A Tri-City executive is being sued in U.S. Bankruptcy Court by a creditor seeking more than $1 million for an outstanding loan balance, interest and legal fees.
The case against Fraser S. Hawley, a developer and business leader who was married to state Sen. Sharon Brown, R-Kennewick, is set to go to trial May 9 in Yakima before Judge Whitman Holt.
Hawley is being sued by MS Properties LLC and owner Michael Shemali, which is asking the court to determine if Hawley’s debt could be erased under U.S. Bankruptcy Code.
Hawley filed to liquidate his assets under Chapter 7 in 2020, after he and Brown, who lived in Benton County, secured a divorce in Walla Walla Superior Court. The bankruptcy was discharged in March 2021.
Shemali, along with Columbia Bank and J.P. Morgan Chase, were his top unsecured creditors.
According to the complaint, Hawley and partner Thomas Arnold borrowed $500,000 from MS Properties in 2016. Later that year, Hawley told MS Properties he needed additional money and together with Arnold and Sorvevi Investment secured an additional $250,000 loan.
The suit does not identify the purpose of the loans. Hawley is the lone defendant.
The plaintiff began making demands for repayment in July 2017. The outstanding balance, including interest and legal fees, stood at $1.09 million in January 2021, when the case reached federal court.
The suit centers on allegations Hawley concealed assets that could have repaid the debt by getting divorced and transferring assets to his wife, which he disputes in response to the original complaint.
According to the suit, Hawley was married to Brown when the notes were signed, and the couple had significant and valuable assets.
The suit claims the couple entered a “sham divorce” in which Hawley transferred assets to Brown and beyond the reach of the bankruptcy. The initial divorce decree was entered March 30, 2018.
Hawley’s response notes the couple divorced in Walla Walla County in part because Brown is prominent in the Tri-Cities by virtue of her position as a state senator representing the 8th Legislative District. Prior to that, she served on the Kennewick City Council. She is a nonpracticing attorney and member of the Washington State Bar, according to the bar directory.
The suit alleges Hawley deliberately used the divorce to place assets out of reach of his creditors.
Hawley countered that no assets were transferred. According to Hawley, the couple spelled out their separate and joint interests in a 2005 postnuptial agreement.
The suit alleges Hawley and Brown continued to live together and share assets, including a home and funds.
Hawley responded that the couple attempted to reconcile on several occasions and lived together at one point. The reconciliation failed and he lives with his son.
In response to the suit, Hawley maintained there was no attempt to deceive and asks for the case to be dismissed and to be reimbursed for legal fees.
MS Properties has requested a jury trial. It is represented by Lukins & Annis PC, a Spokane legal firm. Hawley is represented by Davidson Backman Medeiros PLLC, also of Spokane.
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