Cohabitation,
Nonmarital. Real Property, Tenancy
in common. Unjust Enrichment. Trust,
Resulting trust, Constructive trust.
Loan.
COMPLAINT filed in the Worcester Division
of the Probate and Family Court Department
on April 14, 2003.
The case was heard by Lucille A. DiLeo,
J.
Howard J. Potash for the plaintiff.
Michael J. McManus for the defendant.
GELINAS, J.
Sharon M. Sutton appeals from a judgment
in the Probate and Family Court ruling
that she has no interest in certain
real estate owned as a tenant in common
with Charles Valois and requiring
that she repay Valois funds she obtained
from him during the parties' relationship.
We affirm.
We recite the facts as found by the
trial judge, undisputed in the record,
or in conformity with the judge's
findings, Bruno v. Bruno, 384 Mass.
31, 35 (1981), generally reserving
detail for discussion of the issues.
Sutton, a nurse earning approximately
$32,000 a year, and Valois, an electrical
engineer earning approximately $65,000
a year, met in October of 1999 and
began dating. Valois moved in with
Sutton and her roommate in April of
2000. While the parties lived there
Valois paid one third of the rent.
In July, 2000, Valois purchased, in
his name alone, a home at 16 Logan
Path in Grafton for $143,500, financed
entirely through withdrawals from
his investment accounts. The parties
lived together at the Logan Path home
until the end of October, 2002.
During this period, Sutton asked Valois
to loan her $20,000 so that she could
pay off a car loan. Valois loaned
her the money, and Sutton agreed to
pay him back at the rate of approximately
$500 per month. She made seven payments,
amounting to $3,500. The parties then
began to discuss the possibility of
marriage. After that discussion of
marriage, Valois indicated that Sutton
need not repay the debt.
In their discussions about marriage,
the parties talked of having children
and buying a bigger house, which would
include space for Sutton to operate
a planned massage business. In May
or June of 2001, the parties became
engaged.
In October of 2002, based on the proposed
marriage, the parties bought a house
at 4 Hill Road in Grafton for $274,000.
Both signed the purchase and sale
agreement, the mortgage application,
and the mortgage and promissory note.
The deposit and the cash paid at closing,
however, including the down payment,
totaling in excess of $80,000, were,
in effect, paid by Valois. [FN1] Although
the money paid came from checks drawn
on a joint checking account, all of
the funds for the down payment were
deposited in that joint account by
Valois, who had emptied his retirement
account to do so. While Sutton had
made some contributions to the joint
account, her withdrawals for her personal
and credit card expenses exceeded
her contributions.
The property was deeded to Sutton
and Valois; as it does not specify
the manner in which the parties took
title, they are presumed to have taken
title as tenants in common. G.L. c.
184, § 7. See Russo v. Russo, 3 Mass.App.Ct.
364, 367 (1975).
The parties moved to their new home
on November 1, 2002; Valois rented
out the house at Logan Path. During
the time they lived in the new home,
Sutton collected four rent checks
from the tenant who was now occupying
the house at 16 Logan Path. Valois
maintained at trial that these checks,
totaling $2,500, were to be deposited
in the joint account; they were in
fact retained by Sutton and deposited
in her personal account. Sutton maintained
that she did this with Valois's knowledge
and approval and that Valois had told
her to keep the checks. The probate
judge made an explicit finding that
Valois was credible and Sutton was
not on this issue, and ruled that
Sutton had been unjustly enriched
in part by "the four rent checks
[s]he obtained from Mr. Valois'[s]
tenant." Sutton maintained that
Valois had told her to keep the checks.
A month after moving into their new
home, in December of 2002, the relationship
soured. In February, 2003, approximately
three years after they began living
together, and eight or nine months
after becoming engaged, Sutton told
Valois that she was never going to
marry him and have children with him.
She declined to go to counseling,
and began to contact other men on
the internet and to remain away from
the house for extended periods. When
she left for the weekend of March
7 and 8, Valois packed her personal
belongings and put them in the garage.
