High court denies former KGEZ owner's appeal

The Montana Supreme Court ruled against former Kalispell radio firebrand and station owner John Stokes on Tuesday, effectively ending a malpractice suit against his former bankruptcy attorney.

The ruling was on a technicality that treated separate legal claims as an asset, and the question was whether or not that asset could be sold at auction. The court upheld an earlier decision that it could be sold, which took the legal claim out of Stokes’ hands.

The decision stems from a defamation case that was settled in 2008 against Stokes, who was then a personality and owner of KGEZ in Kalispell. He was found guilty of on-air defamation against the owners of Gardner RV and ordered to pay $3.8 million.

Stokes appealed and hired an attorney, Greg Duncan, to assist in the process while claiming bankruptcy. Eventually the two were at odds over an incomplete disclosure of assets, according to court documents. Duncan filed to withdraw from the bankruptcy proceeding in June 2009.

A bankruptcy court moved Stokes from Chapter 11 to Chapter 7 bankruptcy and a trustee was appointed to auction off Stokes’ assets to pay off debts. 

Meanwhile, Stokes sued Duncan and his paralegal for malpractice in 2012. According to court documents, he claimed that Duncan failed to inform him that filing for bankruptcy wouldn’t dismiss the defamation judgment. A judge stayed that case while bankruptcy proceedings continued.

In bankruptcy, Stokes relinquished his assets to the people he faced in court. The Gardners acquired KGEZ radio for $875,000 and rebranded it as Flathead Broadcasting LLC. 

Up for auction was the bankruptcy estate’s interest in Stokes’ malpractice case, considered as an asset. Duncan purchased the legal action — which was against himself — for $12,000. The sale was upheld by the bankruptcy court in 2013.

Stokes appealed the sale and the case made its way through a couple of jurisdictions before finding itself in the Montana Supreme Court. The court’s decision on Tuesday upheld a prior summary judgment by Flathead County District Court that granted the sale of malpractice legal claims in bankruptcy auction.

In a way, Duncan owns the legal action that was taken against him.

Edward A. Murphy and Michael McMahon, the respective attorneys for Stokes and Duncan, both said that this latest ruling effectively ends the malpractice proceedings. 

Murphy said that Stokes can file with the state Supreme Court for a reconsideration, which could happen in the next few weeks.

Reporter Matt Hudson may be reached at 758-4459 or by email at mhudson@dailyinterlake.com