Donnald R. Reynolds and Parris A. Reynolds v. The Sisco Group, Inc., et al.

Reynolds tried to execute on a money judgment against Sisson by seizing one of three vans Sisson had fraudulently transferred to a friend, Erickson, and by attaching funds owed by a third person, Frye, to whom Erickson had sold the other two
vans after receiving them from Sisson. As Reynolds prepared to sell the seized van and
either shortly before or after he attached the funds from the other vans' sale, Sisson died.
Alaska's probate code bans judgment creditors from attempting new executions or levies
against any property of a deceased judgment debtor's estate. Relying on this prohibition,
the superior court ordered the seized van and attached funds to be restored to Sisson's
estate. We reverse as to the seized van, finding the probate code's ban inapplicable,
since Reynolds perfected his security interest in the van by seizing it before Sisson died.
As to the estate's right to the sale funds, we hold that the issue turns on whether
Reynolds perfected his security interest by serving the writ of attachment on Frye before
Sisson died. Because the record does not disclose the writ's date of service, we vacate
the summary judgment as to the funds and remand for further proceedings.

II. FACTS AND PROCEEDINGS

In April 1999 the superior court entered a default judgment against Eldridge
Sisson and his company, Sisco Group, Inc. (Sisson), awarding Donnald and Parris
Reynolds (Reynolds) over $400,000 in tort damages. Reynolds recorded the judgment
a week later and began collecting the judgment by obtaining writs of execution and
attempting to seize various items of Sisson's property, including three Ford vans. In July
Reynolds managed to seize one of the vans.

Meanwhile, however, attempting to avoid execution, Sisson had transferred
title to all three vans to a friend named Virginia Erickson; in early June Sisson had also
arranged for Erickson to sell two of the vans to a third party, Cameron Frye, for $47,500.
The sale contract between Erickson and Frye, an arm's-length transaction, required Frye
to pay Erickson a down payment of $5,000, forty-eight monthly installments of
$1,027.50, and four $5,000 balloon payments.

Upon learning of this sale, Reynolds asked the court to issue an order
enjoining any further transfer of Sisson's property and directing any persons owing
money to Sisson to pay directly to the court. The superior court granted the request and
issued the writ of attachment so ordering on July 7, 1999. On July 23 Reynolds filed a
supplemental action against Sisson and Erickson, seeking an order nullifying Sisson's
fraudulent transfers to Erickson and requiring Frye to pay his monthly installments
directly to the court. After consolidating the supplemental action with the original case,
the superior court issued a prejudgment writ of attachment on July 29, 1999, ordering
Frye to make all further payments to the court. The record does not disclose the exact
date that Frye received this order, but he evidently started sending his monthly payments
to the court in August or September.

On August 8, 1999, Sisson died in an accident.

Several months later, Reynolds moved for summary judgment on his
fraudulent conveyance complaint, asking the court for title to the van he had seized in
July so that he could sell it in partial satisfaction of his judgment; he also asked the court
to award him the right to collect Frye's installments on the other two vans. The personal
representative for Sisson's estate intervened and responded. While acknowledging that
Sisson's conveyances had been fraudulent, the estate opposed Reynolds's request for the
property, arguing that the sale proceeds from Frye and the title to the unsold van should
instead be restored to the personal representative for distribution as part of Sisson's
estate.

Superior Court Judge Brian C. Shortell agreed with the estate and issued
a summary judgment ordering that the van and the funds be held in the court registry for
distribution as part of Sisson's estate. After the parties stipulated that Judge Shortell's
order disposed of all triable issues, Superior Court Judge Stephanie E. Joannides, who had replaced Judge Shortell on the case, entered a final judgment incorporating the
substance of the summary judgment order.

Reynolds appeals, arguing that the superior court erred in awarding the
disputed property to the estate.

