McLaughlin v. Lougee
| Citation | 137 P.3d 267 |
| Decision Date | 09 June 2006 |
| Docket Number | No. S-11423.,S-11423. |
| Parties | Pamela Francis McLAUGHLIN, Lorimar Lance McLaughlin, and Larry Compton, Trustee, Appellants, v. Ken LOUGEE; Hughes, Thorsness, Gantz, Powell & Brundin; and its successor in interest, Hughes, Thorsness, Powell, Huddleston & Bauman, L.L.C., Appellees. |
| Court | Supreme Court of Alaska (US) |
Michael W. Flanigan, Chris Bataille, Walther & Flanigan, Anchorage, for Appellants.
William M. Bankston, Chris D. Gronning, Bankston, Gronning, O'Hara, Sedor, Mills, Givens & Heaphey, P.C., Anchorage, for Appellees.
Before: BRYNER, Chief Justice, MATTHEWS, EASTAUGH, FABE, and CARPENETI, Justices.
The question in this case is whether a defendant against whom a judgment in a tort case has been entered can later file an action against a third person who was not a party to the original action in order to require the third person to pay a part of the judgment. The superior court held that such an action may not be maintained because (1) under the law applicable when the alleged tortious conduct occurred statutory contribution had been eliminated and (2) a defendant seeking to allocate fault to a third party can do so only in the original action. We disagree because the applicable law did not preclude common law contribution claims against defendants whose responsibility was not considered in an original action, nor did it require that all claims seeking to allocate fault be brought in a single action.
Appellants are Pamela and Lorimar McLaughlin, and Larry Compton, the trustee in bankruptcy of the McLaughlins' bankrupt estate. They sued attorney Ken Lougee and his firm, Hughes, Thorsness, Gantz, Powell & Brundin, and its successor firm, as writ of execution assignees of claims belonging to their former attorney Arthur Robson. In this opinion we collectively refer to the appellants as the McLaughlins and the appellees as Hughes Thorsness. The superior court stated the underlying facts of the case as follows:1
Arthur Lyle Robson ("Robson") represented the McLaughlins between 1990 and 1995 in a series of legal actions concerning a property formerly owned by the McLaughlins. The McLaughlins lost title to their property through foreclosure due to malpractice on the part of Robson. Robson however did not disclose to the McLaughlins that they had lost viable title. During the pendency of that litigation, Robson also represented the McLaughlins in their negotiations with a foreign investor, Okumura, who invested monies based on Robson's misrepresentations as to the legal status of the property. Robson also represented the McLaughlins in a subsequent lawsuit brought by Okumura against the McLaughlins based on misrepresentations made during the negotiations between the parties. Although Robson knew he was responsible for the liability of the McLaughlins based on his misrepresentations, Robson defended the McLaughlins without bringing out his culpability for the misrepresentations. As a result of Robson's conduct, the McLaughlins were found liable to Okumura in the amount of $1,008,536.05. The McLaughlins then filed for bankruptcy on June 23, 1993, and Robson continued to represent them.
After Okumura obtained a judgment against the McLaughlins, Okumura then brought a similar action against Robson alleging misrepresentation, which the court in that case found had occurred as a matter of law. In this suit, defendant law firm Hughes Thorsness represented Robson.
It is during the course of this representation that the McLaughlins allege Hughes Thorsness committed acts that constituted an illegal co-conspiracy with Robson to deprive the McLaughlins of their legal rights. This claim is based at least in part on the allegation that Hughes Thorsness, as part of a scheme to defraud the McLaughlins, prepared for Robson's signature (and without the McLaughlins' informed consent) a pleading in the McLaughlins' bankruptcy withdrawing the McLaughlins' motion to clarify that they still owned legal malpractice claims against Robson. Plaintiffs allege that Hughes Thorsness was aware that Robson could not ethically agree on behalf of the McLaughlins to withdraw their motion claiming that they still had claims against Robson, yet Hughes Thorsness prepared documents for Robson's signature to do just that. Plaintiffs allege that the purpose of Hughes Thorsness's actions were to further Robson's fraudulent scheme to avoid personal liability for his actions. Although the withdrawal of the motion was later reversed and the Bankruptcy Court eventually held that Robson could be sued by the McLaughlins and the Bankruptcy Estate, Robson's malpractice liability insurance had been exhausted due to the settlement of Okumura's claims against Robson as negotiated by Hughes Thorsness. Plaintiffs claim that as a proximate result of the combined conduct of Robson and the defendants, Robson's liability insurance, which should have been used to obtain a joint release from Okumura in favor of both Robson and McLaughlins or to pay Okumura's claims down for the benefit of both Robson and the McLaughlins, was spent only obtaining a release of Robson from the Okumura claims.
