In re: James E. Detiege and Amy A. Detiege

FILED
MAR 22 2022
SUSAN M. SPRAUL, CLERK
NOT FOR PUBLICATION U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. ID-21-1177-GBS
JAMES E. DETIEGE and AMY A.
DETIEGE, Bk. No. 4:19-bk-40051-JMM
Debtors.
Adv. No. 4:19-ap-08029-JMM
JAMES E. DETIEGE; AMY A. DETIEGE,
Appellants,
v. MEMORANDUM∗
MARIA JOSEFA VILMA ROSAUER,
Appellee.
Appeal from the United States Bankruptcy Court
for the District of Idaho
Joseph M. Meier, Chief Bankruptcy Judge, Presiding
Before: GAN, BRAND, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 71 debtors, James and Amy Detiege (“Debtors”) appeal the
bankruptcy court’s judgment in favor of Mr. Detiege’s mother, appellee
Maria Josefa Vilma Rosauer. The bankruptcy court determined that Mrs.
∗ This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
1 Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532.
Rosauer contributed $92,000 for the purchase of a home (the “Property”) to
be co-owned by the parties, and it imposed a constructive trust and lien on
the Property in her favor.
Debtors argue that the court erred by imposing the constructive trust
because Mrs. Rosauer signed a letter stating that no repayment was
expected or implied (the “Gift Letter”). We agree with the bankruptcy
court that the Gift Letter was evidence of donative intent, but it was not
dispositive of the issue. The court’s factual determination that the funds
were not intended as a gift is supported by the record and is not clearly
erroneous. Accordingly, we AFFIRM.
FACTS
A. Prepetition Events
The relevant facts are largely undisputed. Prior to 2016, Mrs. Rosauer
lived in Iowa with her husband. After Mr. Rosauer’s health began
deteriorating, Debtors visited the Rosauers and discussed the possibility
that they sell their home in Iowa and move to Idaho to live with Debtors.
The Rosauers moved to Idaho in September 2016, but Mr. Rosauer
unfortunately died two months later.
Debtors continued discussions with Mrs. Rosauer about buying a
home together and shared their plan with multiple family members. They
were informed by their lender that Mrs. Rosauer could not qualify for a
mortgage on her own, but Debtors could potentially qualify if their credit
improved. Mrs. Rosauer then advanced $12,000 from the sale of her home
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in Iowa to improve Debtors creditworthiness by paying some of their
existing debt. Debtors eventually qualified for a mortgage, and the parties
located a suitable home to purchase.
Mrs. Rosauer contributed an additional $80,000 towards the purchase
of the Property and signed the Gift Letter which was required by the
mortgage lender. Mrs. Rosauer expressed concern about signing the Gift
Letter but was assured by her son that he would not “screw her over” and
she would have a home to live in for the rest of her life. Mr. Detiege told
Mrs. Rosauer that, although title to the Property was placed only in
Debtors’ names, she would be added to the title after two years.
Soon after purchasing the Property, the relationship between the
parties began to suffer. The parties disagree about what caused the rift, but
ultimately, Debtors prevented Mrs. Rosauer from entering the Property or
accessing her personal belongings, which they eventually sold. Mrs.
Rosauer filed suit in state court, and Debtors filed a chapter 7 petition.
B. The Bankruptcy Case And Adversary Proceeding
In May 2019, Mrs. Rosauer filed an adversary complaint. She alleged
that Debtors obtained the Property through actual fraud,
misrepresentations, and concealments, and she alleged a nondischargeable
debt of $92,000 under § 523(a)(2)(A). She alternatively sought a constructive
trust and asserted that, despite the parties’ agreement to purchase the
Property as co-owners, Debtors wrongfully took the funds and deprived
her of any interest in the Property.
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At trial, several family members testified that Debtors and Mrs.
Rosauer had discussed their agreement to purchase the Property together
and for Mrs. Rosauer to live there. Debtors each testified that Mrs. Rosauer
provided the funds as a gift so they could purchase the Property and Mrs.
Rosauer would have a place to stay when she visited, but they did not
agree she would be a co-owner of the Property or that she could stay there
indefinitely. Debtors testified that they asked Mrs. Rosauer to leave the
Property because of her behavior and waited two years for her to remove
her personal property before selling it.
