Teri Lisa Rubio v. Robert Earl Klein ( 2015 )

Opinion filed July 30, 2015
In The
Eleventh Court of Appeals
__________
No. 11-13-00189-CV
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TERI LISA RUBIO, Appellant
V.
ROBERT EARL KLEIN, Appellee
On Appeal from the 318th District Court
Midland County, Texas
Trial Court Cause No. FM-50,673
MEMORANDUM OPINION
Robert Earl Klein sought a divorce from Teri Lisa Rubio and also sought
reimbursement for Rubio’s debts that he had paid. After a bench trial, the trial court
found that no common law marriage existed between Rubio and Klein. The trial
court did, however, find that the parties had a confidential relationship, that Rubio
breached her fiduciary duty to Klein, that Rubio’s breach constituted constructive
fraud, and that Rubio’s breach resulted in an injury to Klein and unjustly enriched
Rubio. The trial court entered a judgment against Rubio and in favor of Klein in the
amount of $75,897.35.1 On appeal, Rubio contends that the trial court erred when it
found that she committed constructive fraud and when it awarded her an offset of
only $42,000. We affirm.
Rubio and Klein began to date in late 1999. They exchanged rings early in
2000 and began to live together in May 2000; they never formally married. Both
parties testified that they had an intimate relationship and that they relied on the
guidance and advice of the other in making decisions. The testimony also shows
that Rubio and Klein opened a joint bank account together. The parties separated in
November 2009.
While together, the parties decided to live in Rubio’s house. They made the
decision to refinance the house and to obtain group credit life insurance in
connection with the mortgage; Klein paid the monthly mortgage payments. Klein
paid off the mortgage in August 2000, in the amount of $80,556.73. Klein also paid
the property taxes for Rubio’s house from 2000 through 2009 in the amount of
$27,940.62. Klein never paid rent, and both parties testified that Rubio never asked
Klein to pay rent. Conflicting testimony existed about who took care of repairs
around the house and who paid for utilities.
There is testimony that Klein trusted that he would receive his money back at
some point in time or that he would be able to live in the house for the rest of his
life. Klein said that he and Rubio had a discussion about his receiving his money
back in the event that they sold the house. According to Klein, there was never a
discussion to the effect that he paid the mortgage as a gift; he conceded that there
We note that the trial court’s judgment awards as damages “$66,497.73” in relation to the
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payments toward Rubio’s home and property taxes but then imposes a “Real Estate Lien Note in the amount
of $66,497.35.” The second amount, ending in .35, coincides with the evidence and the trial court’s letter
judgment.
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was no documentation to show that Rubio agreed to pay him back. Rubio’s ex-
husband testified that Klein had told him that he paid off the mortgage so that Rubio
and her children would not have to worry about where to live; Rubio’s ex-husband
said that Klein never said that the money paid on the house was a gift. Klein testified
that he never had a conversation with Rubio’s ex-husband about paying off the
mortgage.
On the other hand, Rubio said that she paid the mortgage payments with child-
support money from her ex-husband. However, she had no documentation to show
those payments. She also testified that she used her income tax return to pay
property taxes in some years but could not remember when or how she paid them.
Rubio refused to concede that she could not refinance her home by herself because
she had been unemployed; however, she agreed that Klein signed the settlement
refinance statement as a borrower, signed the deed of trust, and also procured group
credit life insurance. Rubio subsequently denied that Klein had any obligation to pay
the mortgage and could not recall whether Klein had made any mortgage payments,
but she conceded that Klein ultimately paid off the mortgage. Rubio testified that
she and Klein never discussed Klein’s expectations but that Klein told her that the
money for the mortgage and property taxes was a gift. Rubio claimed that Klein told
her that he never wanted her or her children to worry about where they would live;
she understood that to mean that his paying off the mortgage was a gift. None of the
checks that Klein wrote for the property taxes indicated that they were loans to
Rubio.
Klein and Rubio also opened a hair salon; Rubio was a licensed beautician.
Klein testified that he paid almost $30,000 to help open and run the salon. Klein
produced checks that reflected that he had paid some $9,400 to the salon; he never
received any reimbursement for the money he advanced to the salon. Both parties
had access to the salon’s bank account.
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Rubio said that any money that Klein advanced to the salon was also a gift.
None of the checks that Klein wrote for the salon showed that they were loans to
Rubio. Rubio admitted that the money Klein advanced to the salon was “for the
acquisition and operation” of the salon. Rubio testified that she was unsure how
much Klein advanced to the salon beyond the $9,400, but she said it was possibly as
much as $7,500.
