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Wednesday, July 17, 2019

Alaska Supreme Court rules law firm owes Leisnoi thousands in decades-long dispute

By Dee Thompson | Nov 29, 2017

ANCHORAGE, Alaska (Legal Newsline) – The Alaska Supreme Court has found that a native corporation is owed hundreds of thousands of dollars by a law firm over a land deal litigated for decades.

The dispute involves Merdes & Merdes PC, Merdes Law Office PC and Ward Merdes and the corporation Leisnoi Inc., a native corporation.

The court issued the decision Nov. 9.

“We agree that the overpayment was, as of July 2010, Merdes & Merdes’ obligation alone; Merdes Law Office and Ward Merdes did not become liable for it until judgment was entered against them jointly and severally in this lawsuit," the decision says.

"We remand this issue so the superior court can either explain why the same prejudgment interest commencement date applies to all three defendants or recalculate prejudgment interest to reflect the different dates on which they became liable for the underlying debt."

According to the order, in 1988, Leisnoi hired attorney Ed Merdes and his law firm, Merdes and Merdes, to represent it in a case against Omar Stratman regarding who held title to property on Kodiak Island. The representation was based on a contingency fee of 30 percent. 

Although Ed Merdes died in 1991, the firm continued to represent the corporation. The Superior Court found in Leisnoi’s favor and Ward Merdes (son of Ed) sought to enforce the fee agreement.

The case went to arbitration, and Merdes & Merdes was awarded $721,000, or about 30 percent of the land’s value, plus interest. According to the order, that sum was “payable in $100,000 yearly installments — as well as the $55,000 in attorney’s fees the superior court had earlier awarded Leisnoi as the prevailing party. The superior court affirmed the arbitration award and entered judgment on it in 1995, and it was not appealed.”

According to the order, Leisnoi made six payments but in 1992 it could not make the annual $100,000 payment and cited the ongoing cost of the original litigation, which was still in the appeals process. Merdes filed a writ of execution but Leisnoi appealed. Then Leisnoi paid $643,760. 

The order states in 2013, the Alaska Supreme Court reversed the lower court’s ruling, ruling that Leisnoi was entitled to recover the $643,760, but not entitled to recoup the $800,000 paid before 2010. 

In that ruling, the court left open Merdes’ ability to pursue more fees.

The Merdes firm did not pay the money to Leisnoi. According to the order, “In March 2013 Merdes & Merdes sought a stay of execution on our 2013 opinion until its ‘competing claim’ for quantum meruit could be resolved; Ward Merdes attested by affidavit that Merdes & Merdes ‘does not have anywhere near enough money to return $643,760 to Leisnoi pursuant to Supreme Court Order 6747. It doesn’t have 1/5th of that amount.’” 

Leisnoi sued the law firm and Ward Merdes in May 2013 “for breach of contract, fraudulent conveyance, conspiracy to fraudulently convey assets, violations of the UTPA (Unfair Trade Practices Act), and unjust enrichment. Merdes denied Leisnoi’s allegations, and Merdes & Merdes filed a counterclaim for its attorney’s fees framed as a claim for quantum meruit,” according to the order.

The Superior Court concluded that recovery in quantum meruit was barred by res judicata and the statute of limitations and granted the motion for summary judgment filed by Leisnoi. It also granted summary judgment on the breach of contract claim and ordered Merdes to repay the $643,760 plus interest, the order states.

However, a five-day trial was held on the other claims, the order states. The court concluded that Merdes was wronged and granted a directed verdict against Leisnoi on the conspiracy claim. It also found the new law firm formed by Ward Merdes was capitalized through fraudulent conveyance. 

Leisnoi prevailed. 

“The court therefore voided the transfers to Merdes Law Office and Ward Merdes and found Merdes & Merdes, Merdes Law Office, and Ward Merdes jointly and severally liable for Leisnoi’s compensatory damages. Pursuant to the UTPA the court trebled this amount to $1,931,280.23,” according to the order.

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