Sutton retrieved her belongings thereafter,
withdrew $4,000 from the couple's
joint account, and the relationship
terminated.
In April of 2003, Sutton filed a complaint
in equity in the Probate Court, seeking
equitable division of personal property
and a one-half interest in the house
at 4 Hill Road. She also filed a petition
for partition of the property.
Valois filed a cross complaint, which
he later amended. In six counts, he
sought reformation of the deed based
on fraud, on mutual mistake and intent,
and on misrepresentation of material
fact. He also claimed equitable distribution
of personal property, unjust enrichment
and a resulting trust. As relief,
Valois sought to be declared the sole
owner of the house, repayment of the
balance of Sutton's debt to him, payment
of the rent checks retained by Sutton,
and repayment of the $4,000 withdrawn
from the joint account.
While the case was pending, and against
a background of declining interest
rates, the judge ordered Sutton to
convey her interest in the property
to Valois, so that he could refinance
the home at a lower rate of interest.
Without objection, Sutton conveyed
her interest to Valois, the reduced
interest mortgage was obtained, a
court-ordered notice of lis pendens
concerning the property was immediately
placed on the record, and a motion
to dismiss the petition for partition
was filed.
Prior to trial, the parties resolved
all differences with respect to the
personal property. At trial the only
issues before the judge were the ownership
of the house and the money, if any,
owed by Sutton to Valois.
The judge provided what she styled
a "brief rationale" in support
of her judgment, which declared Valois
to be the sole owner of 4 Hill Road,
and ordered Sutton to repay Valois
the balance of the loan, the four
rent checks, and the four thousand
dollars withdrawn from their joint
checking account, totaling $23,000.
[FN2]
In her rationale, the judge first
concluded that the value of the property
as of March 1, 2003, was $270,000,
some $4,000 less than had been paid.
She based the value on a real estate
appraisal performed for Valois by
Thomas Walsh, whom she found credible.
She found Sutton's appraiser, who
valued the property at $307,000, not
credible. The judge ruled that, since
Valois had paid the entire down payment
for the real estate and there was
no equity increase in the property,
it was "equitable to award him
sole ownership." She also concluded
that Sutton had been unjustly enriched
in the amount of $23,000, "when
she knew that the relationship was
irretrievably broken down, yet continued
to avail herself of funds of, or belonging
to Charles Valois." The amount
included $16,500 as the remaining
balance of the $20,000 loan, the four
rent checks totaling $2500 obtained
from the tenant, and $4,000 withdrawn
from the joint checking account on
March 10, 2003, after the relationship
had ended.
1. Remedies available to cohabitants.
"Cohabitation in Massachusetts
does not create the relationship of
husband and wife in the absence of
a formal solemnization of marriage,
... [and] the incidents of the marital
relationship [do not] attach to an
arrangement of cohabitation."
Collins v. Guggenheim, 417 Mass. 615,
617 (1994). Common law marriage is
not recognized in Massachusetts. Id.
at 618.
The Supreme Judicial Court has, however,
held valid oral promises between unmarried
cohabitants, so long as "illicit
sexual relations were [not] an inherent
aspect of the agreement or a 'serious
and not merely an incidental part
of the performance of the agreement.'
" Margolies v. Hopkins, 401 Mass.
88, 92 (1987), quoting from Green
v. Richmond, 369 Mass. 47, 51 (1975).
More recently, in Wilcox v. Truax,
427 Mass. 326 (1998), in adjudicating
a claim with respect to the disposition
of property between unmarried cohabitants,
the court held that "unmarried
cohabitants may lawfully contract
concerning property, financial, and
other matters relevant to their relationship."
Id. at 332. In so doing, the court
recognized that "[s]ocial mores
regarding cohabitation between unmarried
parties have changed dramatically
in recent years and living arrangements
that were once criticized are now
relatively common and accepted."
