   otherwise   vacated,   or   it   is   no   longer   equitable   that   the 

                 judgment   should   have   prospective   application;   or   (6)   any 

                 other    reason    justifying    relief  from    the  operation     of  the 

                 judgment. 



                 Leisnoi filed a Civil Rule 60(b) motion in the superior court, arguing that 



it   was   entitled   to  relief  pursuant     to  Rule   60(b)(4)    or  60(b)(6)    because:     (1)   the 



circumstances        surrounding      the   1995    entry   of   judgment     had    changed     such    that 



enforcement of the judgment was no longer just or equitable; and (2) the contingency fee 



contract and the entry of judgment violated 43 U.S.C.  1621(a), rendering both void. 



Leisnoi   also   made   several   arguments   as   to   why   it   was   not   equitable   to   enforce   the 



judgment      because     the  judgment      should   have    been   "considered      satisfied   with   the 



payments made on the obligation to date," effectively arguing the superior court should 



vacate the judgment under Rule 60(b)(5).              The superior court denied the motion. 



                 Leisnoi     argues    on   appeal    that   the   Arbitration    Panel's     violation    of 



43 U.S.C.  1621(a) calls for relief under Rule 60(b)(4) or, alternatively, 60(b)(6), and 



that the unanticipated duration of the Stratman litigation and Leisnoi's resulting inability 



to generate income from its property justify relief under Rule 60(b)(5). Merdes responds 



that, if Leisnoi had an objection to the judgment against it, there were a number of 



mechanisms by which it could have directly attacked Merdes's judgment at various 



stages of the proceedings (e.g., by moving to vacate the Arbitration Panel's award, by 



opposing Merdes's motion for judgment on the award, or by moving to reconsider the 



judgment   in   light   of   43   U.S.C.      1621(a)),   rather   than   waiting   15   years   to   bring   a 



collateral Rule 60(b) motion.           Under the circumstances, Merdes contends, Leisnoi's 



Rule 60(b) challenge to the judgment against it was an improper and untimely appeal on 



                                                    -20-                                              6747
 


----------------------- Page 21-----------------------

the merits, at odds with this court's emphasis on judicial economy and procedures under 



the Appellate Rules. 



                Rule 60(b) provides that a motion for relief from a judgment "shall be made 



within a reasonable time, and for clauses (1), (2), and (3) not more than one year after 



date of notice of the judgment or orders."           Leisnoi seeks relief from judgment under 



Rule 60(b)(4), (5), and (6) only; thus, the one-year time limit does not apply and the time 



to file the 60(b) motion need only be "reasonable," at least with respect to clauses (5) and 



(6). 



                1.      Leisnoi was not entitled to relief under Rule 60(b)(4). 



                Rule 60(b)(4) provides relief from a void judgment.              We have held that 



"[t]his rule of relief applies without time limitations because a void judgment cannot gain 

validity simply by the passage of time,"30  and "even the requirement that the motion be 



made within a reasonable time, 'which seems literally to apply to motions under Rule 

60(b)(4), cannot be enforced   with regard to this class of motion.' "31               Based on this 



language, we hold Leisnoi's Rule 60(b)(4) motion, at least conceptually, is not untimely. 



The critical question is whether the superior court's 1995 judgment issued in violation 



of 43 U.S.C.  1621(a) was void - and thus amenable to a Rule 60(b)(4) challenge - 



or merely voidable, and not subject to such a challenge. 



                Leisnoi     argues    that   its  contract    with    Merdes     was    illegal  under 



43 U.S.C.  1621(a) and therefore void, which in turn renders the judgment entered on 



        30      State,   Dep't   of   Revenue,   Child   Support   Enforcement   Div.   v.   Maxwell, 



6 P.3d 733, 736 (Alaska 2000). 



        31      Kennecorp   Mortg.   &   Equities,   Inc.   v.   First   Nat'l   Bank   of   Fairbanks , 



685 P.2d 1232, 1236 (Alaska 1984) (quoting 11 C. WRIGHT  & A. MILLER , FEDERAL 

PRACTICE      AND   PROCEDURE          2862    at  197  (1973));   see   also   Burrell   v.  Burrell, 

