Mona Cates v. Elizabeth Swain ( 2010 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2010-CT-01939-SCT
MONA CATES
v.
ELIZABETH SWAIN
ON WRIT OF CERTIORARI
DATE OF JUDGMENT: 10/25/2010
TRIAL JUDGE: HON. PERCY L. LYNCHARD, JR.
COURT FROM WHICH APPEALED: TATE COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: JONATHAN S. MASTERS
ROBERT M. STEPHENSON
ATTORNEYS FOR APPELLEE: JOHN THOMAS LAMAR, JR.
DAVID MARK SLOCUM, JR.
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED IN PART, VACATED IN PART
AND REMANDED - 05/02/2013
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
CHANDLER, JUSTICE, FOR THE COURT:
¶1. Elizabeth Swain and Mona Cates cohabited from 2000 until 2006. After they severed
the relationship, Swain filed an action seeking the repayment of funds she first had invested
in property in Washington, which were then used to purchase a residence in Tate County.
The chancellor rejected Swain’s claim of a constructive trust or a resulting trust. The
chancellor found that Cates had been unjustly enriched by Swain’s contributions and
awarded Swain a judgment in that amount. The Court of Appeals affirmed the chancellor’s
rejection of the trust claim but reversed the decision of the chancellor, which was based on
unjust enrichment. The Court of Appeals held that, because “cohabitation alone cannot form
the basis of an equitable remedy between non-married cohabitants,” the remedy of unjust
enrichment was outside the bounds of the chancery court’s equitable powers. Cates v.
Swain, 2012 WL 1292639, at *7 (Miss. Ct. App. Apr. 17, 2012).
¶2. We find that the chancellor was empowered to award relief on the basis of unjust
enrichment. We affirm the judgment of the Court of Appeals to the extent that it affirmed
the chancellor’s rejection of Swain’s claim of a constructive trust or a resulting trust. We
reverse the judgment of the Court of Appeals with regard to the unjust-enrichment award.
Because the chancellor made a mathematical error in the calculation of the unjust-enrichment
award, we vacate the chancellor’s judgment in part, and remand the case to the chancery
court for entry of judgment in the correct amount of $41,495.
FACTS
¶3. In 2000, Swain and Cates met though an online dating service and began a
relationship while living in different states. Swain was in the Navy and worked as an
oceanographer, and Cates was a commercial airline pilot based in New York, New York,
where she maintained a separate residence. During the entirety of her relationship with
Cates, Swain was married and estranged from her husband. Swain testified that she remained
married so that her husband could remain covered under her medical insurance policy, and
so that Swain could claim a larger housing allowance from the Navy than she would have
been entitled to as a single individual. Swain divorced after her relationship with Cates had
ended.
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¶4. In late 2000, Swain transferred to Pensacola, Florida, and bought a house there. Cates
provided $2,000 in earnest money toward the purchase of the house, residing there and in
New York. Swain made the monthly mortgage payments and significantly paid down the
principal. The two made improvements to the house.
¶5. In 2003, Swain and Cates moved to Seattle, Washington. Cates bought a home in
Seattle, where the two cohabitated. Swain sold the Florida home and received $32,000 in
equity. Swain testified that she gave Cates a check for $34,000, representing the equity in
the Florida home, plus an extra $2,000 from Swain’s personal checking account as an
investment. Swain testified that Cates used this money for the down payment on the
Washington home, which Cates purchased for $191,000. In contrast, Cates testified that the
check was repayment for undocumented loans. Swain and Cates made various improvements
to the Washington home, and in 2005 the residence sold for $300,000.
¶6. In 2005, Cates and Swain moved to Tate County, Mississippi, where Cates bought a
home for $350,000, using the equity from the sale of the Washington home. Swain provided
Cates a check for $5,000 with “closing costs” written in the memo line. She also paid $4,495
to carpet the home. Again, Cates characterized these expenditures as repayments for
undocumented loans to Swain.
¶7. Subsequently, the parties’ relationship deteriorated, and Swain moved out in March
2006. On June 13, 2006, Swain filed a complaint against Cates, alleging that they had been
cohabitants, that they had been involved in several joint ventures together, and that they had
entered into an agreement for Swain to invest the proceeds from the sale of her Florida home
into future purchases of real property in Washington and Mississippi. Swain requested that
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the chancery court declare a constructive trust or a resulting trust in the Mississippi home, and
that Cates had been unjustly enriched.