After post-trial briefing, the bankruptcy court issued its
memorandum decision. The court concluded that the evidence did not
establish a nondischargeable debt under § 523(a)(2)(A), but it rejected
Debtors’ contention that the Gift Letter conclusively determined the funds
were a gift.
The bankruptcy court determined that Mrs. Rosauer’s testimony—
that the parties agreed to be equal co-owners—was corroborated by
multiple independent witnesses. It found Debtors’ testimony to be less
credible and belied by the fact that Mrs. Rosauer immediately moved into
the Property with all her personal belongings and began purchasing items
for the home and paying for utilities.
The court held that permitting Debtors to retain the benefit of Mrs.
Rosauer’s payments would constitute unjust enrichment, and it imposed a
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constructive trust on the Property in the amount of $92,000. The court
entered judgment in favor of Mrs. Rosauer, and Debtors timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(O). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Did the bankruptcy court err by imposing a constructive trust on the
Property in favor of Mrs. Rosauer?
STANDARD OF REVIEW
We review a bankruptcy court’s decision to impose a constructive
trust for abuse of discretion. Goldberg v. Bank of Alex Brown (In re Goldberg),
168 B.R. 382, 384 (9th Cir. BAP 1994). A bankruptcy court abuses its
discretion if it applies an incorrect legal standard or its factual findings are
illogical, implausible, or without support in the record. TrafficSchool.com v.
Edriver, Inc., 653 F.3d 820, 832 (9th Cir. 2011).
DISCUSSION
The imposition of a constructive trust is an equitable remedy used to
prevent injustice. In re Goldberg, 168 B.R. at 384; Custer v. Dobbs (In re
Dobbs), 115 B.R. 258, 269 (Bankr. Idaho 1990). The propriety of a
constructive trust must be established under state law and be consistent
with the Bankruptcy Code. Torres v. Eastlick (In re N. Am. Coin & Currency,
Ltd.), 767 F.2d 1573, 1575 (9th Cir. 1985); In re Dobbs, 115 B.R. at 269.
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A constructive trust may be imposed under Idaho law where “one
who holds title to property is subject to an equitable duty to convey the
property to another in order to prevent unjust enrichment.” Med. Recovery
Servs., LLC v. Bonneville Billing & Collections, Inc., 336 P.3d 802, 808 (Idaho
2014). Unjust enrichment consists of three elements: “(1) there was a benefit
conferred upon the defendant by the plaintiff; (2) appreciation by the
defendant of such benefit; and (3) acceptance of the benefit under
circumstances that would be inequitable for the defendant to retain the
benefit without payment to the plaintiff for the value thereof.” Vanderford
Co. v. Knudson, 165 P.3d 361, 272 (Idaho 2007).
A. The Bankruptcy Court Did Not Err By Considering All Evidence Of
Donative Intent.
Debtors’ sole argument on appeal is that the bankruptcy court erred
by imposing the constructive trust because, under Idaho law, the Gift
Letter conclusively established Mrs. Rosauer’s intent to provide the funds
as a gift. They argue that consideration of other evidence of Mrs. Rosauer’s
intent was barred by the parol evidence rule, relying on an unpublished
Idaho Court of Appeals case, Wilson v. Wilson, 2020 WL 1487684 (Idaho Ct.
App., Mar. 23, 2020), for this proposition.
Mrs. Rosauer contends that Debtors failed to object to the admission
of parol evidence and, thus, waived the argument on appeal. Debtors did
not make evidentiary objections, but they preserved the issue by arguing in
their post-trial brief that Mrs. Rosauer should not be permitted to
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contradict the Gift Letter. More importantly, the court did not err by
considering other evidence.
Under Idaho law, the parol evidence rule is a rule of contract
construction which provides:
[W]hen a contract has been reduced to a writing that the parties
intend to be a final statement of their agreement, evidence of
any prior or contemporaneous agreements or understandings
which relate to the same subject matter is not admissible to vary,
contradict, or enlarge the terms of the written contract.
Simons v. Simons, 11 P.3d 20, 24 (Idaho 2000). The rule applies only when
the “integrated character of the writing is established.” Valley Bank v.
