2014 VT 261


Currie v. Jané
(2013-261)
 
2014 VT 106
 
[Filed 05-Sep-2014]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2014 VT 106

 

No. 2013-261

 

Janet
  K. Currie


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Addison Unit,


 


Civil
  Division


 


 


Paul
  C. Jané


March
  Term, 2014


 


 


 


 


Helen
  M. Toor, J.


 

 
Michelle A.
Kenny of Tepper Dardeck Levins & Gatos, LLP, Rutland, for Plaintiff-Appellant.
 
Benjamin H. Deppman
and Lesley B. Deppman of Deppman
& Foley, P.C., Middlebury, for
  Defendant-Appellee.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund,
Robinson and Crawford, JJ.[1]
 
 
¶ 1.            
ROBINSON, J.   Plaintiff challenges a partition order
reflecting the trial court’s conclusion that defendant had an 81.7%
interest in the home that plaintiff and defendant purchased together, and
applying various setoffs for contributions to the maintenance of the home after
the parties purchased it.  We affirm.
¶ 2.            
In response to plaintiff’s action for partition of jointly owned
property, filed in February 2010 in the Addison superior court, the trial court
found the following facts. The parties met in 2002 or 2003 and had a romantic
relationship. In August 2007, the pair bought a house in Orwell. Prior to the
purchase, plaintiff had been renting an apartment within the house from the
owners of the property, the Tricketts.  After
the sale, defendant moved in with plaintiff. 
¶
3.            
The parties bought the house for $245,000.  Defendant’s mother
contributed $200,000, defendant paid about $4,300 in closing costs, and the Tricketts financed a $45,000 private mortgage to the
parties. Defendant’s mother did not ask for a promissory note, and her
contribution was a gift rather than a loan. In particular, the contribution was
intended as a gift to defendant, not to plaintiff. Although both parties signed
the promissory note to the Tricketts, plaintiff took
responsibility for making those payments, and was supposed to pay the balloon
payment on the mortgage in August of 2010. The property was titled to the
parties as joint tenants with rights of survivorship.  
¶
4.            
Sometime after the closing, plaintiff signed an indemnification
agreement that expressly acknowledged that defendant paid $200,000 plus the
closing costs, that plaintiff was solely responsible
for the $45,000 mortgage debt, and that plaintiff would indemnify defendant for
any default on that debt.
¶
5.            
Plaintiff testified that she always believed that each party had a fifty
percent interest in the property, while defendant testified that his
understanding was that he had an interest in the property commensurate with his
$200,000 contribution, and plaintiff had an interest commensurate with her
$45,000 contribution.  The attorney who conducted the closing for the
parties corroborated defendant’s testimony.  The trial court expressly
rejected plaintiff’s testimony and concluded that both parties understood that
their interests were defined by their respective contributions to the purchase
price.[2]