¶8. The chancellor rejected Swain’s claims of a constructive trust or a resulting trust. The
chancellor found that Cates had been unjustly enriched by Swain’s investment contributions.
The chancellor rejected Cates’s unsupported assertions that these contributions were merely
loan repayments. The chancellor found Swain was entitled to recover the equity from her
Florida home. The chancellor awarded Swain $38,000, minus $2,500.1 The chancellor also
found that Swain was entitled to recover the $5,000 she had tendered to Cates for closing
costs on the Mississippi home and the $4,495 she had spent to carpet Cates’s Mississippi
home. The chancellor entered a judgment in the amount of $44,995 in favor of Swain.
¶9. The Court of Appeals reversed. Cates, 2012 WL 1292639, at *9. The Court of
Appeals reviewed our prior cases pertaining to unmarried cohabitants, and concluded that
“Mississippi does not enforce contracts implied from the relationship of unmarried
cohabitants.” Id. at *4. Therefore, the Court of Appeals held that the chancellor had lacked
the authority to grant the remedy of unjust enrichment. Id. at *7. This Court granted Swain’s
petition for certiorari to review the legal question of whether the remedy of unjust enrichment
was available to Swain. We find that, in the particular circumstances, the chancellor did not
err by granting relief on the basis of unjust enrichment.
STANDARD OF REVIEW
1
As discussed later in this opinion, the chancellor’s findings concerning these
amounts were clearly erroneous. The testimony and exhibits reflect that Swain paid Cates
$34,000 from the Florida home, and Cates paid Swain $2,000 in earnest money.
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¶10. This Court will not reverse a chancellor’s fact-findings unless they were manifestly
wrong, clearly erroneous, or the chancellor abused his discretion. Smith v. Wilson, 90 So. 3d
51, 56 (Miss. 2012) (quoting Zeman v. Stanford, 789 So. 2d 798, 801-02 (Miss. 2001)). We
review questions of law de novo. Smith, 90 So. 2d at 56.
ANALYSIS
¶11. Unjust enrichment “applies to situations where there is no legal contract and ‘the
person sought to be charged is in possession of money or property which in good conscience
and justice he should not retain but should deliver to another.’” Miss. Dep’t of Envtl. Quality
v. Pac. Chlorine, Inc., 100 So. 3d 432, 442 (Miss. 2012) (quoting Powell v. Campbell, 912
So. 2d 978, 982 (Miss. 2005)). In these circumstances, equity imposes “a duty to refund the
money or the use value of the property to the person to whom in good conscience it ought to
belong.” Estate of Johnson v. Adkins, 513 So. 2d 922, 926 (Miss. 1987). The amount of
recovery for unjust enrichment is “that to which the claimant is equitably entitled.” Id.
¶12. The chancellor found that Cates had been unjustly enriched by Swain’s contributions
to the Mississippi home, which consisted of Swain’s proceeds gained from the sale of her
Florida home, the $5,000 Swain contributed at closing, and the $4,495 Swain had paid to
carpet the Mississippi home. The Court of Appeals concluded that the remedy of unjust
enrichment was not available to Swain as an unmarried cohabitant. Cates, 2012 WL 1292639,
at *7. The Court of Appeals primarily relied upon Davis v. Davis, 643 So. 2d 931 (Miss.
1994), and Estate of Alexander v. Alexander, 445 So. 2d 836 (Miss. 1984), to reach this
conclusion. Cates, 2012 WL 1292639, at *5.
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¶13. We find Davis and Alexander to be distinguishable from this case. In Davis, the
unmarried parties separated, and the woman, Elvis Davis, sought an equitable distribution of
assets. Davis, 643 So. 2d at 932. Travis Davis had amassed considerable wealth, and Elvis
argued that, by virtue of her efforts in her live-in, long-term relationship with Travis, she was
entitled to an equitable division of assets. Id. at 933. The Court disagreed, noting that the
Legislature has not extended the rights enjoyed by married people to those who cohabit. Id.
at 936.