696 P.2d 157, 163 n.11 (Alaska 1984). 



                                                 -21-                                            6747
 


----------------------- Page 22-----------------------

the contract void and subject to vacation under Rule 60(b)(4). Leisnoi also contends that, 



under section 1621(a), "the actual entry of judgment was itself a violation of federal law 



by    the   trial  court."     Leisnoi     acknowledges        that   this  case   differs   from     typical 



Rule 60(b)(4) cases "in which relief from judgment is appropriate because it is void for 



lack of jurisdiction."  While conceding that the Arbitration Panel and the superior court 



had subject matter jurisdiction over the fee dispute, Leisnoi nonetheless claims that those 



tribunals'      lack    of   legal   authority     to   enforce     the    fee   contract     (because      of 



43    U.S.C.      1621(a))    creates    a  situation   analogous     to  one   where    the   court   lacks 



jurisdiction.     Leisnoi   also    argues   that   the   trial   court   "usurped   power"   in   entering 



judgment against Leisnoi. 



                 Merdes responds that Rule 60(b)(4) applies only where the trial court "lacks 



fundamental jurisdiction" and "usurps its statutory authority to . . . render a decision in 



the first instance" - which Merdes contends did not occur here. Merdes argues that we 



and   other   courts   have   not   found   such   a   lack   of   jurisdiction   even   where   there   were 



significant irregularities at the trial court level or even   where the trial court acted in 



violation of federal statute. 



                 The superior court in this case concluded that 43 U.S.C.  1621(a) does not 



"deprive[] a state trial court of subject matter jurisdiction to enter judgment [a]ffecting 



title to ANCSA grant revenues or real property"; the court based this conclusion on the 



fact   that   "[t]he   Alaska   Supreme   Court   has   previously   exercised   authority   to   decide 



whether   ANCSA   exemptions   apply   to   particular   cases   and   has   thus   vindicated   this 



court's jurisdiction to decide such a claim." 



                 We have held that a judgment is void only where the court that issued it 



                 had no jurisdiction to subject the parties or the subject matter 

                 to its control, or where the defendant was not given proper 

                 notice of the action and opportunity to be heard, or where the 

                 judgment was not rendered by a duly constituted court with 



                                                    -22-                                               6747
 


----------------------- Page 23-----------------------

                 competency   to   render   it,   or   where   there   was   a   failure   to 

                 comply with such requirements as are necessary for the valid 

                 exercise of power by the court.[32] 



The validity of a Rule 60(b)(4) motion is strictly a question of law.33               In the interests of 



finality, the concept of void judgments is narrowly construed.34 



                 A   judgment   is   not   void   merely   because   it   is   erroneous.35 As   the   U.S. 



Supreme       Court   recently    observed,   "[f]ederal   courts   considering       [identical   federal] 



Rule 60(b)(4) motions that assert a judgment is void because of a jurisdictional defect 



generally   have   reserved   relief   only   for   the   exceptional   case   in   which   the   court   that 

rendered judgment lacked even an arguable basis for jurisdiction."36                   The First Circuit 



characterized the distinction between "total want of jurisdiction" and "an error in the 

exercise of jurisdiction" as "essential"; only the former will render a judgment void.37 



        32       Holt    v.  Powell,   420    P.2d   468,   471   (Alaska    1966)    (internal   citations 



omitted). 



        33       Aguchak v. Montgomery   Ward Co., Inc. , 520 P.2d 1352, 1354 (Alaska 



 1974). 



        34       United States v. Berenguer, 821 F.2d 19, 22 (1st Cir. 1987); see 12 JAMES 



MOORE , ET AL ., MOORE 'S FEDERAL PRACTICE  60.44, at 60-149 (3d ed. 2003). 



        35       See  DeNardo   v.   State ,   740   P.2d  453,   457   (Alaska   1987);  see   also   11 



CHARLES ALAN WRIGHT , ARTHUR R. MILLER & MARY KAY KANE , FEDERAL PRACTICE 

AND PROCEDURE  2862 (2d ed. 1995). 



