## Facts

- Willner’s Fuel Distributors, Inc. was a creditor of Rosson & Company, Inc., a corporation formed in 1983 and involuntarily dissolved in 1985.
- Attorney Robert Noreen filed bankruptcy petitions in 1986 for Thomas Rosson and for Rosson & Company; both were dismissed without discharge.
- Noreen later represented Rosson and the corporation in litigation over a road-construction contract; the case settled in March 1989 for $100,000.
- Willner’s separately sued Rosson and the corporation to collect an unpaid debt; Noreen appeared in that collection case only for Rosson individually.
- After learning of the corporation’s dissolution, Willner’s sought a default judgment against the corporation.
- On March 28, 1989, Noreen deposited the settlement checks into his client trust account and arranged payment of $80,000 to Rosson, retaining $20,000 as fees.
- Also on March 28, the court entered a default judgment for Willner’s against the corporation (about $25,257), and Willner’s served a levy on Noreen’s trust account to reach the settlement funds as assets of the judgment debtor.
- The parties disputed whether the levy was served before or after the settlement proceeds were disbursed:
  - Noreen asserted the levy was served in the afternoon after the morning disbursement.
  - The process server stated service occurred at about 1:30 p.m.
  - A bank employee’s account and bank-record inferences suggested the disbursement transaction could have been processed late on March 28 (after business hours) or on March 29.
- Willner’s sued Noreen, alleging wrongful disbursement of assets of a dissolved, insolvent corporation and false statements regarding whether funds remained in the trust account when the levy was served.
- The superior court concluded Noreen owed no duty to Willner’s and entered judgment that effectively absolved Noreen; Willner’s appealed.

## Issues

1. Whether disputed evidence about the timing of deposit/disbursement and levy service created genuine issues of material fact precluding summary judgment for Noreen.
2. Whether an attorney holding a client’s funds in a trust account can face liability to a judgment creditor when a levy is served and the attorney disburses the funds.
3. Whether disbursing settlement proceeds to an individual from a dissolved, allegedly insolvent corporation can constitute a wrongful distribution as against corporate creditors, and whether that theory could be resolved on summary judgment.

## Decision

- The Alaska Supreme Court reversed the disposition exonerating Noreen and remanded.
- Conflicting evidence regarding when the bank transactions were processed and when the levy was served raised genuine issues of material fact.
- Because a factfinder could conclude the funds were still in the trust account when the levy was served, the court held it was error to determine as a matter of law that Noreen breached no duty to Willner’s.
- The court declined to resolve the merits of the wrongful-distribution theory on the summary-judgment record, given unresolved factual questions about the nature and timing of the transfer.

## Legal Principles

- Summary judgment is improper when the record contains genuine disputes of material fact, including disputes grounded in competing testimony, documentary inferences (such as bank records), and timing questions central to liability.
- A person holding a judgment debtor’s property may have obligations upon service of a levy; if the holder still possesses the property at service, transferring it in a way that defeats the levy may create liability.
- When client funds are held in an attorney trust account, potential exposure to levy-related obligations depends on whether the attorney held the debtor’s property at the time of service and the surrounding circumstances; those determinations are fact-dependent.
- Claims that settlement proceeds constituted corporate assets subject to creditor protection, and that transfers were improper due to dissolution or insolvency, generally require fact findings not suitable for resolution where material facts remain disputed.

## Conclusion

The court reversed and remanded because conflicting evidence about when the levy was served relative to the alleged disbursement created triable fact issues bearing on whether the attorney still held debtor property and could be liable for disbursing funds or failing to honor the levy.


Willner's Fuel Distribs., Inc. v. Noreen, 882 P.2d 399 (Alaska 1994)