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Guttchen v. Gabriel (6/14/2002) sp-5581
Guttchen v. Gabriel (6/14/2002) sp-5581
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
PETER and BAERBEL GUTTCHEN, )
) Supreme Court No. S-9648
Appellants, )
) Superior Court No.
v. ) 3KO-85-563 CI
)
GREGORY and EDITHANNE ) O P I N I O N
GABRIEL, )
) [No. 5581 - June 14, 2002]
Appellees. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Kodiak,
Milton M. Souter, Judge.
Appearances: Steve Gray, Steven P. Gray,
P.C., Kodiak, for Appellants. Michael D.
White and Michael A. Grisham, Patton Boggs,
LLP, Anchorage, for Appellees.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
BRYNER, Justice.
I. INTRODUCTION
Peter and Baerbel Guttchen sought leave under AS
09.35.020 to execute on a judgment lien more than five years
after entry of the judgment; the lien pertained to a parcel of
land that the judgment awarded to Gregory and Edithanne Gabriel
and secured the judgment's award of costs and attorney's fees in
favor of the Guttchens. The superior court denied the Guttchens'
motion for execution, ruling that the Gabriels' intervening
bankruptcy had rendered the lien invalid, since, in the court's
words, "[o]nce the valid underlying judgment is discharged in
bankruptcy, it cuts the legs out from under the lien." We reverse
and remand with directions to grant the Guttchens' motion,
holding that the superior court erred in dismembering the
Guttchens' lien and that undisputed evidence satisfies AS
09.35.020's demand for a "just and sufficient reason" to allow
execution.1
II. FACTS AND PROCEEDINGS
This case began as a dispute between three parties -
Baerbel and Peter Guttchen, Edithanne and Gregory Gabriel, and
Joseph Brodman - over the ownership of a small, remote parcel of
land on Raspberry Island, near Kodiak. The litigation that
ensued eventually led to two unpublished decisions from this
court.2 In the first, we summarized the background facts as
follows:
Joseph Brodman owned 4.8 acres of
land on Raspberry Island. He agreed to
give 1.5 acres of the parcel to Gregory
Gabriel, in exchange for electrical
supplies Gabriel had given him. Brodman
executed a quitclaim deed, intended as
security only, in favor of [the]
Gabriels, conveying to them an undivided
one-half interest in the 4.8 acre
parcel. Prior to delivering the
quitclaim to the Gabriels, Brodman
executed a lease to the Guttchens which,
on its face, conveyed the entire 4.8
acres. Brodman and the Guttchens also
executed, but did not record, a separate
agreement acknowledging that the
Gabriels had been given the 1.5 acres.
Mr. Gabriel discovered the recorded
Guttchen lease. Difficulties among the
three parties ensued, culminating in
this lawsuit.
The jury trial resulted in verdicts
for Brodman against the Gabriels, the
Guttchens against the Gabriels, and the
Guttchens against Brodman. The jury
awarded Brodman and the Guttchens
considerable punitive damages from the
Gabriels. The court quieted title[ ] in
Brodman, subject to the Gabriels' "right
of possession" of the 1.5 acres. . .
.[3]
Our first decision vacated the award of punitive
damages, amended the judgment to grant the Gabriels a fee
interest in 1.5 acres, and directed the parties to "have the
property surveyed and to establish boundaries for the two
parcels"; we recognized, however, that the Kodiak Island Borough
might refuse to allow the property to be subdivided.4 We also
vacated the original award of prevailing-party attorney's fees,
leaving it to the trial court to reconsider the issue on remand.5
On remand, the superior court modified the judgment as
directed and, by a judgment entered July 5, 1989, awarded the
Guttchens $7,526.02 in attorney's fees and costs against the
Gabriels. The judgment specifically directed the Gabriels and
Brodman to survey the parcel and establish boundaries within
sixty days. The Guttchens recorded the judgment in the Kodiak
Recording District office on July 17, 1989, perfecting their lien
on the Gabriels' 1.5 acre parcel.