        36       United Student Aid Funds, Inc. v. Espinosa, 130 S. Ct. 1367, 1377 (2010) 



(internal quotation marks omitted). 



        37       United States v. Boch Oldsmobile, Inc., 909 F.2d 657, 661-62 (1st Cir. 



 1990) (quoting Lubben v. Selective Serv. Sys. Local Bd. No. 27, 453 F.2d 645, 649 (1st 

Cir.   1972)).    Several   federal   courts   have   considered   whether   a   court   is   divested   of 

jurisdiction pursuant to Federal Rule of Civil Procedure 60(b)(4) when it acts in violation 

                                                                                           (continued...) 



                                                   -23-                                              6747
 


----------------------- Page 24-----------------------

                We conclude that although entered in error, the 1995 judgment was not 



void for lack of subject matter jurisdiction. The superior court is the trial court of general 

jurisdiction, with original jurisdiction over civil matters. 38       It has jurisdiction to confirm 



an arbitration award and enter judgment pursuant to AS 09.43.110 and AS 09.43.140. 



Title 43 U.S.C.  1621(a) does not purport to limit this authority.             Unquestionably, the 



superior     court   initially  had   subject   matter   jurisdiction    to  determine    whether     the 



arbitration award was valid.       Leisnoi's argument can succeed only if the superior court 



was somehow divested of jurisdiction when it erroneously entered   judgment on the 



award.    But as we have explained, an erroneous judgment is not tantamount to a void 



judgment; the superior court's entry of judgment, while erroneous, did not render the 



        37(...continued) 



of governing law.      In V.T.A., Inc. v. Airco, Inc., the Tenth Circuit analyzed whether the 

district court had jurisdiction to enter a consent decree securing monopoly rights for a 

party prior to the issuance of a valid   patent,   where state and federal law potentially 

prohibited such issuance.        597 F.2d 220 (10th Cir. 1979).          The court concluded that 

"[e]ven if the parties' consent decree does technically run afoul of federal patent law 

principles, the problem would be one of relief from an erroneous judgment, not a void 

one. The district court had requisite jurisdiction over the parties and over the subject 

matter."    Id. at 226.   Similarly, in  United States v. Boch Oldsmobile, the First Circuit 

concluded that even if a consent decree was entered in violation of the Federal Trade 

Commission Act, the district court retained power to enter judgment: "Consent decrees 

that run afoul of the applicable statutes lead to an erroneous judgment, not to a void one." 

Boch Oldsmobile , 909 F.2d at 662.  See also  Walling v. Miller, 138 F.2d 629, 631 (8th 

Cir. 1943) (holding that, even if suit was brought by someone not authorized to do so 

under the Fair Labor Standards Act, errors in the resulting court order "did not go to the 

jurisdiction or power of the court but to the merits only" and thus did not render the 

judgment   void);   M OORE ,  supra   note   34,      60.44,   at   60-150   ("[I]f   a   federal   court 

misinterprets a statute and, in the process, enjoins conduct that is actually legal, that does 

not render the judgment void."). 



        38      AS 22.10.020. 



                                                  -24-                                            6747
 


----------------------- Page 25-----------------------

judgment void or divest the court of jurisdiction. 39  Merdes properly notes that were we 



to adopt a different rule, "[v]irtually any judgment could be collaterally attacked as void" 



merely because a trial court issued a ruling in violation of law. 



                 Leisnoi     also   argues    that  the  trial  court   "usurped     power"     in  entering 



judgment against Leisnoi.          The "usurpation of power" standard   for voidness largely 



mirrors   the   subject   matter   jurisdiction   standard:       It   is   to   be   "rarely   and   sparingly 



employed," with application "limited to cases which involve an arrogation of authority 

which the court clearly lacks."40        "In order to protect the finality of judgments, care must 



be taken to distinguish between true instances of usurpation of power, and instances 

where the court has merely committed prejudicial error."41 



                 Our conclusion is the same under the "usurpation of power" standard as 



under our subject matter jurisdiction analysis:              The superior court's judgment, while 



         39      We recognize that our holding potentially conflicts with our decision in 



Cline v. Cline, where we held that an order awarding 62% of a military spouse's pension 

to   a   non-military   spouse   was   void   for   lack   of   subject   matter   jurisdiction   because   it 

violated   the   cap   on   awards   set   by   federal   statute.   90   P.3d   147,   156   (Alaska   2004). 