Id. at 330. "Such ... contract[s
are] subject to the rules of contract
law, and [are] valid even if expressly
made in contemplation of a common
living arrangement, except to the
extent that sexual services constitutes
the only, or dominant, consideration
for the agreement, or that enforcement
should be denied on some other public
policy ground." Id. at 332. Cases
to the contrary in Massachusetts were
expressly overruled. Ibid. [FN3] The
court in Wilcox, supra at 335, also
acknowledged that, in the circumstances,
the Probate Court had jurisdiction
over the plaintiff's quantum meruit
claim.
Wilcox, supra at 331 n. 3, however,
limits the grant of property rights
to cases where there is an express
contract and does not provide for
an equitable distribution of property.
See Northrup v. Brigham, 63 Mass.App.Ct.
362, 369-370 (2005). Equitable remedies
are, however, available to cohabitants.
See Collins v. Guggenheim, 417 Mass.
at 617-618 (constructive trust); Northrup
v. Brigham, supra at 366-367 (quantum
meruit). See also Wilcox v. Truax,
supra at 335.
Other states permit equitable claims
by, and grant equitable remedies to,
unmarried cohabitants as they seek
resolution of property issues, where
the claims are not specifically predicated
either on sexual relations, or, in
some cases, on the status of being
an unmarried cohabitant; these courts
generally conclude that equitable
remedies will not contravene a public
policy recognizing the importance
of marriage. See, e.g., Salzman v.
Bachrach, 996 P.2d 1263, 1267-1269
(Colo.2000) (contributing cohabitant's
unjust enrichment claim did not depend
on sexual relations, and thus, public
policy did not preclude that claim);
Spafford v. Coats, 118 Ill.App.3d
566, 572-573 (1983) (claims of plaintiff
were "substantially independent
of the nonmarital relationship of
the parties and [were] not based on
rights arising from their cohabitation";
thus, claim of unjust enrichment was
permitted). Here we proceed to address
the plaintiff's equitable claims.
2. The Hill Road property. Sutton
first argues that the judge erred
when she ruled that Valois should
retain sole ownership of the 4 Hill
Road property "by virtue of a
resulting trust." As Valois observes,
however, the judge did not state,
either in the judgment or in her brief
rationale, that the judgment with
respect to the ownership of the property
rested on a theory of resulting trust.
She simply stated, "Mr. Valois
contributed all the money for the
acquisition ... [and] there is no
equity to be divided between the parties.
Since Mr. Valois paid the entire down
payment ... the Court finds it equitable
to award him sole ownership."
While this language might seem to
indicate a judgment based on the judge's
personal notions of fairness and equity,
see, e.g., Raymond Leasing Corp. v.
Callico Distribs., Inc., 62 Mass.App.Ct.
747, 749 n. 3 (2005), when considered
in the context of the judge's factual
findings, it is clear that the judgment
is founded in recognized equitable
doctrine. Though not stating as much,
the judgment in effect denied any
claim, based on either legal or equitable
grounds, that Sutton made for a share
in the property.
>From the judge's findings, it is
clear that Sutton's claims are not
predicated either solely or predominantly
on sexual services. Sutton's original
claim, and any later equitable claim
arising after her transfer of title
to Valois, was predicated on her holding
legal title to the property together
with Valois, along with her signing
the note and mortgage. Sutton yielded
any legal claim when, in compliance
with court order, and without any
written agreement or reservation with
respect to her claim of title, she
transferred her legal interest in
the property to Valois, so that the
property might be remortgaged.
Upon the voluntary transfer of her
interest in the property, albeit at
the order of the probate judge, Sutton
moved to dismiss her separate petition
for partition, and her claim became
an equitable one, based on equitable
theories of unjust enrichment, constructive
trust, or resulting trust. See Fortin
v. Roman Catholic Bishop of Worcester,
416 Mass. 781, 789-790, cert. denied,
511 U.S. 1142 (1994). Sutton's original
pleadings suffice to permit consideration
of her claims on the equitable theories
of unjust enrichment, were Valois
to retain sole ownership without payment
to her, or that, after her conveyance
of the property to him, Valois then
held title in a constructive or resulting
trust for Sutton's benefit.
We conclude, on the grounds apparent
in the record, [FN4] as outlined below,
that there was no error in the determination
that Valois should have sole ownership
of the property. We consider each
of Sutton's equitable claims in turn.
