Merdes & Merdes, P.C. v. Leisnoi, Inc.
410 P.3d 398
| Alaska | 2017Background
- From 1988 Merdes & Merdes (Ed Merdes, later represented by his son Ward) represented Leisnoi, Inc. under a contingency fee agreement that awarded ~30% of land value as fees; arbitration and a 1995 superior court judgment enforced that fee award.
- Leisnoi made most installment payments but stopped in 2002; after post-judgment negotiations, Merdes obtained a writ of execution in 2010 while appeals were pending; Leisnoi paid $643,760 under threat of the writ and appealed.
- In 2013 the Alaska Supreme Court held the contingency-fee agreement (and related awards/enforcement) violated ANCSA and reversed the writ, ordering return of the $643,760, but left open Merdes & Merdes’s ability to pursue quantum meruit fees.
- Leisnoi sued Merdes & Merdes, Merdes Law Office (a successor firm), and Ward Merdes for breach of contract, fraudulent conveyance, conspiracy, UTPA violations, and unjust enrichment; Merdes counterclaimed for quantum meruit.
- The superior court granted summary judgment barring the quantum meruit counterclaim (res judicata/statute of limitations), ordered repayment of $643,760, and after trial found fraudulent conveyance and UTPA violations, voided transfers, awarded compensatory damages and trebled UTPA damages.
- On appeal the Alaska Supreme Court affirmed all rulings except it remanded to reconsider application of prejudgment interest as to which defendants are liable and from what start dates.
Issues
| Issue | Leisnoi's Argument | Merdes' Argument | Held |
|---|---|---|---|
| Whether Merdes & Merdes may pursue quantum meruit after the 1995 judgment and the 2013 decision | Merdes should be permitted to seek recovery in quantum meruit (the Supreme Court left the issue open) | Res judicata and the statute of limitations bar the later quantum meruit claim because the 1995 final judgment (voidable, not void) encompassed fee relief | Res judicata bars Merdes & Merdes’s quantum meruit claim; summary judgment affirmed |
| Whether transfers to Merdes Law Office and Ward Merdes constituted fraudulent conveyances | Leisnoi: transfers were made with intent to hinder/delay/defraud creditors (badges of fraud) and are void under AS 34.40.010 | Merdes: Leisnoi lacked a money judgment basis and voiding transfers alone would suffice (no damages) | Trial findings of fraudulent conveyance sustained; voiding transfers appropriate and compensatory damages supported by separate breach/UTPA rulings |
| Whether defendants’ conduct violated the UTPA and whether attorneys are subject to UTPA | Leisnoi: transferring assets to avoid returning overpayment was an unfair/deceptive act in trade or commerce covering attorney conduct | Merdes: attorney regulation/Bar rules preclude UTPA or UTPA would improperly duplicate bar discipline | UTPA applies to attorney conduct here; transfers were unfair/deceptive, treble damages proper; Routh Crabtree precedent affirmed coexistence of discipline and UTPA liability |
| Prejudgment interest: when it began and which defendants are liable | Leisnoi: prejudgment interest accrues from July 28, 2010 (actual notice while appeal of writ pending) and applies to repayment | Merdes: interest should start in 2013 after appellate decision or written demand; only Merdes & Merdes (original firm) was liable for the underlying debt and thus interest | Court agreed July 28, 2010 is a correct accrual date for the overpayment; but remanded to determine appropriate start dates/liability allocation among the three defendants (cannot simply charge all with same start date without explanation) |
Key Cases Cited
- Leisnoi, Inc. v. Merdes & Merdes, P.C., 307 P.3d 879 (Alaska 2013) (held contingency fee unenforceable under ANCSA but left open quantum meruit possibility)
- Summers v. Hagen, 852 P.2d 1165 (Alaska 1993) (creditors generally must reduce claims to judgment before suing grantees for fraudulent-conveyance conspiracy damages)
- Estate of Katchatag v. Donohue, 907 P.2d 458 (Alaska 1995) (discussed waiver and preclusion of untimely quantum meruit claims in probate context)
- Kenai Chrysler Ctr., Inc. v. Denison, 167 P.3d 1240 (Alaska 2007) (UTPA applies to post-sale/debt collection conduct; multi-factor unfairness test)
- Pepper v. Routh Crabtree, APC, 219 P.3d 1017 (Alaska 2009) (attorneys are not categorically exempt from UTPA; consumer-protection claims can coexist with bar discipline)
- Pister v. State, Dep’t of Revenue, 354 P.3d 357 (Alaska 2015) (res judicata elements summarized)