Law Offices of Clark v. Altman

680 P.2d 1125, 1984 Alas. LEXIS 281

• Court: Alaska Supreme Court
• Decided: March 30, 1984
• Docket: No. 6501
• Status: Published

Opinions

OPINION

MATTHEWS, Justice.

Murphy Clark obtained a default judgment against a former client, David Altman, for legal services. The judgment to-talled $5,799.70 and was entered on November 29, 1979. Altman’s subsequent motion to have the judgment set aside, accompanied by a bond of $5,849.23 for payment of any judgment which might eventually be rendered, was initially granted by Judge Karl Johnstone, to whom the case was assigned. Clark, however, successfully moved for reconsideration and the original default judgment was reinstated as of March 2, 1980. The amount of the bond was paid to Clark on April 14, 1980. The balance on the judgment was then $202.22, reflecting additions of $117.00 in costs of execution and $134.75 in accrued interest.

Eight days later, on April 22nd, Clark caused real property owned by Altman to be sold at an execution sale. At the sale Clark purchased the property by bidding $2,070.49 as an offset on the judgment. No money was paid to the officer conducting the sale. The actual amount of the judgment at that point, including the costs of the execution sale, was $388.13.¹

In May of 1980, Altman attempted to have the default judgment set aside. Clark successfully resisted this effort.

On August 22, 1980, Clark moved to confirm the execution sale pursuant to AS 09.35.180.² The motion was not opposed and was granted on September 21, 1980.

On September 28, 1981, Clark moved ex parte for issuance of a deed of conveyance. Judge Victor Carlson, acting in the absence of Judge Johnstone ordered issuance of such a deed on that day.³

On October 12, 1981 Altman moved pursuant to Civil Rule 60(b) to set aside the order of confirmation and the order directing issuance of the deed. Judge Johnstone granted the motion and required Clark to reconvey the property to Altman in exchange for $388.13. From this order Clark appeals.

Trial court decisions under Civil Rule 60(b) are discretionary, reviewable only for an abuse of discretion. Aguchak v. Montgomery Ward Co., Inc., 520 P.2d 1352, 1354 (Alaska 1974). A reviewing court applying this standard will only re-verse a trial court’s ruling if it is left with a definite and firm conviction on the whole record that the trial judge has erred. Guard v. P & R Enterprises, 631 P.2d 1068, 1071 (Alaska 1981); Gregor v. Hodges, 612 P.2d 1008, 1010 (Alaska 1980). We do not have such a conviction in this case and hold that the trial court’s order was proper under Civil Rule 60(b)(6)⁴ for the following reasons.

First, Clark’s September 1981 motion for issuance of a deed was not served on Altman. Civil Rule 77(a), which requires service of all motions upon the adverse party or his counsel, was thus violated.⁵ Civil Rule 5(a) provides an exception to this rule in that “No service need be made on parties in default for failure to appear....”⁶ However, Altman was not such a party because he had appeared prior to the time that Clark made his motion for issuance of the deed. Clark contends that notice may be dispensed with because issuance of the deed was a mere ministerial act and the trial court had no discretion other than to grant the motion. The argument is, in other words, that notice is unnecessary where the motion cannot be opposed successfully. We do not regard this argument as meritorious. Motions which appear clearly right when unopposed often become doubtful when opposition is filed. Altman could have presented in defense most of the contentions which he later made in his motion to set aside the resulting order and it serves no useful purpose to speculate whether the motion for issuance of a deed would have been granted under those circumstances.

Second, the fact that Clark made an offset bid in excess of $2,000 on a judgment of $388.13 is a substantial irregularity. This irregularity is relevant to the validity of the confirmation order and to the redemption remedy. The latter point has special importance because the record indicates that as of July 25, 1980, and continuing thereafter, Clark took the position in dealing with Altman that the redemption price was “the full value of the offset bid, plus interest and attorney’s fees.”⁷ This was an over statement of the redemption price by more than five-fold. Such an overstatement has a natural tendency to deter exercise of the right to redeem.

The suggestion in the dissent of Chief Justice Burke that overstatement of the offset bid is not an impropriety because a redeeming judgment debtor is entitled to a court ordered refund of the difference between the offset bid and the correct redemption price is unpersuasive. First, a judgment debtor may not have the money to pay the inflated bid, and may lack the resources to obtain it. Second, the right to a refund may be contested and thus obtaining a refund may be an expensive and uncertain remedy. Under the procedures mandated by Civil Rule 69(e)(3)⁸ Clark should have paid the price in excess of the judgment and costs to the Clerk of Court who, upon entry of the order confirming the sale should have paid the same to Altman. Had these procedures been followed the defect of the inflated offset bid would have been cured. However, these procedures were not followed.

Third, the property had substantial value. According to one estimate its worth, without deducting encumbrances, was $750,000.⁹ It was apparently subject to a substantial purchase money lien covering it and other property.¹⁰ The amount of the encumbrance attributable to the property sold is not of record, but we are told that Altman’s total payment during 1980 and 1981 on the purchase money lien amounted to $488,258.55. The court’s conclusion that the property sold was very valuable in contrast to the trivial amount unpaid on the judgment seems amply justified.