In advancing her claim, Sutton first
challenges the judge's finding that
Valois contributed the entire down
payment for the property but, as Valois
argues, the judge's finding is supported
by uncontroverted testimony that Valois
was, by a mathematical necessity,
the financial source for the entire
down payment. Sutton withdrew for
her own use monies in excess of all
deposits she made to the joint account,
and Valois contributed not only monies
sufficient for the down payment, but
to make up for Sutton's excess withdrawals.
Further, it is also uncontroverted,
and the judge found that (1) the parties
were engaged to be married when they
purchased the house in October, 2002;
(2) a principal reason for purchasing
the house was that it was big enough
so that the parties could begin a
family together; (3) in December,
2002, the couple began to have problems
with their relationship; (4) in February,
2003, Sutton told Valois that she
would never marry him or have children
with him; and (5) she departed permanently
from the residence in early March,
2003. These findings would support
an ultimate finding that Valois advanced
the monies for the purchase and that
he agreed to the tenancy in common
predicated on Sutton's promise to
marry and to have a family with him.
A determination that a party would
be unjustly enriched "require[s],
generally, ... that [the] party [would]
hold property under such circumstances
that in equity and good conscience
he ought not retain it." Stevens
v. Nagel, 64 Mass.App.Ct. 136, 141
(2005), quoting from Simonds v. Simonds,
45 N.Y.2d 233, 242 (1978). "The
fundamental question in the present
case [, therefore,] is whether [Valois]
... received [a property interest
that] in equity and good conscience
belongs to [Sutton]." National
Shawmut Bank of Boston v. Fidelity
Mut. Life Ins. Co., 318 Mass. 142,
150 (1945). A determination on the
unjust enrichment here hinges on "the
reasonable expectations of the parties."
Community Builders, Inc. v. Indian
Motocycle Assocs., Inc., 44 Mass.App.Ct.
537, 560 (1998). We conclude that
it would be unreasonable for Sutton
to expect to gain an ownership interest
in the property where its purchase
was predicated on her promise to marry
and have a family, a promise that
she broke soon after the purchase.
While the promise to marry and have
a family obviously connotes a promise
with a sexual dimension, this vastly
complex relationship and undertaking
cannot be said to be solely, or even
predominantly, sexual in a way offensive
to public mores. If Sutton were to
receive "one-half of the property's
fair market value less the original
outstanding mortgage obligation"
that she suggests should be hers,
she would receive a windfall of half
of Valois's approximately $80,000
deposit, having contributed no funds
toward that deposit. It would contravene
any notions of equity and good conscience
to conclude that Valois must face
the possible loss of some $40,000,
given the fact that he expended the
funds and agreed to accept the property
in his and Sutton's name in anticipation
of marriage and a family with Sutton,
plans that began to fall apart less
than two months after the purchase
of the property. This is particularly
so given the dearth of evidence as
to any monetary contribution Sutton
made to the relationship. In sum,
Sutton would be unjustly enriched
if she were found to possess an interest
in the property such that she could
recover any of Valois's deposit, and
the Probate Court judge crafted a
proper equitable solution on this
issue. See in this regard, De Cicco
v. Barker, 339 Mass. 457 (1959).
Nor could Sutton prevail on a theory
that Valois held a share of the property
for Sutton in constructive or resulting
trust. A constructive or resulting
trust may be imposed to prevent injustice,
unjust enrichment, or fraud. See State
Street Bank & Trust Co. v. Beale,
353 Mass. 103, 105 (1967); Fortin
v. Roman Catholic Bishop of Worcester,
416 Mass. at 789-790. They are equitable
remedies, applied where there is no
stated intention to create a trust
and where legal title to property
is obtained by fraud, in violation
of a fiduciary relationship, where
confidential information was misused,
or where there was "significant
wrongdoing" by the party claiming
title. See Barry v. Covich, 332 Mass.