III. DISCUSSION

The controversy in this appeal centers on AS 13.16.505, which prohibits
judgment creditors from executing or levying on property of a deceased debtor's estate
but nonetheless permits the continued enforcement of liens:

No execution may issue upon nor may any levy be
made against any property of the estate under any judgment
against a decedent or a personal representative, but this
section shall not be construed to prevent the enforcement of
mortgages, pledges, or liens upon real or personal property in
an appropriate proceeding.

Alaska drew this statute from § 3-812 of the Uniform Probate Code, a law we described
in Lundgren v. Gaudiane as establishing that the "death of the judgment debtor
terminates the possibility of issuing a valid writ of execution upon a money judgment."1

In Sheehan v. Estate of Gamberg, we declared that "the purpose of
AS 13.16.505 is to freeze the status of all claims at the death of the debtor in order to
provide for the orderly administration of the estate."2 We observed that this purpose harmonizes with the purpose of Alaska's devolution statute,3 which passes a decedent's
property "to his heirs or devisees immediately upon [] death, subject to the rights of
creditors."4 Given this immediate transfer of property rights, we explained, "a judgment
creditor of a decedent cannot create a new property interest, such as a judgment lien, in
the decedent's estate since title is in the heirs or devisees."5

In the present case, Reynolds insists that AS 13.16.505's prohibition against
new executions and levies does not prevent him from using Sisson's vans as a source for
satisfying his judgment. Before Sisson died, Reynolds points out, one of the vans had
already been seized under a writ of execution; and a prejudgment writ of attachment had
already issued directing Frye to pay to the court all future installments falling due on the
other two vans. Because seizing the first van completed its execution and the
prejudgment writ of attachment acted as a lien on the remaining funds owed by Frye,
Reynolds maintains, his interest in using this property to secure his judgment was already
perfected by the time Sisson died. And because AS 13.16.505 only prohibits new
executions or levies and expressly allows continued enforcement of existing liens after a judgment debtor dies, Reynolds reasons, nothing in the statute or in our cases
interpreting it precludes him from satisfying his judgment by enforcing his established
interests in the van and Frye's installments.

In response, the estate cites Sheehan and Lundgren and insists that, as
interpreted by these cases, AS 13.16.505 effectively froze the status of all claims pending
against Sisson at the time of his death, thereby requiring his interest in the vans to be
treated as the estate's property:

What is in dispute is the appropriate disposition of the
van still titled to Erickson and the proceeds of the sale [of the
other two vans]. Based on AS 13.16.505 and [Lundgren], the
Personal Representative asserts that the property and
proceeds of sale should be returned to her to allow her to
properly carry out her duties[.]

But the estate's argument is unpersuasive.6 In providing that "no execution
may issue upon nor may any levy be made against any property of the estate,"
AS 13.16.505's plain language makes two conditions necessary to trigger its prohibitions
after a judgment debtor dies: (1) some form of execution or levy must be issued or made;
and (2) the execution or levy must be directed against property of the estate. Our cases
interpreting this statute reinforce its plain meaning. In Sheehan, for example, we noted
the statute's purpose of ensuring that "a judgment creditor of a decedent cannot create
a new property interest" after title passes to heirs or devisees; yet at the same time we
recognized that the heirs and devisees take the decedent's property "subject to the rightsof creditors" existing at the time of death.7 Similarly, in Lundgren, we described
AS 13.16.505 as a provision that "terminates the possibility of issuing a valid writ of
execution upon a money judgment."8

Here, then, the estate's claim that it should receive the disputed property so
that the personal representative can ensure an orderly administration of the estate's assets
begs the two critical questions posed by the statutes' requirements: would allowing
Reynolds to recover his judgment by selling the seized van and collecting Frye's
installments entail the creation of a new property interest (that is, an interest that did not
exist at the time of Sisson's death)? And if so, does the new interest that Reynolds seeks
to assert involve property that belongs to the estate (that is, property devolving to
Sisson's heirs and devisees upon Sisson's death)?