Fourth, in response to Altman’s attempt, made in May of 1980, to have the court reconsider its order reinstating the default judgment, Clark represented that “all but approximately $100 of the judgment entered against defendant has been satisfied by payment of the bond in this case :.. thereby contending that Altman was “es-topped from moving to set aside the judgment on the grounds of substantial accord and satisfaction.” Clark’s statement that all but about $100 of the judgment had been satisfied contrasts with his later representation to Altman that the full amount of the offset bid had to be paid in order to accomplish redemption.

Fifth, the relationship between Clark and Altman is that of an attorney attempting to collect a fee from a former client. ' “[T]he fiduciary character of the relation between client and lawyer applies to the ... collecting ... of fees just as it does to every other phase of the relationship.” R. Wise, Legal Ethics at 234 (2nd Ed.1970). Clark was thus bound to conduct himself fairly and reasonably toward Altman. In the manner detailed above these standards were not observed with the exactitude required in a lawyer-client context.

AFFIRMED.¹¹

MOORE, J., not participating.

1 . Pending was a motion for additional attorney’s fees by Clark initially requesting the sum of $1,639.78 which was amended to request $1,221.96. The pendency of this motion explains the amount of Clark's offset bid. However, the motion was denied on April 22, 1980 by Judge Johnstone.

2 . AS 09.35.180 provides:

Confirmation of sale or resale, (a) Where real property executed upon has been sold, the judgment creditor may, upon motion, apply for an order confirming the sale. The judgment debtor may object to the confirmation of the sale on the grounds that there were substantial irregularities in the proceedings of sale which caused probable loss or injury to the judgment debtor.

(b) If the court finds that there were substantial irregularities in the proceedings concerning the sale to the probable loss or injury to the party objecting, it shall deny the motion and direct that the property be resold in whole or in part as upon an execution.

(c) Upon a resale, the bid of the purchaser at the former sale shall be considered to be renewed and continued in force, and no bid may be taken except for a greater amount. If the property sells to a person other than the former purchaser, he shall be repaid his bid out of the proceeds of the resale.

(d) An order confirming a sale is a conclusive determination of the regularity of the proceedings concerning the sale, as to all persons, in any other action or proceeding.

3 .The deed was issued pursuant to AS 09.35.260 which provides:

Conveyance of property. If no redemption is made within the time prescribed, the purchaser or last redemptioner is entitled to a conveyance. If the judgment debtor redeems, the effect of the sale is terminated and he is restored to his estate.

The time prescribed for redemption is one year from the order of confirmation. AS 09.35.250 provides:

Redemption by judgment debtor or successor. The judgment debtor or his successor in interest may redeem the property before the confirmation of sale on paying the amount of the purchase money, with interest at the rate of eight per cent a year from the date of sale, together with the amount of any taxes, and, in the case of unpatented mining claims, the annual assessment work required to be performed by law, and expenses under § 300(b) of this chapter which the purchaser or re-demptioner may have paid after the purchase. If the judgment debtor does not redeem before the confirmation of the sale, he may redeem only within 12 months from the order of confirmation.

4 . Civil Rule 60(b)(6) provides:

On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:

(6) any other reason justifying relief from the operation of the judgment.

5 . Civil Rule 77(a) provides:

All motions, orders to show cause, petitions, applications and every other such matter shall be served upon the adverse party, or, after the adverse party has appeared by counsel, upon counsel for the adverse party.

6 . Civil Rule 5(a) also recognizes that motions which may be heard ex parte do not require service. This recognition cannot be read as a broad exception to the requirement of service expressed in Civil Rule 77(a) and is limited to situations in which ex parte motions are authorized by rule. See, e.g., Civil Rule 65(b), 77(i)(3). In 2 J. Moore, Moore’s Federal Practice ¶ 5.04[1] at 1329-30 n. 12 (2d ed. 1983) examples are given of motions which can be heard ex parte under the comparable provisions of Rule 5(a) Fed.R.Civ.P. All examples are specifically authorized by other sections of the Federal Rules.

7 . Between May 8, 1980 and July 25, 1980 Clark had offered $1,000.00 as the redemption price which he would accept.

8 . Civil Rule 69(e)(3) provides:

Disposition of Proceeds of Sale. After entry of an order confirming sale of real property, the clerk shall apply the proceeds of the sale, or so much thereof as may be necessary in satisfaction of the judgment and costs. Any proceeds remaining shall be paid to the judgment debtor. Such payments shall be made prior to the entry of the order of confirmation if the judgment debtor files with the clerk a waiver of all objections made or to be made to the proceedings concerning the sale.

9 . Altman's counsel argued that the net value of the property was in excess of $600,000.00.

10 . The record does not disclose the value of the other property. The lien was $811,384.56 as of December 2, 1981. In addition, a 1981 title report showed some $97,000.00 in judgment liens against all property owned by Altman.

11 . We do not accept the statement in the dissent of Justice Compton that we háve "judicially repealed” AS 09.35.180(d). That subsection, which is set forth above in footnote 2, applies to "any other action or proceeding” and thus precludes collateral but not direct attacks on orders of confirmation. Since a Civil Rule 60(b) motion is a direct attack it is not prohibited by subsection 180(d). 7 J. Moore, Moore’s Federal Practice ¶60.41[1] at 801 (2d ed. 1979). In Mallonee v. Grow, 502 P.2d 432 (Alaska 1972) we affirmed an order which granted a Rule 60(b) motion to set aside an order confirming an execution sale.