¶
6.            
The parties later secured a $50,000 home equity line of credit from
Merchants Bank. The note was in defendant’s name, and he made payments while he
lived at the home. Defendant used the line of credit to buy a new $16,500 car,
and plaintiff used it to pay off a debt of $10,642 on her car.  Plaintiff
also used the line of credit without authorization from defendant for
miscellaneous expenses.
¶
7.            
Defendant has paid for several home-improvement projects, including a pond
installation, repairs to the drainage around the house, and masonry work. While
defendant lived at the residence, he paid for insurance, taxes, and utilities. His total contributions for repairs and maintenance, plus the
closing costs, totaled $72,484.
¶
8.            
The parties’ relationship ended, and defendant moved out of the house in
January 2009.  In February, he stopped paying the expenses for the
property and ignored plaintiff’s requests for assistance. 
¶
9.            
Since that time, plaintiff has paid for all of the expenses for the home
including insurance, utilities, fuel, and expenses to maintain the property,
totaling $35,150 at the time of trial. Plaintiff also completed repair work on
the house, including “sheetrocking one room, roof
work, replacing the oil tank, replacing the water tank, having a rotten section
of the barn removed, and replacing two broken windows.”  These repairs
totaled $9,250.  Plaintiff claims to have paid property taxes, but failed
to provide reliable evidence to the trial court proving that she did so. 
¶
10.        
Plaintiff has rented out a portion of the house since April 2010,
collecting $700 per month. As of the trial, plaintiff had earned $27,300 from
renting the house. She did not share any of this income with defendant. 
¶
11.        
Plaintiff did not pay the balloon payment on the mortgage, and in 2010,
the Tricketts filed a petition for foreclosure. In
November 2011, plaintiff filed for bankruptcy to avoid losing the property.[3] Plaintiff’s mother helped her to redeem
the property by borrowing $143,000 against the equity in her own home.
Plaintiff currently pays $818 per month toward this mortgage on her mother’s
house used to finance the redemption of the parties’ house—$56,691 to the Trinketts, $12,031 for past-due property taxes, and $71,722
to pay off the home equity loan. 
¶
12.        
In August 2011, in the face of an inevitable foreclosure sale, the court
ordered plaintiff to sell the house.  Plaintiff did not comply with the
order, as she never made herself available for a realtor to see the interior of
the property in order to list it. In November 2011, the court found plaintiff
in contempt on that basis.  In its decision below the trial court found
that plaintiff intentionally failed to follow up to list the house.  
¶
13.        
In the partition action, plaintiff sought to keep the house and buy out
defendant’s interest.  Defendant wanted the property awarded to him so
that he could sell it and then disburse the amounts allocated by the court to
plaintiff.  Neither party sought to divide the property into two lots. The
property was appraised at $240,000. 
¶
14.        
The parties submitted the matter to the court.[4]  On the basis of the above findings,
the trial court analyzed the parties’ interests and respective obligations as
follows.  First, it concluded that when the parties purchased the
property, they intended to own it in shares proportionate to their original
contributions: 81.7% to defendant, and 18.3% to plaintiff.  
¶
15.        
Second, the court considered all of the various contributions by the
parties to maintaining and improving the property, as well as the rental income
that plaintiff received, and attempted to calculate setoffs.[5]  The court reasoned that, in
contrast to its finding as to how the parties intended to own the equity in
their property, they intended to contribute equally to the home’s upkeep and
share in its benefits.  Accordingly, the court calculated its setoffs on
the assumption that the parties shared equal responsibility for the maintenance
and upkeep of the house.  It also concluded that plaintiff did not oust
defendant from the property such that defendant was entitled to payment from
plaintiff for half the rental value of the total property.  
¶
16.        
Turning to the numbers, the trial court concluded that plaintiff had put
a total of $187,400 into the property (including the $143,000 borrowed against
her mother’s house to redeem the property), but deducted two items: first, half
of the rental payments she had received after defendant left, on the theory
that she should have shared the rental payments with defendant, and second,
money for funds plaintiff had misappropriated from defendant, on the theory
that she should not get “credit” for paying off defendant’s home-equity line to
the extent it was used to finance personal expenditures undertaken without
defendant’s authorization.  Accordingly, the trial court concluded that
plaintiff’s adjusted post-purchase contributions were $165,350, and defendant’s were $72,484, leaving defendant with a net
obligation to plaintiff for post-purchase contributions of $46,433.
¶
17.        
The trial court gave plaintiff the option of buying out defendant, on a
short timetable, for $158,144 (calculated by the court as the $240,000 value of
the property, less $46,433 multiplied by defendant’s 81.7% interest in the
property).  Alternatively, if plaintiff did not buy out defendant within
thirty days, the court would issue a writ of possession for defendant so that
defendant could sell the house and divide the proceeds so that plaintiff would
receive $46,433 off the top, and the parties would divide the remaining equity
81.7% to 18.3%.
¶
18.        
On appeal, plaintiff argues that the trial court’s allocation of 81.7%
of the equity in the jointly owned property is not supported by the evidence,
and that the trial court’s requirement that plaintiff pay defendant $158,144 to
buy out his interest is clearly erroneous and inequitable.
I.      
 
