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Patterson v. Patterson

Court of Appeals of Tennessee, Nashville

April 20, 2017

PEGGY PATTERSON
v.
SHANE PATTERSON

          Session March 22, 2017

         Appeal from the Circuit Court for Cannon County No. 15-CV-16 J. Mark Rogers, Judge

         Stepmother filed a detainer warrant against Stepson and was awarded possession of the real property in the general sessions court. Stepson appealed to the circuit court, and a bench trial was conducted. The trial court awarded the property to Stepmother. We affirm the trial court's finding that no resulting trust was proven. Although we affirm the trial court's finding of unjust enrichment for the improvements on land based on the three-part test under Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512, 525 (Tenn. 2005), we reverse the trial court's award of $37, 000.00 to Stepson for the improvements to the property because Stepson failed to prove the correct measure of damages at trial. Affirmed in part, reversed in part, and remanded.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part; Reversed in Part; and Remanded

          Joshua A. Jenkins, Murfreesboro, Tennessee, for the appellant, Peggy Patterson.

          B. Nathan Hunt, Clarksville,, Tennessee, for the appellee, Shane Patterson.

          J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which Brandon O. Gibson and Kenny Armstrong, JJ., joined.

          OPINION

          J. STEVEN STAFFORD, JUDGE

         Background

         Plaintiff/Appellant Peggy Patterson ("Stepmother") and her husband Milburn Wayne Patterson ("Father, " and, together with Stepmother, "Homeowners") bought the subject real property located at 1429 Mingle Hollow Road, Woodbury, Tennessee, ("property") on December 11, 2003. It is undisputed that Homeowners contributed the down payment on the property, the deed to the property is in the Homeowners' names, and that Defendant/Stepson Shane Patterson ("Stepson"), Father's son from a prior relationship, did not contribute to the down payment. It is also undisputed that Stepson was allowed to live on the property at some point after the purchase of the property and that Stepson was to pay the monthly mortgage, homeowners' insurance, property taxes, and utilities, which were all in the Homeowners' names. The circumstances surrounding this agreement, however, are sharply disputed. To further complicate matters, Father passed away in March 2015.

         Following Father's death, Stepmother filed a detainer warrant in the Cannon County General Sessions Court seeking to regain possession of the property, and a detainer summons was issued on May 14, 2015. After a hearing on July 7, 2015, Stepmother was awarded possession of the property. Stepson timely appealed to the Cannon County Circuit Court ("trial court") and deposited a $7, 885.80 cash bond to "secur[e] payment of mortgage payments of [twelve] months[.]" Sometime in August 2015, Stepson filed an answer and counter-complaint. Although Stepson acknowledged that only the Homeowners' names are on the deed to the property, Stepson denied that Stepmother was entitled to possession of the property. According to Stepson, the parties and Father entered into an agreement prior to the purchase of the property, wherein Homeowners would purchase the property and Stepson would be responsible for the mortgage, property taxes, utilities, and insurance, with the understanding that the property would eventually be conveyed to Stepson.[1] As a result, Stepson requested that the trial court impose a constructive trust on the property and transfer ownership to Stepson subject to the remaining mortgage balance. In addition, Stepson asserted that he made "all payments" on the mortgage and the property taxes and therefore was entitled to credit or offset of those amounts.[2] In addition, Stepson attached Father's purported will, which appeared to devise the property to Stepson. Stepson further alleged that, if the trial court declared Stepmother to be owner of the property, Stepmother would be unjustly enriched because Stepson made repairs and improved the property. Stepson later was allowed to amend his counter-complaint to add a claim for resulting trust based on his payments of the mortgage, property taxes, utilities, and insurance.

         On August 26, 2015, Stepmother answered the counter-complaint, denying all material allegations, and sought to dismiss Stepson's counter-complaint. Stepmother alleged that Father could not have conveyed the property to Stepson by will because she, as a tenant by the entirety, was entitled to the property after Father's death. Stepmother further alleged that Stepson was barred by the statute of frauds from pursuing any action to enforce the alleged contract to deed Stepson the property.