According to Rubio, Klein never told her that he expected repayment for the
mortgage payments, property tax payments, or money advanced to the salon. Rubio
conceded that no documentation existed to show that any of the payments Klein
made were gifts. Both parties testified that Rubio never filed any tax documents in
which she stated that the payments were gifts.
At the start of her relationship with Klein, Rubio had a house with a mortgage
and she was unemployed. She subsequently testified further that, at the time she
separated from Klein, her mortgage was paid off and she owned a profitable business
that had two locations.
Neither findings of fact nor conclusions of law were timely requested by
Rubio, and none were entered by the trial court, although the trial court filed a letter
judgment that explains, in part, its final judgment. When no findings of fact are
filed, all those findings necessary to support the trial court’s judgment are
implied. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992). A trial
court’s implied findings have the same force and dignity as a verdict of a jury
rendered upon jury questions. Smith v. Hennington, 249 S.W.3d 600, 602 (Tex.
App.—Eastland 2008, pet. denied). Where, as here, a reporter’s record is filed, the
trial court’s implied findings are not conclusive and may be challenged for legal and
factual sufficiency. Id. In the absence of findings, we will uphold the judgment of
the trial court if it can be upheld on any available legal theory that finds support in
the evidence. Point Lookout W., Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987).
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In considering a legal sufficiency challenge, we review all the evidence in the
light most favorable to the trial court’s judgment and indulge every reasonable
inference in its favor. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005).
We credit any favorable evidence if a reasonable factfinder could and disregard any
contrary evidence unless a reasonable factfinder could not. Id. at 821–22, 827. In
reviewing a factual sufficiency challenge, we consider all of the evidence and uphold
the finding unless it is so against the overwhelming weight of the evidence as to be
clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). But
factfinders “are the sole judges of the credibility of the witnesses and the weight to
give their testimony. They may choose to believe one witness and disbelieve
another.” Wilson, 168 S.W.3d at 819. If the evidence at trial would enable
reasonable minds to differ in their conclusions, we do not substitute our judgment,
so long as the evidence falls within a zone of reasonable disagreement. Id. at 822.
Rubio’s first and third issues concern the trial court’s finding that Rubio
breached a duty to Klein. Rubio asserts that no fiduciary relationship existed and,
therefore, that no duty existed. She also asserts that no evidence or insufficient
evidence exists to support the trial court’s finding that she breached a fiduciary duty
to Klein. Rubio’s first issue regards Klein’s payments toward the mortgage and
property taxes. Her third issue concerns Klein’s payments toward the salon.
The existence of a confidential relationship that gives rise to an informal
fiduciary relationship is normally a question of fact, but when the issue is one of no
evidence, it becomes a question of law. Crim Truck & Tractor Co. v. Navistar Int’l
Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992), superseded by statute on other
grounds as recognized in Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84
S.W.3d 212, 225–26 (Tex. 2002). Confidential relationships may exist where one
person trusts in and relies upon another. Id. One party is justified in expecting
another to act in its best interest when the parties have dealt with each other for a
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sufficient time and have become accustomed to being guided by the judgment or
advice of the other. See Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex.
1998); Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962). But subjective trust
alone is insufficient to create a confidential relationship; a confidential relationship
exists “in those cases ‘in which influence has been acquired and abused, in which
confidence has been reposed and betrayed.’” Crim Truck, 823 S.W.2d at 594
(quoting Tex. Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980)).
To prove a breach of the fiduciary duty that a confidential relationship creates,
a plaintiff must show that a fiduciary relationship existed, that the defendant
breached its fiduciary duty to the plaintiff, and that the plaintiff was injured or the
defendant benefited as a result of the defendant’s breach. Lindley v. McKnight, 349
S.W.3d 113, 124 (Tex. App.—Fort Worth 2011, no pet.). Constructive fraud is the
type of cause of action referred to when a party shows facts such as those. Archer v.
Griffith, 390 S.W.2d 735, 740 (Tex. 1964). “Actual fraud usually involves
dishonesty of purpose or intent to deceive, whereas constructive fraud is the breach
of some legal or equitable duty which, irrespective of moral guilt, the law declares
fraudulent because of its tendency to deceive others, to violate confidence, or to
injure public interests.” Id.