The Gabriels appealed the superior court's award of
attorney's fees. While the appeal was still pending, they filed
for personal bankruptcy; the bankruptcy action stayed their
appeal. The United States Bankruptcy Court for the District of
Alaska discharged the Gabriels' debts on September 24, 1990.
Thereafter, appellate proceedings resumed, and, on July 17, 1991,
we issued the second unpublished decision in the case, affirming
the attorney's fees awarded on remand.6
The Guttchens took no immediate action to execute their
judgment lien after we affirmed their attorney's fee award.
Similarly, the Gabriels took no immediate steps to survey the
Brodman property in order to establish the boundaries of their
1.5 acre parcel.
On May 10, 1994, the Gabriels quitclaimed their
property interest to their children, Gregory Gabriel Jr. and
Brian Gabriel. The Guttchens - who had previously acquired
Brodman's interest - offered to buy the children's interest;
their offer was rejected. In 1999 Gregory Jr. requested the
Kodiak Island Borough to grant a variance that would enable him
to subdivide the Brodman property; the borough denied the request
on June 17, 1999, and Gregory Jr. appealed to the superior court.
On August 3, 1999, after learning of Gregory Jr.'s efforts to
obtain the variance, the Guttchens filed their motion for leave
to execute after five years. Following oral argument, the
superior court denied the motion, ruling that under common law
the Guttchens' judgment lien did not survive the bankruptcy
court's discharge of the Gabriels' underlying debt.
The Guttchens appeal.
III. ANALYSIS
A. The Parties' Arguments
The Guttchens argue that the superior court erroneously
concluded that the Gabriels' bankruptcy discharge extinguished
their judgment lien. While acknowledging that the superior court
never considered whether they had established good cause to
execute, the Guttchens urge us to direct the superior court to
grant their motion for leave to execute because, they contend,
the undisputed record establishes good cause for leave to execute
as a matter of law. In response, the Gabriels tacitly concede
that the superior court applied the wrong legal standard with
respect to the judgment lien's survival, but nevertheless urge us
to affirm because, in the Gabriels' view, the Guttchens failed as
a matter of law to show good cause for leave to execute late.
B. Standard of Review
Whether the superior court applied an incorrect legal
standard is a question of law that we review using our
independent judgment.7 We may apply a legal doctrine to
undisputed facts without giving deference to the superior court.8
C. The Superior Court Applied the Wrong Standard in Its
Decision.
The superior court ruled from the bench at oral
argument that, under common law doctrine, the discharge of the
underlying debt in the Gabriels' bankruptcy effectively nullified
the Guttchens' judgment lien:
I have substantial doubt that the
judgment and lien can have a separate
existence. The case law that I'm familiar
with from the common law is to the effect
that in order for the judgment lien to exist,
there has to be a valid underlying judgment.
Once the valid underlying judgment is
discharged in bankruptcy, it cuts the legs
out from under the lien. The lien cannot
have a separate existence. And I am prepared
to hold to that effect at this time, but I
will give counsel a chance to argue the
point.
Accordingly, the court denied the Guttchens' motion to execute
without further considering its merits. But the superior court
erred concerning the effect of the bankruptcy discharge.
The United States Supreme Court has held that a
bankruptcy discharge does not extinguish a valid lien on real
property.9 "[A] bankruptcy discharge extinguishes only one mode
of enforcing a claim - namely, an action against the debtor in
personam - while leaving intact another - namely, an action
against the debtor in rem."10 While the Supreme Court's holding
involved a mortgage lien,11 numerous other courts have held that
judgment liens similarly survive bankruptcy and are enforceable
in rem.12 The In re Hermansen court held, for example, that
"[g]enerally, valid, perfected judicial liens which precede
bankruptcy survive and are enforceable after bankruptcy. . . .
The bankruptcy discharge does not prevent post-petition
enforcement of valid liens. The secured creditor may proceed to
enforce the lien, as an in rem action, and is not
barred . . . ."13
Accordingly, it was error to deny the Guttchens' motion
for leave to execute on the ground that the Gabriels' bankruptcy
extinguished both the underlying debt and the lien.