¶14. In Estate of Alexander v. Alexander, 445 So. 2d 836 (Miss. 1984), Margie and Sam
Alexander had cohabitated for thirty years in a house owned by Sam. Id. at 837. When Sam
died, Margie petitioned the court for a life estate in the residence. Id. The Court found that
the Legislature had made no provision for a person in Margie’s situation, and that “a mere
‘live-in’ relationship . . . cannot be allowed to negate the law of descent and distribution.”
Id. at 839 (emphasis added). The Court also found that Margie could not recover under an
implied-contract theory because no evidence established the existence of an implied contract
between Margie and Sam. Id. at 840.
¶15. In both Davis and Alexander, the aggrieved party’s claim for recovery was based upon
a relationship. Both claims were for equitable division of property. In Davis, the Court rightly
noted that cohabitation is prohibited as against public policy and that the Legislature has not
extended the rights of married persons to cohabitants, nor do we today. In this case, Swain’s
claim was not one for equitable division. Swain made a claim, inter alia, for unjust
enrichment based upon her monetary contributions to Cates’s purchase of the Washington
home and the purchase and improvement of the Mississippi home, which Cates retained after
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Swain moved from the residence. Ultimately, the chancellor adjudicated the case on that
theory of relief, and we find no error in the chancellor’s legal conclusion.
¶16. True, as Presiding Justice Dickinson indicates in his separate opinion, Swain’s unjust-
enrichment claim was predicated on her assertion that Swain and Cates had entered into an
agreement that Swain would invest the proceeds from the sale of her Florida home toward
future home purchases. Thus, as Swain contended at trial, she should be entitled to share in
the profits Cates earned from the use of Swain’s money.
¶17. Swain claimed there was a mutual agreement between her and Cates that her Florida
equity proceeds were to be used as an investment in both the Washington and Mississippi
homes but offered no written evidence to support her testimony. Cates, who disputed Swain’s
version, claimed that she considered the funds provided by Swain to be reimbursement money
for all the “loans” she had provided Swain, but she offered no written evidence to support her
testimony. The only proof offered by either party for her claims was her respective testimony.
The chancellor, essentially, accepted neither version. We find no abuse of discretion.
¶18. Instead, the chancellor focused on readily identifiable assets (or tangible benefits) each
party conferred on the other, which, if retained by that party, would, under the circumstances,
inequitably benefit (or unjustly enrich) that party. In essence, these particular benefits spoke
for themselves, irrespective of how the parties attempted to characterize them after the fact
at trial. The chancellor declined to treat these benefits as either investments or gratuitous gifts,
as the Court of Appeals mistakenly construed our caselaw to require. Rather, the chancellor
sought, as much as the evidence would allow, to restore the status quo and return the parties
to the positions they had occupied before the transaction(s). This Court has held that an
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unjust-enrichment award may consist of a refund, if that is equitable. Adkins, 513 So. 2d at
926. Our standard of review is abuse of discretion. Smith, 90 So. 3d at 56. Even if this Court,
as an original matter, would have decided the matter differently, applying our standard of
review, we conclude that the chancellor did not abuse his discretion in awarding Swain a
refund, a form of restitution.
¶19. While the record reflects that Cates is a generous individual, the evidence she
submitted in support of her claim, as found by the chancellor, simply did not carry much
weight. We are mindful that the doctrine of unjust enrichment is not “a roving mandate [for
a court] to sort through terminated personal relationships in an attempt to nicely judge and
balance the respective contributions of the parties.” Slocum v. Hammond, 346 N.W.2d 485,
491-92 (Iowa 1984). The chancellor astutely recognized that Swain’s unjust enrichment claim
did not request that the court undertake such a momentous task. We find that the chancellor
did not err in granting Swain recovery under the theory of unjust enrichment.