¶
19.        
We will uphold the trial court’s findings as long as they are supported
by any credible evidence in the record.  Whippie
v. O’Connor, 2010 VT 32, ¶ 12, 187 Vt. 523, 996 A.2d
1154.  We review questions of law de novo.  Office of Child
Support ex rel. Lewis v. Lewis, 2004 VT 127, ¶ 6, 178 Vt. 204, 882 A.2d 1128.  And we review the trial court’s
exercise of discretion in applying the equitable remedy of partition for abuse
of discretion.  Weed v. Weed, 2008 VT 121, ¶ 16,
185 Vt. 83, 968 A.2d 310.
¶
20.        
In this case the trial court properly acknowledged the statutory
presumption that when people purchase property together, absent other evidence,
there is a legal presumption that they share equal ownership interests. 
27 V.S.A. § 2(b)(2)(A) (“Unless the instrument
creating a joint tenancy contains language indicating a contrary
intent . . . [i]t shall be
presumed that the joint tenants’ interests are equal.”).  It concluded,
though, that the evidence in this case was sufficient to rebut the
presumption.  It relied on the testimony of defendant and the lawyer who
managed the closing and who was employed by plaintiff at the time of the
closing; the post-closing indemnification agreement acknowledging defendant’s
$200,000 contribution and assigning sole responsibility for the $45,000 debt on
the property to plaintiff; and its conclusion that, for a host of reasons, plaintiff
was not a credible witness. 
¶
21.        
Plaintiff suggests that where the deed titles property to joint tenants
with rights of survivorship, the presumption of equal ownership interests is
conclusive.  We disagree.  The presumption reflected in 27 V.S.A.
§ 2(b)(2)(A) is an evidentiary presumption,
subject to rebuttal.  See, e.g., Whippie,
2010 VT 32, ¶ 14 (recognizing that presumption of ownership in equal
shares is rebuttable).  In Whippie,
we held that “[d]espite the presumption of equal
contribution and equal interest, when one cotenant pays more than his or her
share of property-related expenses, she or he is entitled to proportionate
reimbursement, or credit, from the other tenants to reflect the proportionate
burden of co-ownership.”  Id. ¶ 16 (citation omitted); see
also Massey v. Hrostek, 2009 VT 70, ¶ 17,
186 Vt. 211, 980 A.2d 768, overruled in part on other grounds, Whippie, 2010 VT 32, ¶¶ 13-17 (concluding that
trial court’s finding that one party intended to convey nothing was unsupported
by record, and was therefore insufficient to rebut the presumption established
by 27 V.S.A. § 2(b)(2)(A)).  
¶
22.        
We have identified various factors relevant to the partition accounting,
including all of the property-related expenses paid by each party, such as
mortgage payments, necessary utilities, taxes, insurance, and maintenance
expenses.  Whippie, 2010 VT 32, ¶ 16.  Other courts have recognized
that unequal contributions to the purchase price of the property may be a
significant factor, though the significance of this factor may depend on
whether the other evidence suggests that the party who contributed more
intended to make a gift by doing so.  See, e.g., Felderman
v. Zweifel, 346 S.W.3d 386, 389 (Mo. Ct. App.
2011) (stating that evidence that co-tenants who contributed unequally toward
purchase of property may rebut presumption of equal ownership, but such
evidence may also be explained by evidence of intent to make enforceable gift);
Anderson v. Woodward, 2009 MT 144, ¶¶ 17, 18, 207 P.3d 329 (holding
that evidence of unequal contribution to asset may rebut presumption that joint
tenants own equal shares, but does not necessarily apply where relationship
between parties indicates that one might have intended to make gift to other); Pederson
v. Brook, 851 A.2d 627, 630 (N.H. 2004) (concluding that under partition
statute, parties’ contributions to acquisition of, maintenance for, repair of,
preservation of, and improvements to property, as well as duration of occupancy
and nature of use, contractual agreements as to disposition of property, and
status of legal title are all factors court may consider when determining
whether presumption of equal ownership has been rebutted).   
¶
23.        
In this case, the trial court relied on the following facts: the
parties’ undisputed substantially divergent contributions to the price of
purchasing the property; the fact that defendant’s contribution was financed by
a gift from his mother to him; plaintiff’s execution of the
indemnification agreement acknowledging defendant’s contribution to the
purchase price and agreeing to indemnify him in connection with the debt
incurred to finance her share of the purchase price; and the testimony
of two out of three witnesses, including the attorney who represented the
parties at the closing, as to their understanding of the parties’ intentions
when they purchased the property.  The trial court found that defendant
had not previously purchased real estate, and was not aware that he could have
asked the lawyer to state what percentage interest each of the parties would
have.  The trial court concluded on the basis of plaintiff’s prior actions
and inconsistent testimony that plaintiff was not a credible witness.  We
will not set aside the trial court’s findings concerning the credibility of
witnesses.  Nystrom v. Hafford, 2012 VT
60, ¶ 12, 192 Vt. 300, 59 A.3d 736. We conclude
that the trial court’s finding that the parties intended to own the property in