D. The Record Establishes Fair and Just Reasons to Allow
Execution.
Because it relied on the assumption that the Guttchens'
lien could not survive without its underlying debt, the superior
court did not address the merits of their motion for leave to
execute late. Alaska Statutes 09.35.020 establishes the
standard:
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.[14]
In State, Department of Revenue, Child Support
Enforcement Division, ex rel. Inman v. Dean, we construed this
statute to require a showing of "good cause" for delay in
execution.15 Although we noted in Dean that "administrative
efforts to collect delinquent support payments" might show good
cause, as might "[e]vidence of previous attempts to execute,"16
we have not otherwise defined what would suffice to meet the
statutory requirement of "just and sufficient reasons for the
failure to obtain the writ of execution within five years."17
Here, both parties urge us to sustain their respective
positions on the issue of "just and sufficient reasons" as a
matter of law. Although the issue typically involves a factual
component and is therefore usually consigned to the superior
court's discretion,18 both parties in this case had the
opportunity to present their positions to the superior court in
their memoranda and affidavits, neither party requested an
evidentiary hearing before the superior court, and the critical
facts surrounding the issue are undisputed. Given these
circumstances, we find no impediment to deciding the issue of
just and sufficient reasons for late execution as a matter of
law.19
The undisputed facts in the record show the following:
(1) the 1989 attorney's fees award and recorded judgment
established a lien against any interest the Gabriels held in the
Raspberry Island property; (2) the Guttchens perfected their lien
before the Gabriels filed for bankruptcy in March 1990; (3) the
bankruptcy discharged the Gabriels' personal liability so that
the only method of enforcing the judgment was the judicial lien
on the Raspberry Island property; (4) the Gabriels' property
interest in the Raspberry Island parcel could only be perfected
by surveying the property, establishing its boundaries, and
obtaining a variance from the Kodiak Island Borough to allow
subdivision;20 (5) despite a provision in the superior court's
July 5, 1989, judgment requiring the Gabriels to survey and
establish their boundaries within sixty days, neither the
Gabriels nor their successors - their children - applied for a
variance until 1999; (6) in response, the Guttchens filed a
motion for leave to execute on their lien.21
We find that these circumstances establish good cause
for late execution as a matter of law: the Raspberry Island
property was the only property of the Gabriels subject to
execution, the Gabriels controlled the process of subdividing the
property, and they did not timely act upon the superior court's
order to apply for a variance in order to subdivide. When Greg
Gabriel Jr. applied for a variance in 1999, the Guttchens
promptly filed their motion for leave to execute. Because the
Gabriels controlled the subdivision process, discharged the
underlying debt in bankruptcy, and failed to act to perfect their
own interest in the 1.5 acre parcel for ten years, the Guttchens
had compelling reason to delay execution until Gregory Jr.
ultimately attempted to subdivide the property.
Moreover, the Gabriels failed to produce any evidence
below suggesting that a delayed execution might actually
prejudice them: their personal debt had long been discharged,
they had quitclaimed the parcel to their children in 1994, they
no longer claimed any personal interest in it, and they offered
no factual basis to establish standing to assert any potential
prejudice to their successors in interest.22
On this record, then, we hold as a matter of law that
denial of the Guttchens' motion for leave to execute would be an
abuse of discretion.
IV. CONCLUSION
We VACATE the superior court's judgment and REMAND with
directions to enter a judgment granting the motion for leave to
execute late.
_______________________________
1 The Guttchens have additionally challenged the superior
court's award of prevailing-party attorney's fees. Our decision
reversing the superior court's judgment on the merits moots this
issue.
2 See Gabriel v. Guttchen, Mem. Op. & J. No. 434 (Alaska,
January 25, 1989) (Gabriel I); Gabriel v. Brodman, Mem. Op. & J.
No. 561 (Alaska, July 17, 1991) (Gabriel II).