¶20. We affirm the judgment of the Court of Appeals to the extent that it affirmed the
chancellor’s rejection of the constructive trust or resulting trust claim, reverse the judgment
of the Court of Appeals regarding the unjust-enrichment award, affirm the chancellor’s
judgment in part, vacate it in part, and remand for entry of judgment in the correct amount of
$41,495. We find that the chancellor clearly erred in his findings regarding the amounts Swain
paid to Cates. Swain testified that she had tendered a $34,000 cashier’s check to Cates from
her equity in the Florida home, not a $38,000 check as found by the chancellor. Further, the
record shows that Cates paid $2,000 in earnest money for the Florida home, not $2,500, as
found by the chancellor. A receipt reflects that the amount Swain paid to carpet the
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Mississippi home was $4,495, and she tendered a $5,000 check to Cates for closing costs on
that home. These amounts total $41,495. Swain contests these amounts, and contends that the
correct amount was $48,524.58. We affirm the chancellor’s judgment in part, vacate the
chancellor’s judgment in part, and remand the case to the chancery court for entry of judgment
in the amount of $41,495.
CONCLUSION
¶21. We find that the chancellor was empowered to grant relief to Swain based on the
theory of unjust enrichment. We affirm in part and reverse in part the judgment of the Court
of Appeals, affirm in part and vacate in part the judgment of the chancellor, and remand to the
chancery court for entry of judgment in the amount of $41,495.
¶22. THE JUDGMENT OF THE COURT OF APPEALS IS AFFIRMED IN PART
AND REVERSED IN PART. THE JUDGMENT OF THE TATE COUNTY
CHANCERY COURT IS AFFIRMED IN PART, VACATED IN PART, AND THE
CASE IS REMANDED FOR ENTRY OF JUDGMENT IN THE AMOUNT OF $41,495.
WALLER, C.J., RANDOLPH, P.J., KITCHENS, PIERCE, KING AND
COLEMAN, JJ., CONCUR. DICKINSON, P.J., CONCURS IN PART AND
DISSENTS IN PART WITH SEPARATE WRITTEN OPINION. LAMAR, J., NOT
PARTICIPATING.
DICKINSON, PRESIDING JUSTICE, CONCURRING IN PART AND
DISSENTING IN PART:
¶23. The majority correctly holds that the chancellor should have granted Swain relief based
on the equitable theory of unjust enrichment. But, because the majority merely modifies
Swain’s award without remanding to the chancellor for a fair and equitable determination of
the amounts due, I dissent in part.
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¶24. Unjust enrichment applies when “there is no legal contract but where the person
sought to be charged is in possession of money or property which in good conscience and
justice he [or she] should not retain but should deliver to another.” 2 In such situations, we
“impos[e] a duty to refund the money or the use value of the property to the person to whom
in good conscience it ought to belong.” 3 The amount of recovery for unjust enrichment is
“that to which the claimant is equitably entitled.” 4
¶25. Cates used $34,000 of Swain’s money to purchase a home, which she later sold at a
$109,000 profit. Rather than dividing the money with Swain, Cates took all the profits – plus
another $9,495 from Swain – to purchase and carpet another home, which she titled
exclusively in her name. It seems to me rather odd for the majority – claiming it is applying
equitable principles – to conclude that Cates shall keep all the profits she earned from the use
of Swain’s money. Where is the equity in that?
¶26. The majority sidesteps the equity consideration by asserting that the chancellor merely
restored the “status quo.” 5 But allowing Cates to keep over a hundred-thousand dollars of
profits she earned using Swain’s money hardly fits my definition of status quo.
¶27. To be clear, I do not view Swain’s contributions as “investments.” And, there is no
issue regarding loans, because the chancellor rejected the notion that Swain “loaned” the
money to Cates. I simply disagree with the majority’s view that this Court should forbid the
2
Hans v. Hans, 482 So. 2d 1117, 1122 (Miss. 1986) (emphasis added).
3
Id.
4
Estate of Johnson v. Adkins, 513 So. 2d 922, 926 (Miss. 1987).
5
Maj. Op. at ¶ 18.
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chancellor from even considering the profits that Cates made using Swain’s money. This is
precisely why the doctrine of unjust enrichment applies, and why the chancellor should be
free to consider all of the facts and surrounding circumstances, and to exercise discretion to
reach an equitable award.
¶28. This case should be remanded for the chancellor to apply the doctrine of unjust
enrichment and determine a fair and equitable amount of recovery, taking into consideration
all factors, including the increase and/or decrease in value of the properties at issue, and not
just the dollar amount of Swain’s contribution. Because the majority forbids the chancellor
from considering anything but the amount of Swain’s contributions and merely corrects the
chancellor’s mathematical errors, I respectfully concur in part and dissent in part.
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