         A bench trial was held on February 8, 2016. The testimony at trial generally concerned (1) whether Homeowners purchased the property for Stepson's benefit and with the intent to eventually convey it to Stepson; and (2) who actually made the required payments over the years on the property, such as the mortgage, property taxes, utilities, and insurance. The evidence on these issues is largely conflicting. Stepmother first testified that she and Father bought the property after learning about it from a family friend and introduced into evidence a warranty deed that conveyed the property to her and Father. According to Stepmother, she and Father discussed the purchase "quite a bit" but that, because she suffered a stroke, Father bought the property in their names while she was at the hospital. Stepmother denied that Stepson contributed any amount toward the down payment. Stepmother also noted that Stepson did not participate in the closing and denied the existence of any agreement purporting to convey Stepson the property. After Homeowners purchased the property, Stepmother testified that the property "just sat there" but that eventually Stepson was allowed to live on the property in exchange for his payment of the mortgage, property taxes, utilities, and insurance.

         Stepmother's testimony regarding the mortgage payments for the property was conflicting. Initially, Stepmother contended that the Homeowners "always paid" the mortgage then immediately conceded that Stepson made "a few payments" while he was living at the property. Stepmother later conceded, however, that Stepson made "[m]aybe four or five" mortgage payments. Stepmother mentioned that Stepson's failure to make the payments was due to the fact that he was not employed. Stepmother did not mention in her testimony any mortgage payments purportedly made by Brother on Stepson's behalf. In any event, Stepmother again denied that Stepson had ever reimbursed Homeowners for any mortgage payments.

         Stepmother's testimony regarding the other financial obligations on the property was more consistent. For example, Stepmother testified that the utilities, property tax records, and homeowners' insurance were either in Father's name or in the Homeowners' names. With respect to the homeowners' insurance, Stepmother testified that Father made those payments before he passed away but that Stepson took over the payment obligations after Father's death. Stepmother agreed, however, that Stepson paid for all of the utilities and homeowners' insurance for several years but that he stopped making the insurance payments one and one-half years before trial. Stepmother further testified that Homeowners "pa[id] [the property taxes] every year" for the subject property.

         When asked whether Stepmother had "any knowledge" of any repairs or improvements made to the property by Stepson, Stepmother responded that she "[didn't] know of any." Stepmother contended that Father "put up a barn" and made repairs and improvements "until he got ill." Stepmother denied asking Stepson to make any repairs and denied that Stepson ever requested that Stepmother pay for the improvements.

         Stepson's testimony sharply conflicted with Stepmother's with regard to the ownership of the property. First, Stepson testified that he was renting a trailer in Murfreesboro prior to 2003 but that he desired to own land in Cannon County. Because of his bad credit, however, Stepson testified that Homeowners, Stepson, and Brother, had a meeting to discuss an arrangement whereby Homeowners would purchase property for Stepson's use and benefit. According to Stepson, Homeowners agreed to help Stepson co-sign for the property with the understanding that if Stepson paid the mortgage, property taxes, utilities, and insurance, that the property would eventually be his; however, Stepson admitted on cross-examination that he did not sign any documents obligating him to make those payments on the property or obligating Homeowners to eventually transfer the property to Stepson. Shortly after the meeting, a family friend informed the parties about a property in Cannon County that was up for sale. Stepson testified that he did not participate in the closing of the property because he was working. Stepson believed that the down payment on the property was a gift because Father helped Brother open a bail bonding business by gifting him approximately the same amount as the down payment to the property. Stepson also denied that the property was unoccupied subsequent to the purchase; rather, Stepson asserted that he moved in shortly after the purchase in December 2003.

         Again, the subject of who made payments toward the financial obligations on the property was a subject of much discussion during Stepson's testimony. According to Stepson, he paid nearly all of the mortgage payments. At times, however, Stepson testified that he required financial assistance. In those situations, Stepson stated that he would ask Father for help, Father would make the payments, and Stepson would promptly reimburse Father for the payments. Stepson estimated that he received such help approximately eight times over the years. Stepson testified, however, that he did not reimburse Father for two of these payments, one of them being a gift for Stepson's birthday.[3] Despite Brother's later testimony that he also helped Stepson make some mortgage payments, Stepson did not mention these purported payments during his testimony.