a 81.7% to 18.3% proportion was amply supported by its
findings and the underlying evidence.
II.
¶
24.        
Plaintiff next argues that the trial court’s order effectively required
her to pay over $300,000 to keep the property (the $143,000 she borrowed from
her mother to redeem the property, for which she was liable independent of the
trial court’s decision, and the $158,144 the court ordered that she pay
defendant).  That is more than the $240,000 that the property was actually
worth and was thus, plaintiff argues, inequitable and a windfall to
defendant.  Plaintiff does not identify particular flaws in the trial
court’s analysis but instead argues that the outcome of the trial court’s
calculations was inequitable.  
¶
25.        
We review the trial court’s assessment of equitable remedies, like
partition, for abuse of discretion, and will uphold the trial court’s judgment
unless the trial court has withheld its discretion entirely or exercised it
“for clearly untenable reasons or to a clearly untenable extent.”  Weed, 2008 VT 121, ¶ 16.  We cannot
conclude on the basis of plaintiff’s general arguments that the trial court
abused its discretion. 
¶
26.        
First, the trial court did not abuse its discretion in giving plaintiff
a short window in which to buy out defendant.  The court recognized that
in a partition action, “partition in kind is preferable to assignment, and
assignment is preferable to sale.”  Wilk v. Wilk,
173 Vt. 343, 346-47, 795 A.2d 1191, 1193-94 (2002).  In this case,
neither party argued for partition in kind.  The court gave plaintiff an
opportunity to buy out defendant’s interest subject to a short time limit
unless the parties negotiated a different period.  The court explained the
short timeline by noting that plaintiff was previously in contempt of a court
order to sell the property, and has been aware of the possible result of the
partition action for a long time.  Moreover, given that its decision was
in June, the court worried that a more extended deadline would make it
difficult to sell the house that year.  These decisions were within the trial
court’s discretion to achieve equity.  See id. at
346, 795 A.2d at 1194 (statutes governing partition “should be interpreted to
give the trial court as many options as possible to achieve equity between the
parties, including an expansive power to assign property to one of the
co-tenants”).  
¶
27.        
Nor did the trial court abuse its discretion in determining the amount
plaintiff would have to pay to buy out defendant’s interest.  Plaintiff’s arguments
fail to recognize the reasons that her buy-out cost plus existing debt on the
property exceed the property’s value.  The $143,000 debt plaintiff accrued
to redeem the property exceeded the original principal of plaintiff’s $45,000
debt on the property by nearly $100,000.  In addition to repaying the
original debt, the $143,000 to redeem included the cost of unpaid and past-due
property taxes, $72,000 to pay off a line of credit secured by the property but
used for a variety of personal expenses, and interest and fees associated with
the foreclosure of the property.  In addition, the trial court reduced
plaintiff’s credit to account for purchases she made using defendant’s personal
checks and credit card without his authorization.  Given the extensive
debt and additional expenses built up by the parties in connection with, or
attached to, the property, it is no surprise that plaintiff would have to pay
more than the value of the property to satisfy her debt to defendant and keep
the property.
¶
28.        
Moreover, defendant, too, stands to lose relative to his initial
investment and the value of this house.  He initially invested $200,000 to
purchase the house.  He contributed $72,484 to closing costs, taxes,
insurance, and other costs of carrying the house.  If plaintiff buys him
out with a payment of $158,144, he will be out of pocket in an amount exceeding
$110,000 in connection with this property—hardly the windfall that plaintiff
claims.  Putting aside the carrying costs for the house, he will net
$42,000 less than he paid for the house.  Given the parties’ decisions and
actions, everybody was bound to lose financially in connection with this
partition.
¶
29.        
The trial court’s approach was not the only possible approach, but was
within its broad discretion.  We recently explained:  
Absent a compelling alternative approach, once cotenancy is established, the partitioning court should
split the property in half and then consider equitable factors in the following
order.  First, the court may determine the contributions of each party
towards the actual expenses of the house, including mortgage, insurance, taxes,
utilities, repairs, and improvements.  These contributions can credit a
party for payment of other expenses, but only where, by agreement with the
other cotenants, the claiming party paid more than its pro-rata share of such
other expenses in lieu of a pro-rata contribution to its shared
obligation on the real property bills.
 Second, the court should credit against contribution claims a rental
value offset for any period of exclusion of a party ousted from the premises by
the cotenants in possession.  The court should next consider other
equities cognizable in partition and then any allocation of costs and fees
arising from partition.
 
