Thomas A. Rosson, Jr., formed a solely owned corporation, Rosson & Company, Inc. (Rosson, Inc.) in 1983. [FN1] Rosson, Inc. was involuntarily dissolved on November 27, 1985 by the State of Alaska.

FN1. Rosson, the individual, is referred to as "Thomas Rosson" to distinguish him from Rosson, Inc.

In 1986, attorney Robert S. Noreen (Noreen) filed a voluntary bankruptcy petition for Rosson, Inc. and for Thomas Rosson individually in the United States Bankruptcy Court for the District of Alaska. Willner's Fuel Distributors, Inc. (Willner's) was listed as one of the twenty largest unsecured creditors of Rosson, Inc.

On April 8, 1988, Thomas Rosson and Rosson, Inc. sued the Fairbanks North Star Borough, R & M Engineering Consultants, and Glacier State Telephone Company (collectively referred to as "Borough") for breach of contract and negligence, and additionally sued the Fairbanks North Star Borough individually for business interference. The alleged breaches arose out of conduct following the August 20, 1984 award of a road contract, apparently to Rosson, Inc. Noreen was the attorney of record for both Thomas Rosson and Rosson, Inc. in this action. Noreen claims that "at some point during this time frame" Thomas Rosson told him that Rosson, Inc. had been involuntarily dissolved in 1985.

On May 9, 1988, Willner's filed suit against Thomas Rosson and Rosson, Inc. for $20,212.17. Noreen entered an appearance for Thomas Rosson individually, but did not enter an appearance for the corporation in the suit brought by Willner's. After filing its suit, Willner's learned that Rosson, Inc. had been involuntarily dissolved in 1985. On February 2, 1989, Willner's applied for default against Rosson, Inc.

At some time in March [1989], the suit by Thomas Rosson and Rosson, Inc. against the Borough was settled for $100,000.00. Noreen explains that "Thomas Rosson settled the lawsuit against the Fairbanks North Star Borough for $100,000.00 both in his individual capacity and as the past president or assignee of interests in the dissolved corporation Rosson & Company, Inc." Noreen asserts that "[t]his settlement was concluded and settlement checks were received by attorney Noreen no later than March 26, 1989."

According to Noreen, at sometime "in the morning" of March 28 Thomas Rosson accompanied Noreen to National Bank of Alaska (NBA), where Noreen deposited the settlement monies from the suit by Thomas Rosson and Rosson, Inc. against the Borough into his trust account. Noreen directed the NBA teller to transfer $80,000.00 from the trust account to Thomas Rosson, by cashier's check. Noreen explains that he then wrote a check to himself from the settlement proceeds for his fee of $20,000.00, and deposited the check into his business account.

Also on March 28, a default judgment in the amount of $25,257.44 was entered against Rosson, Inc. in the suit by Willner's against Thomas Rosson and Rosson, Inc., because Rosson, Inc. had "failed to plead in or otherwise defend this action." Noreen states that he was presented with a levy on his trust account to satisfy this default judgment "in the afternoon of March 28, 1989." According to Noreen, the settlement proceeds had already been distributed "to his client Thomas Rosson individually and as sole corporate representative of Rosson Inc., pursuant to client demand" by this time. In a response to the levy, Noreen stated that he had no funds of Rosson, Inc. under his control.

... Noreen represented two clients: Thomas Rosson, a natural person, and Rosson, Inc., a dissolved corporation. The interests of these two clients with respect to the net proceeds of their claim, $80,000, were not identical. The corporation's interest was in maximizing its share of the proceeds and in disbursing the proceeds to its creditors in accordance with the priorities established by law. Thomas Rosson's interest was in maximizing his individual claim to the proceeds. A lawyer who represents clients with conflicting interests is in a sensitive position and may be liable for breach of the lawyer's fiduciary responsibilities to either client. Just as creditors may sue directors on behalf of a dissolved corporation, creditors may maintain similar actions against the attorney of the dissolved corporation for breach of the attorney's fiduciary obligations.

The corporate assets at issue here were placed in Noreen's attorney's trust account, and thus were in his custody and control. Requiring an insolvent or dissolved corporation's attorney to protect assets in his or her custody from a director's improper distribution would not impose an unwarranted burden on the legal profession. In fact, an attorney often has an ethical duty to protect third-party claims to funds in his or her custody from a client's wrongful interference. See Alaska Rules of Professional Conduct 1.15 cmt.

By way of summation, we hold that if an attorney represents both a dissolved or insolvent corporation and a director or officer of that firm, and if the attorney controls corporate assets, then the attorney must protect the financial rights of creditors to these assets, where he or she knows or should know that the director or officer intends to interfere with creditors' claims through an improper distribution of these assets.

Had Noreen not disbursed the proceeds from the Borough settlement to Rosson, instead retaining the funds in his attorney's trust account, he could have been vulnerable to claims upon the funds not only from Willner's but also from Rosson, Inc.'s other creditors. In such a situation, Noreen, as stakeholder for the proceeds, could deposit them in the superior court registry and file a claim for interpleader, requiring the joinder of all of Rosson, Inc.'s creditors, in order to avoid multiple liability and vexatious litigation.

If upon remand it is determined that Noreen is liable for wrongfully disbursing the proceeds for the Borough settlement to Thomas Rosson, then any recovery against Noreen should be deposited into the superior court registry, and Willner's should notify all other creditors of the availability of these funds for allocation.