Christensen, 808 P.2d 415, 417 (Idaho 1991). The mere existence of the
document does not establish integration; it must be determined from the
surrounding circumstances. Nysingh v. Warren, 488 P.2d 355, 356 (Idaho
1971).
The parol evidence rule is inapplicable here because the Gift Letter is
not a written contract between Debtors and Mrs. Rosauer, and there is no
evidence in the record that they intended the Gift Letter to integrate their
previous discussions about purchasing a home together. The Gift Letter is a
form document that contains no terms and, at best, evidences an agreement
between Debtors and their lender, not one between Debtors and Mrs.
Rosauer.
Wilson v. Wilson is also inapposite. That case was an appeal from a
divorce proceeding in which the parties disputed the characterization of a
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home purchased before the marriage as either separate or community
property. 2020 WL 1487684, at *1. The Court of Appeals affirmed the trial
court’s decision not to impose an equitable lien because the appellant
offered no authority for a premarital unjust enrichment claim in a divorce
proceeding. Id. at *2. The court further noted that even if the trial court
could decide the issue, appellant would not be able to rely on parol
evidence because he signed, not only a “gift letter,” but a quitclaim deed
conveying any interest to his spouse as her sole and separate property. Id.
at *1-3; see also Hall v. Hall, 777 P.2d 255, 256 (Idaho 1989) (“Where the
language of a deed is plain and unambiguous the intention of the parties
must be determined from the deed itself, and parol evidence is not
admissible to show intent.”).
Here, there was no deed or integrated contract between Mrs. Rosauer
and Debtors and the bankruptcy court was not precluded from considering
other evidence about the nature of the funds provided by Mrs. Rosauer.
B. The Bankruptcy Court Did Not Clearly Err By Determining
The Funds Were Not A Gift.
Under Idaho law, a gift is “a voluntary transfer of property by
one to another without consideration or compensation therefor.”
Banner Life Ins. v. Mark Wallace Dixson Irrevocable Tr., 206 P.3d 481, 490
(Idaho 2009) (quoting Stanger v. Stanger, 571 P.2d 1126, 1129 (Idaho
1977)). To effectuate a gift, “a donor must deliver property to a
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donee . . . with a manifested intent to make a gift of the property.” Id.(citations omitted).
The bankruptcy court determined that the funds were not a gift for
two reasons. First, whether Mrs. Rosauer provided the funds in exchange
for an ownership stake, as she testified, or to have a place to stay when
visiting the grandchildren, as Mr. Detiege testified, she did so for
consideration. See, e.g., Weisel v. Beaver Springs Owners Ass’n, 272 P.3d 491,
498 (Idaho 2012) (explaining what constitutes consideration under Idaho
law). Second, the court held that the evidence did not support a finding of
donative intent.
Under Idaho law, the question of donative intent is one of fact. Wilson
v. Mocabee, 467 P.3d 423, 432 (Idaho 2020). Donative intent may be proved
“by direct evidence, including statements of donative intent, or inferences
drawn from the surrounding circumstances . . .” Banner Life Ins., 206 P.3d at
490; see also Mocabee, 467 P.3d at 432 (“[D]onative intent is ascertained from
inferences drawn when examining all surrounding circumstances. The
facts . . . are not to be viewed in a vacuum; rather, all evidence of donative
intent must be reviewed as contained in the entire record.”) (internal
citation omitted).
The bankruptcy court properly considered all evidence of donative
intent, including corroborating testimony from other witnesses, the
surrounding circumstances, and witness credibility. It determined that
Mrs. Rosauer provided the funds, not as a gift, but as part of an agreement
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to be co-owner of the Property. The court’s factual findings are not illogical,
implausible, or without support in the record. See Anderson v. City of
Bessemer City, 470 U.S. 564, 574 (1985) (“Where there are two permissible
views of the evidence, the factfinder’s choice between them cannot be
clearly erroneous.”).
CONCLUSION
Because the bankruptcy court did not clearly err in finding that Mrs.
Rosauer’s transfers were not gifts, Debtors have not demonstrated an abuse
of discretion. We AFFIRM the bankruptcy court’s judgment.
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