Whippie, 2010 VT 32, ¶ 15 (footnote omitted).  The trial court here considered these factors, exercising
discretion in applying them.  It concluded, based on the evidence
presented, that the parties intended to hold disproportionate underlying equity
on account of their disparate initial investments, but intended to bear the
ongoing carrying costs of the property equally.  It credited both parties
for their contributions—including crediting plaintiff for contributions to
redeeming the property against a foreclosure with respect to which she had
previously agreed to indemnify defendant.  And it gave both parties the
benefit of rental payments.  It reduced plaintiff’s credit on account of
her unauthorized expenditures of defendant’s monies.  Although the trial
court’s decision to apply the credit in plaintiff’s favor on account of her
proportionately higher net contributions against the full value of the
property, rather than against defendant’s interest in the property, may have
deprived her of the full value of the credit the trial court assigned her, this
discrepancy is more than outweighed by the benefit to plaintiff of the trial
court’s crediting her entire contribution to redeem the property, including
that portion that covered expenses arguably within the indemnification
agreement.  Accordingly, we conclude that the trial court’s partition
order was within its discretion. 
           
Affirmed.
 

 


 


FOR THE
  COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate Justice

 





[1] 
Justice Crawford was present for conference on the briefs, but did not
participate in this decision.


[2]
 The trial court concluded that the parties did not consider the $4,500
closing costs paid by defendant to be reflected in their proportionate
ownership of the property; rather, it was a separate expenditure similar to
other subsequent payments by each party discussed below.


[3] 
The trial court dismissed the partition action in response to the bankruptcy
proceeding, but then reopened it after the bankruptcy case ended.


[4] 
The parties apparently waived the appointment of commissioners.
 


[5] 
The court also considered expenses, such as utilities, that are arguably better
viewed as costs of day-to-day living rather than costs of maintaining the
property.