The McLaughlins subsequently filed an action against Robson for malpractice and fraud and obtained a judgment against Robson in the amount of $3,571,429.33 on October 2, 2001, in case number 4FA-96-2602 Civil. To collect on this judgment, the McLaughlins executed on all claims that Robson had against the current defendants, which claims are alleged by the McLaughlins to have been "assigned" to them by court order. Pursuant to AS 09.17.080, plaintiffs allege that Robson had claims for allocation that could have been asserted against defendants following the entry of judgment in 4FA-96-2602 Civil and that defendants are liable for their percentage of fault in causing the harm.
The McLaughlins sued in September of 2003, claiming that Hughes Thorsness was liable to them as Robson's assignees for some portion of their judgment against Robson in proportion to Hughes Thorsness's responsibility for Robson's conduct. Hughes Thorsness promptly filed three separate motions to dismiss claiming that (1) assignments of legal malpractice claims are not permitted, (2) the applicable statute of limitations had expired, and (3) a defendant such as Robson cannot seek to require others to share fault and liability except in the initial action in which he is sued. Ruling only on the last ground, the superior court ordered the complaint dismissed.
The superior court reasoned that the McLaughlins' case "is effectively one for contribution and because contribution actions were repealed by the 1989 voter initiative establishing proportionate fault, Alaska Rule of Civil Procedure 12(b)(6) bars the instant action." The court determined that the relevant fault allocation statute, AS 09.17.080 (1989), "does not create a separate cause of action in which a defendant can obtain an affirmative recovery. . . ." "All that [AS 09.17.080 (1989)] allows a defendant to do is join other persons who may be liable to a claimant, and to have a factual determination made of the percentages of fault for each responsible person." Consequently, the court held that the McLaughlins as assignees of Robson could not initiate a post-judgment action against Hughes Thorsness.
Decisions granting motions to dismiss for failure to state a claim upon which relief can be granted are reviewed de novo and the allegations contained in the complaint are accepted as true for purposes of review.2 Such decisions will be affirmed only if it appears that the claimants "can prove no set of facts which would entitle them to relief."3
Because the alleged tortious conduct in this case occurred between 1993 and 1995, the 1989 tort reform initiative in effect from 1989 to 1997 governs this case.4 This initiative enacted a comparative fault-several liability system and repealed Alaska's version of the Uniform Contribution Among Joint Tortfeasors Act (Uniform Contribution Act). As modified by the 1989 initiative, AS 09.17.080 provided:
(a) In all actions involving fault of more than one party to the action, including third-party defendants and persons who have been released under AS 09.16.040, the court, unless otherwise agreed by all parties, shall instruct the jury to answer special interrogatories or, if there is no jury, shall make findings, indicating (1) the amount of damages each claimant would be entitled to recover if contributory fault is disregarded; and (2) the percentage of the total fault of all of the parties to each claim that is allocated to each claimant, defendant, third-party defendant, and person who has been released from liability under AS 09.16.040.
(b) In determining the percentages of fault, the trier of fact shall consider both the nature of the conduct of each party at fault, and the extent of the causal relation between the conduct and the damages claimed. The trier of fact may determine that two or more persons are to be treated as a single party if their conduct was a cause of the damages claimed and the separate act or omission of each person cannot be distinguished.
(c) The court shall determine the award of damages to each claimant in accordance with the findings, subject to a reduction under AS 09.16.040, and enter judgment against each party liable. The court also shall determine and state in the judgment each party's equitable share of the obligation to each claimant in accordance with the respective percentages of fault.
(d) The court shall enter judgment against each party liable on the basis of several liability in accordance with that party's percentage of fault.
Under the initiative, AS 09.17.900 defined "fault" as follows:
In this chapter "fault" includes acts or omissions that are in any measure negligent or reckless toward the person or property of the actor or others, or that subject a...
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