338, 342 (1955); Massachusetts Wholesalers
of Malt Bevs., Inc. v. Attorney Gen.,
409 Mass. 336, 342-343 (1991); Demoulas
v. Demoulas, 428 Mass. 555, 572 (1998).
Nothing in the record here suggests
that Valois obtained legal title by
fraudulent means or by "significant
wrongdoing." He obtained his
legal title by providing all of the
cash consideration for the purchase
and by his agreement to pay the note
secured by the mortgage to the property.
Full title to the property came to
rest in Valois as the result of a
court order made in the course of
the present proceedings. All obligations
that Sutton had to pay under the original
note were extinguished by the new
mortgage and note on which Valois
alone was obligated. Nothing in the
record suggests that Sutton contributed
to any of the initial mortgage payments.
There is no suggestion in the record
that Valois engaged in fraud, either
on Sutton or on the court, with respect
to obtaining full title to the property
or by refinancing the existing mortgage
at more favorable rates. Sutton conveyed
her interest in the premises to Valois
without contesting or appealing the
court order and voluntarily dismissed
her claim for partition.
As there was no fraud or other wrongdoing
with respect to Valois's obtaining
full title to the property, and no
enforceable agreement, Sutton's claim
for a constructive or resulting trust
could only be based on unjust enrichment.
Compare Lewis v. Mills, 32 Mass.App.Ct.
660 (1992). As set out supra, any
such claim must fail. Recovery on
a theory of Valois's being unjustly
enriched would be appropriate "only
if the circumstances of [his] retention
are such that, as between [Sutton
and Valois] it is unjust for [Valois]
to retain [it]." Restatement
of Restitution § 1 comment c (1937).
Valois's retaining the entire premises
does not have the characteristics
of a "windfall." J.A. Sullian
Corp. v. Commonwealth, 397 Mass. 789,
794 (1986). Sutton's claim in this
regard must fail.
3. Propriety of order that Sutton
repay Valois $23,000. Sutton challenges
the Probate Court judge's determination
that Sutton was required to repay
the $16,500 balance on Valois's $20,000
loan to her, claiming "the evidence
raised the inference" that Valois
waived repayment. Sutton relies on
testimony in which Valois acknowledged
that he made the loan to Sutton because
he loved her, but ignores Valois's
direct denial--found in the same section
of testimony cited by Sutton--that
he ever told Sutton that he forgave
the debt. It was for the Probate Court
judge to evaluate and weigh the witness
on this point, including her determination
of the credibility of the testimony,
see Adoption of Daniel, 58 Mass.App.Ct.
195, 200 (2003). Nothing in the record
directs us to a conclusion that the
judge committed clear error in holding
Sutton to the legal obligation created
by the $20,000 loan. The evidence,
rather, suggests that any waiver of
the original loan payments was predicated
on Sutton's promise to marry.
Regarding the $2,500 in rent money
that Sutton was ordered to return,
Sutton relies on her testimony--contradicted
by Valois's testimony--that Valois
knew that she was depositing the checks
into a separate account. Here again,
it was the Probate Court judge's province
to resolve conflicts in testimony
and to evaluate the parties' credibility
as witnesses. The testimony permitted
the judge to conclude that the rent
checks at issue were wrongfully diverted
by Sutton and that, as Sutton lacked
any reasonable expectation that she
had permission to retain the funds
for her own use, equity and good conscience
required that the rent be remitted
to Valois.
Finally, as regards the $4,000 that
Sutton withdrew from the parties'
joint checking account when the couple's
relationship reached its end, Sutton
argues that she justifiably emptied
the account "in order to help
pay the expenses of reestablishing
herself as a single person living
in an apartment." As Valois observes,
however, at the time of the parties'
parting, Sutton had taken out of the
account for personal expenses more
than she had contributed to it, leaving
in the account only money contributed
by Valois. The Probate Court judge
did not err in concluding that, if
Sutton were permitted to take the
$4,000 with her, she would receive
a windfall that she could not have
reasonably expected was hers to keep,
and that, on principles of unjust
enrichment set forth, supra, Valois
was entitled to the funds.
Judgment affirmed. |