M m. Op. & J. No. 561 at 2-3.. 434 at 2.
4 Id. at 3-4.
5 Id. at 4.
o e, 817 P.2d 453, 456-57 (Alaska 1991).8Foss
7 Lowe v. Lowe, 817 P.2d 453, 456-57 (Alaska 1991).
9 Johnson v. Home State Bank, 501 U.S. 78, 82-84 (1991).
10 Id. at 84.
11 Id. at 80-81.
12 See, e.g., In re Hermansen, 84 B.R. 729, 733 (Bankr. D.
Colo. 1988); Songer v. Cooney, 264 Cal. Rptr. 1, 2-4 (Cal. App.
1989) (noting that judgment is enforceable absent bankruptcy
court order avoiding lien in its entirety); First Nat'l Bank in
Toledo v. Adkins, 650 N.E.2d 277, 279-80 (Ill. App. 1995)
(allowing judgment lien to be revived pursuant to statute after
statute of limitations had run despite intervening bankruptcy
discharge of personal liability on judgment lien); Pimentel v.
White, 720 P.2d 758, 760 (Or. App. 1986); Hayden v. American
Honda Motor Co., 835 S.W.2d 656, 660 (Tex. App. 1992).
13 84 B.R. at 733 (citation omitted).
14 Alaska Civil Rule 69(d) implements this statute by
setting forth procedures for executing more than five years after
judgment:
(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.
(2) Upon filing such motion and
affidavit the judgment creditor shall
cause a summons to be served on the
judgment debtor . . . .
(3) The judgment debtor . . . may file
and serve a verified answer to such
motion . . . alleging any defense to
such motion which may exist. . . .
(4) The order shall specify the amount
for which execution is to issue . . . .
(5) At the time of filing the motion
for leave to issue execution or at any
time thereafter before the final order
is entered, the judgment creditor may
cause the property of the judgment
debtor to be attached and held during
the time said motion is pending and
until the final order is entered. . . .
In the event that the court shall order
that execution be issued, it shall
further order that any property of the
judgment debtor attached hereunder shall
be sold for the satisfaction of such
execution . . . .
15 902 P.2d 1321, 1324 (Alaska 1995).
16 Id. at 1325.
17 AS 09.35.020.
18 See State, Dep't of Revenue v. Dean, 902 P.2d at 1325-
26 (child support); see also Perry v. Newkirk, 871 P.2d 1150,
1156 (Alaska 1994) (same); Jones v. Cent. Peninsula Gen. Hosp.,
779 P.2d 783, 789 (Alaska 1989) (motion for summary judgment).
19 Foss Alaska Line, Inc. v. Northland Servs., Inc., 724
P.2d 523, 526 (Alaska 1986) (stating that we may apply a legal
doctrine to undisputed facts without deferring to the trial
court). In Dean, we did find it necessary to remand for the
superior court to determine the existence of a fair and just
reason. 902 P.2d at 1325-26. But unlike the parties in the
present case, the parties there had not had an opportunity to
litigate the issue before the superior court. Accordingly, Dean
does not support the proposition that a remand is necessary here.
20 Following this court's first decision, the Kodiak
Island Borough notified the Gabriels that they needed to file a
subdivision plat to subdivide, that the Raspberry Island property
was in a conservation district where the minimum lot size was
five acres, and that they therefore would need a variance.
21 It is also undisputed and relevant to the issue of good
cause that the Guttchens had attempted to execute against several
bank accounts without success prior to the bankruptcy stay. See
Dean, 902 P.2d at 1325 (noting the "[e]vidence of previous
attempts to execute" might show good cause for subsequent delay).
22 In their brief, the Gabriels suggest prejudice to
Gregory Jr. by portraying him as "an innocent third party." But
the record hardly supports the description: Gregory Jr. was on
notice of the Guttchens' lien when the Gabriels conveyed the
property in 1994, and their quitclaim deed could convey no
greater interest to Gregory Jr. than the Gabriels themselves
possessed.