Although we seriously question whether  Cline was correctly decided, we decline to 

revisit its merits today because the parties did not fully brief the case.  (Merdes mentions 

Cline in a footnote, and Leisnoi does not brief it at all.) At least one court has disagreed 

with our analysis in Cline.  Coon v. Coon, 614 S.E.2d 616, 617-18 (S.C. 2005) (holding 

that the federal statutory limitation "supplants state domestic-relations law pursuant to 

the   Supremacy   Clause   of   the   United   States   Constitution,   but   it   does   not   pre-empt 

state-court subject-matter jurisdiction") (footnotes omitted). 



         40      Kenai   Peninsula   Borough   v.   English   Bay   Vill.   Corp. ,   781   P.2d   6,   10 



(Alaska 1989) (finding no usurpation of power where the superior court issued a default 

judgment in the absence of a prior valid entry of default and without a valid application 

for default or for a default judgment). 



         41      Id. 



                                                    -25-                                               6747
 


----------------------- Page 26-----------------------

entered in error, did not amount to an arrogation of authority.  The circumstances do not 



justify disturbing a judgment that has stood for over 17 years. 



                 The superior court correctly ruled that Leisnoi was not entitled to relief 



under Rule 60(b)(4). 



                 2.      Leisnoi was not entitled to relief under Rule 60(b)(5) or (b)(6). 



                 Unlike      Rule    60(b)(4),     which     applies    without     time    limitations,     a 



Rule 60(b)(5) or 60(b)(6) motion must be made within a "reasonable time."                         We have 



concluded that "as a matter of law, a period of almost seven and one-half years is not a 



reasonable time within which to file a motion for relief under section (b)(5-6) [of Civil 

Rule   60]."42     This   holding     is  consistent   with   our   concern   that   Rule   60(b)   not   be 



considered   "a   substitute   for   a   party   failing   to   file   a   timely   appeal"   or   a   means   of 

"allow[ing] relitigation of issues that have been resolved by the judgment."43 



                 The   superior   court   found   that   the   reasonable   time   limitation   was   not 



satisfied with regard to Rule 60(b)(6) because Leisnoi failed to offer any excuse "for not 



seeking to vacate the judgment for fourteen years."  We conclude that the superior court 



did not abuse its discretion in denying Leisnoi relief.  Leisnoi did not challenge the 1995 



judgment on the basis of Rule 60(b)(6) until filing its May 2009 Rule 60(b) motion - 



a period of over 14 years.        Leisnoi's Rule 60(b)(6) motion was untimely, and we need 



not consider whether relief would otherwise be justified under this clause. 



                 The superior court did not address the timeliness of Leisnoi's Rule 60(b)(5) 



motion but instead ruled on the merits, essentially concluding that the equities did not 



compel granting Rule 60(b)(5) relief.  Leisnoi contends that it is entitled to relief under 



Rule   60(b)(5)   because   "the   fundamental   assumptions   made   by   the   arbitration   panel 



         42      Burrell v. Burrell , 696 P.2d 157, 163 (Alaska 1984). 



         43      Id. 



                                                    -26-                                                 6747 


----------------------- Page 27-----------------------

and   .   .   .   the   trial   court   have   proven   to   be   so   wrong   as   to   have   made   the   continued 



enforcement of the judgment unconscionable."                Specifically, Leisnoi points to the fact 



that ongoing litigation with Stratman and the related cloud on title to the corporation's 



lands prevented it from generating significant income from its property, even as interest 



continued to accrue on the judgment. It contends that these circumstances made the land 



less   valuable,    such    that  "the   actual   value   received    by   Leisnoi    has   proven    to  be 



unconscionably less than that awarded by the arbitration panel."                 Merdes responds that 



Rule     60(b)(5)    does   not  apply    to  money     judgments     because     they  are   not  deemed 



prospective. The superior court agreed with Merdes, noting that while "there is no doubt 



that Leisnoi had wished for a swifter outcome in its favor," Merdes accepted a case with 



extremely high risks such that "[t]he interest rate . . . imposed by the Arbitration Award 



. . . is not extraordinary or outrageous" so as to justify relief under Rule 60(b)(5). 