As to the seized van, at least, the answer to the first question is decidedly,
"No." Under Alaska law, a writ of execution directs a judgment creditor to levy on -
or seize - the property that is subject to the writ.9 Until the levy occurs, "the property
is not affected by the execution."10 But once the property is levied upon, it serves as a
specific source for satisfaction of the judgment,11 and the judgment creditor thus enjoys a lien-like interest in collecting against the particular property seized.12 By seizing the
van under a writ of execution, then, Reynolds secured a cognizable interest in satisfying
his judgment against that particular item of property.13 And because the van's levy
undisputedly occurred before Sisson died , this interest cannot properly be regarded as
the kind of newly created interest forbidden under AS 13.16.505. To the contrary,
whatever residual right Sisson retained in the seized van when he died devolved to his
heirs and devisees subject to Reynolds's established interest in collecting against that
property.

Whether Reynolds has the right to collect Frye's installment payments
presents a cloudier picture. Because the record fails to disclose exactly when Reynolds
served the prejudgment writ of attachment on Frye, we cannot determine whether the
installment payments were attached before Sisson died. Reynolds argues that this is
irrelevant. He maintains that the prejudgment writ of attachment itself amounted to a lien
upon issuance, regardless of whether or when it was served. In support of this argument,
Reynolds cites Civil Rule 89's opening language, which authorizes claimants to apply
for prejudgment writs of attachment "as security for satisfaction of a judgment that may
be recovered."14 But the rule's broad statement describing a writ of attachment's purpose
begs the narrower question of precisely when a writ of attachment achieves its purpose of providing "security for satisfaction of a judgment." Nothing in the statement of
purpose suggests that a writ of attachment creates a security interest before being
perfected by service. And as we explain below, Alaska's probate code definitively
hinges the estate's right to Frye's payments on when Reynolds perfected his security
interest.

As already mentioned, AS 13.16.505 prohibits a new execution or levy after
a judgment debtor dies only if the execution or levy is directed "against any property of
the estate."15 A writ of attachment is a type of levy. The pivotal questions presented,
then, are whether Frye's future payments for the two vans can be considered "property"
and, if so, whether these payments became "property of the estate" under AS 13.16.505.

Alaska's probate code adopts an expansive view of "property," defining
the word to mean "anything that may be the subject of ownership, and includes both real
and personal property and an interest in real or personal property."16 The contractual
right to payments from Frye certainly is something that "may be the subject of
ownership" so it is unquestionably property. We must thus proceed to ask whether this
contractual right became property of the estate. Another probate code provision, AS
13.16.385, squarely controls this issue, unequivocally granting personal representatives
exclusive power to prosecute claims on behalf of unsecured creditors for any
unencumbered property transferred by a decedent through "void or voidable" means:

The property liable for the payment of unsecured debts
of a decedent includes all property transferred by the decedent by any means which is in law void or voidable as
against creditors, and subject to prior liens, the right to
recover this property, so far as necessary for the payment of
unsecured debts of the decedent, is exclusively in the
personal representative.[17]

By giving Sisson's personal representative exclusive authority to maintain
an action to set aside the allegedly fraudulent chain of conveyances unless Frye's
payments were "subject to prior liens," this provision effectively recognizes that the right
to the outstanding payments would pass to the estate if Reynolds's claim against the
funds remained unperfected - that is, if the writ of attachment remained unserved -
when Sisson died.18

Here, before Sisson died he transferred all three of his vans to Erickson,
who titled them in her name. By the time of his death, two of the three - the two that
remained unseized - had been further transferred from Erickson to Frye in return for
his promise to make forty-eight monthly payments of $1,027.50. Reynolds had filed a
complaint asserting that these transactions were fraudulent and were therefore voidable;
and he had obtained a prejudgment writ of attachment. But whether the writ was served
on Frye before Sisson died is unclear on the current record and was not decided below.
Because the record fails to disclose when the writ was served, entry of summary
judgment on this point was inappropriate. Accordingly, we must set aside the summary judgment with respect to Frye's payments and remand this case for further proceedings
to determine if the writ of attachment was served before Sisson's death.

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