A Tri-City executive is being sued in U.S. bankruptcy court by a creditor seeking more than $1 million for an unpaid loan balance, interest, and legal fees.
The case against Fraser S. Hawley, a developer and business executive who was married to state Sen. Sharon Brown, R-Kennewick, is scheduled to go to trial May 9 in Yakima before Judge Whitman Holt.
Hawley is being sued by MS Properties LLC and owner Michael Shemali, who are asking the court to determine whether Hawley’s debt could be discharged under the US Bankruptcy Code.
Hawley filed for liquidation of his Chapter 7 assets in 2020, after he and Brown, who lived in Benton County, were granted a divorce in Walla Walla Superior Court. The bankruptcy was discharged in March 2021.
Shemali, along with Columbia Bank and JP Morgan Chase, were its main unsecured creditors.
According to the complaint, Hawley and his partner Thomas Arnold borrowed $500,000 from MS Properties in 2016. Later that year, Hawley told MS Properties he needed additional money and, along with Arnold and Sorvevi Investment , obtained an additional loan of $250,000.
The lawsuit does not identify the purpose of the loans. Hawley is the only defendant.
The plaintiff began filing claims in July 2017. The outstanding balance, including interest and legal fees, was $1.09 million as of January 2021, when the case went to court. Federal Court.
The lawsuit centers on allegations that Hawley hid assets that could have repaid debt by divorcing and transferring assets to his wife, which he disputes in response to the original complaint.
According to the lawsuit, Hawley was married to Brown when the notes were signed, and the couple had significant and valuable assets.
The lawsuit says the couple entered into a “mock divorce” in which Hawley transferred assets to Brown and out of bankruptcy. The initial divorce judgment was pronounced on March 30, 2018.
Hawley’s response notes that the couple divorced in Walla Walla County in part because Brown is prominent in the Tri-Cities due to her position as a state senator representing the 8th Legislative District. Prior to that, she served on Kennewick City Council. She is a lay lawyer and a member of the Washington State Bar, according to the bar directory.
The lawsuit alleges that Hawley deliberately used the divorce to place assets beyond the reach of her creditors.
Hawley countered that no assets were transferred. According to Hawley, the couple clarified their separate and joint interests in a 2005 postnuptial agreement.
The lawsuit alleges Hawley and Brown continued to live together and shared assets, including a home and funds.
Hawley replied that the couple had tried to reconcile on several occasions and had lived together at one point. The reconciliation failed and he lives with his son.
In response to the lawsuit, Hawley argued that there was no attempt at deception and is asking that the case be dismissed and reimbursed for legal costs.
MS Properties requested a jury trial. He is represented by Lukins & Annis PC, a Spokane law firm. Hawley is represented by Davidson Backman Medeiros PLLC, also of Spokane.