                 We have held that "clause (5) is typically invoked to obtain relief from 



declaratory      judgments       and   injunctions      whose     continued     enforcement       becomes 

inequitable. . . . [C]lause (5) is applicable to any judgment having prospective effect."44 



We have also explained that Rule 60(b)(5) "by definition . . . cannot apply to a judgment 

that   simply    offers   a  present    remedy     for  a  past  wrong."45      In  Ferguson      v.  State, 



Department of Revenue , we illustrated this difference in the child-support context, noting 



that   "[a]   paternity   judgment     has   prospective     aspects    that  can   be  alleviated    under 



Rule 60(b)(5), because a paternity judgment gives rise to prospective duties, including 



a duty to pay child support in the future.  But each child support payment, as it becomes 



        44       Farrell ex rel. Farrell v. Dome Labs. , 650 P.2d 380, 384 (Alaska 1982). 



        45       Bauman v. Day , 892 P.2d 817, 829 (Alaska 1995). 



                                                    -27-                                                6747 


----------------------- Page 28-----------------------

due,   is   a   final   judgment   in   its   own   right."46 Accordingly,   we   affirmed   the   superior 



court's judgment, which alleviated only the prospective effects of a vacated paternity 

judgment. 47    Under this analysis, the amounts already paid by Leisnoi prior to its final 



payment on the judgment were in response to a past rather than prospective judgment, 



and   therefore   not   subject   to   relief   under   Rule   60(b)(5). Even   if   Leisnoi   still   had 



installments on the judgment outstanding, the judgment could not be considered to have 



"prospective effect."        The amount awarded by the Arbitration Panel and entered   as 



judgment by the superior court offered a "remedy for a past wrong," not an ongoing or 



recurring     remedy;     the  arrangement      for  payment     in  installments     was   merely    an 

accommodation of Leisnoi's financial situation and did not create prospective duties.48 



                For the foregoing reasons, we conclude that the superior court did not abuse 



its discretion in denying Leisnoi relief under Rule 60(b)(5) or 60(b)(6). 



V.      CONCLUSION 



                To    summarize,     Leisnoi    did  not  waive    its  right  to  appeal  because    its 



$643,760 payment to Merdes was involuntarily made in response to the 2010 issuance 



of the writ of execution.       Leisnoi's contingency fee agreement with Merdes violated 



ANCSA's prohibition against contingency fee agreements, as did the Arbitration Panel's 



fee award, the superior court's 1995 entry of judgment, and the 2010 writ of execution. 



        46      977 P.2d 95, 100 (Alaska 1999). 



        47      Id. 



        48      See Stokors S.A. v. Morrison , 147 F.3d 759, 762 (8th Cir. 1998) (" 'That 



a court's action has continuing consequences . . . does not necessarily mean that it has 

prospective      application   for  the  purposes   of   Rule   60(b)(5).    The    standard    used   in 

determining whether a judgment has prospective application is whether it is executory 

or involves the supervision of changing conduct or conditions.' " (quoting Maraziti v. 

Thorpe, 52 F.3d 252, 254 (9th Cir. 1995))). 



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----------------------- Page 29-----------------------

The 1995 entry of judgment was voidable, not void, and Leisnoi was not entitled to relief 



under   Civil   Rule   60(b)(4),   60(b)(5),   or   60(b)(6).  Leisnoi   is   entitled   to   recover   the 



balance that it paid after the writ of execution was unlawfully issued, but it is not entitled 



to recover payments made prior to the issuance of the writ of execution.   The amount to 



be repaid should include interest.        Merdes may seek to recover any fees it believes are 



owed under a theory of quantum meruit. 



                The superior court's order issuing a writ of execution on the 1995 judgment 



is REVERSED.   The superior court's order denying Leisnoi's Civil Rule 60(b) motion 



to set aside the 1995 judgment is AFFIRMED. 



                                                  -29-                                            6747
 

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