         Stepson testified that he made every property tax payment but that he called and canceled the check he wrote for tax year 2014 after Stepmother reneged on the purported agreement. As support for the payments, Stepson introduced some, but not all, of the receipts for the mortgage payments, property tax payments, the utility payments, and the insurance payments that he paid directly to the companies, but he admitted on cross-examination that the majority of the receipts do not show who made those payments.[4]

         Stepson testified that he made the house on the property habitable by undertaking numerous repairs over the years, costing him approximately $1, 500.00. Stepson also testified to several other improvements, such as a chicken coop project, costing him approximately $7, 000.00/$8, 000.00.[5] In addition, Stepson testified that he cleared the property and dug a pond, at a cost of approximately $500.00 in fuel for the bulldozer and $300.00 in bentonite.[6] Stepson also stated that the cost of the new horse barn he built was approximately $22, 000.00 to $23, 000.00. Stepson admitted that Stepmother never asked him to make any repairs or improvements to the property and that Stepson did not expect to be paid for his efforts.

         Brother testified that Father withdrew some money out of his 401(k) to help Brother with a bail bonding business by contributing $50, 000.00. Out of fairness, Brother testified that Father helped Stepson with the down payment to the property. Brother corroborated Stepson's testimony that, because of Stepson's bad credit, Stepson sought help from the Homeowners. Brother testified that a discussion occurred one month prior to the purchase of the property wherein the Homeowners agreed to help Stepson purchase the property upon the condition that Stepson would pay for all of the mortgage, property taxes, utilities, and insurance. According to Brother, Father at some point wished to quitclaim his interest in the property to Stepson when he realized that Stepmother would not honor the agreement to convey Stepson the property; however Father's efforts to ensure that Stepson would receive the property ultimately failed. To Brother's knowledge, Stepson made all of the payments that Stepson was required to pay under the purported agreement. Brother noted, however, that shortly before Father's death, Brother made two mortgage payments on behalf of Stepson. Brother indicated that Stepson "paid me most of that money back."

         Murphy Smiley, Stepson's nephew and Stepmother's grandson, and Brittany Slate, Stepmother's granddaughter, generally testified about the strained relationship between Stepmother and Stepson. According to Mr. Smiley, the hostility stemmed from Stepmother most of the time. On Stepmother's good days, Mr. Smiley testified that Stepmother's attitude toward Stepson's entitlement to the property vacillated, often expressing conflicting beliefs as to whether Stepson should be permitted to remain on the property. Mr. Smiley, however, denied that Stepmother ever discussed who owned the property. Ms. Slate generally testified that Stepmother was a truthful person.

         At the conclusion of trial, the trial court issued oral findings and rulings and declared that all of the witnesses were credible.[7] On March 21, 2016, the trial court entered a written order. The trial court found that Stepmother was entitled to possession of the property, that Stepmother was unjustly enriched by the repairs and improvements that Stepson made to the property, and that Stepson failed to prove the existence of either a constructive or resulting trust. As a result, the trial court ordered that Stepmother pay Stepson an amount totaling $37, 000.00, which represented the following:

ITEM

AMOUNT

1. Chicken Coop Repairs

$7, 000.00

2. Barn Wrapped Tin Work

$8, 000.00

3. Horse Barn

$22, 000.00

TOTAL:

$37, 000.00

         The trial court specifically found, however, that these improvements did not increase the actual value of the property. Finally, the trial court ordered that Stepmother be awarded $3, 381.17 from Stepson's cash bond, which amount represented the unpaid property taxes for tax years 2014 and 2015, prorated amounts for the January 2016 and February 2016 property taxes, and the 2015 homeowner's insurance premium paid by Stepmother. The remaining cash appeal bond was ordered to be returned to Stepson.

         Issues

         Stepmother raises the following issues for our review, which we have taken from her brief and slightly restated:

1. Whether Stepson failed to prove that he expected to be compensated, and therefore, unjust enrichment does not exist.
2. In the alternative, whether the trial court erred in its calculation of damages for Stepson's ...

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