Before they lived together, Klein and Rubio knew each other for several
months, were in an exclusive and intimate relationship, exchanged rings, and
planned to live together in Rubio’s house. Each party trusted the other and relied on
the other’s advice and judgment. Klein testified that he paid substantial amounts of
money toward Rubio’s house and business during the time that they lived together;
he believed that he would recover his money at some point. In her testimony, Rubio
contradicted Klein. Further, Rubio’s ex-husband testified similarly to Rubio, but he
did say that Klein never told him that the payments toward Rubio’s house were a
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gift. Before she lived with Klein, Rubio had a mortgage on her house and was
unemployed. When Rubio and Klein separated, Rubio had no mortgage on her
house and she owned a successful business with two locations. The trial court, as
factfinder, was free to believe Klein, and we cannot substitute our judgment for that
of the trial court. See Wilson, 168 S.W.3d at 819, 822. Legally and factually
sufficient evidence exists that Rubio and Klein were in a confidential relationship,
that they owed fiduciary duties to each other, that Rubio breached her fiduciary duty
to Klein when she refused to repay him, that her breach constituted constructive
fraud, and that Rubio benefited from her breach. See id. at 819; Cain, 709 S.W.2d
at 176. The trial court did not err when it awarded damages to Klein for the money
he paid toward Rubio’s house and business. We overrule Rubio’s first and third
issues.
In her second issue, Rubio contends that the trial court erred when it offset
Klein’s damages by only $42,000 for unpaid rent applicable to the period of time
that Klein lived in Rubio’s house. Rubio argues that the evidence showed that
reasonable rent was at least $750 per month and that, at that rate, for the time the
parties were together, the trial court should have offset the damages by $86,250.
The right to an offset of damages is an affirmative defense, equitable in nature,
and must be pleaded by the party asserting it. Brown v. Am. Transfer & Storage Co.,
601 S.W.2d 931, 936 (Tex. 1980); see Jeter v. Citizens Nat’l Bank, 419 S.W.2d 916,
918 (Tex. Civ. App.—Eastland 1967, writ ref’d n.r.e.) (citing Van Winkle Gin &
Mach. Co. v. Citizens’ Bank of Buffalo, 33 S.W. 862, 864 (Tex. 1896)). The
factfinder then determines the amount of the offset. See, e.g., Levisay v. Cawyer,
No. 11-93-029-CV, 1994 WL 16189658, at *2 (Tex. App.—Eastland Apr. 20, 1994,
no writ) (not designated for publication) (explaining that jury determined offset
amount). We review the factfinder’s determination under the legal and factual
sufficiency standards outlined above. See id. (citing Sterner v. Marathon Oil Co.,
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767 S.W.2d 686, 690 (Tex. 1989); In re King’s Estate, 224 S.W.2d 660, 661 (Tex.
1951)).
Rubio pleaded for reasonable rent as an offset. Rubio testified as to the value
of Rubio’s house, and both parties testified about what they believed the amount of
reasonable rent to be. Klein lived in Rubio’s house rent-free for almost ten years,
but there is also evidence that he paid the property taxes and paid off the mortgage
during that time. Rubio testified that she paid her mortgage some months and
property taxes some years but had no documentation of those payments. Conflicting
testimony also existed about who paid to repair damages to the home and who paid
for utilities. The trial court was free to believe Klein. See Wilson, 168 S.W.3d at
819.
The evidence at trial showed that a reasonable amount of rent for Rubio’s
house was $750 per month. But that was the rental value for the entire four-bedroom,
three-bath house. Using Rubio’s figures, total rent for Rubio’s home for 115 months,
the time that Klein lived there, would be $86,250. However, both Klein and Rubio
occupied the house during the time that Klein lived there. Equitably, then, Klein’s
obligation would be one-half of the total rent, $43,125. Although the trial court
awarded $42,000 as an offset, and half of the total rent would be $1,125 more than
that, the trial court’s judgment did not fall outside the zone of reasonable
disagreement in light of the testimony that Klein paid for at least some of the repairs
and utilities for almost ten years. See id.; Jeter, 419 S.W.2d at 918. Legally and
factually sufficient evidence supports the trial court’s judgment, and the trial court
did not err when it credited Rubio with an offset of $42,000. See Wilson, 168 S.W.3d
at 819; Cain, 709 S.W.2d at 176. We overrule Rubio’s second issue.
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We affirm the judgment of the trial court.
JIM R. WRIGHT
CHIEF JUSTICE
July 30, 2015
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
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