Fairbanks Dev., LLC v. Johnson

• Decision Date: 30 September 2021
• Docket Number: 2020-C-01031
• Citation: 330 So.3d 183
• Parties: FAIRBANKS DEVELOPMENT, LLC v. Charles Woodrow JOHNSON and Jessica Lyn Petersen
• Court: Louisiana Supreme Court

330 So.3d 183

FAIRBANKS DEVELOPMENT, LLC

v.Charles Woodrow JOHNSON and Jessica Lyn Petersen

2020-C-01031

Supreme Court of Louisiana.

September 30, 2021

CRAIN, J.^*

We must decide which of the following determines one's status as a co-owner of immovable property: the authentic act conveying ownership of the property, or the source of the funds used to pay the purchase price. We find the authentic act controls and affirm the court of appeal's judgment.

FACTS AND PROCEDURAL HISTORY

Jessica Petersen and Charles Johnson met as teenagers. They began a relationship and eventually started living together while Petersen was attending college in Georgia. Although Johnson worked as a mechanic, the couple's lifestyle was funded almost entirely by a trust created for Petersen's benefit by her grandfather. In 2000 they returned to Louisiana and purchased a house and surrounding acreage in Ouachita Parish. The act of sale expressly conveys ownership of the property to Johnson and Petersen, both of whom signed the deed before a notary public and two witnesses. The purchase price was paid in full at closing with funds from Petersen's trust. Shortly thereafter Petersen and Johnson acquired additional acreage adjacent to the original tract. This second act of sale also conveys ownership of the property to Johnson and Petersen, and both signed the deed before a notary public and two witnesses. The purchase price for this parcel was paid with funds loaned to Petersen by her mother. Both pieces of immovable property will be collectively referred to hereinafter as "the property."

At the time of the purchases, Petersen and Johnson were not married. They married soon afterward, had the first of three children, and began a life in their new home. Two outbuildings, a concrete driveway, and an entrance gate were added to the property, again using funds from Petersen's trust. Throughout the marriage, the couple remained financially dependent on the trust, as neither Petersen nor Johnson worked outside the home.

Their relationship ended in divorce in 2006. Petersen was granted exclusive use of the home in the divorce proceeding and remained there until moving out of town and eventually out of state. A prospective buyer offered to purchase the property, but Johnson would not agree to the sale. In 2017 Johnson moved back into the house with his current wife and their children.

In 2018 Petersen sold an undivided one-half interest in the property to Fairbanks Development, LLC., which then instituted this proceeding to partition the property, naming both Petersen and Johnson as defendants. Petersen filed a cross-claim against Johnson claiming to be sole owner of the property, alleging her separate funds were used to purchase the property. Petersen specifically requested a judgment "naming and declaring her to be the owner of all the property." Notably, the cross-claim does not seek to reform or rescind the acts of sale conveying the property to both Petersen and Johnson. Petersen makes no claim of error, fraud, or duress in the execution of those authentic acts, nor does she allege the acts were modified by any subsequent agreement between the parties. Her claim of full ownership is based entirely on the fact that she paid for the property.

The claims proceeded to trial where there was no dispute about the essential aspects of the transactions. Johnson and Petersen acknowledged the property was acquired through the two acts of sale that name both of them as purchasers. Petersen wanted Johnson's name included in the deeds, and the transactions were explained to them at the closings. Both gave similar explanations for Johnson being named a purchaser. According to Johnson:

We were trying to start, you know, life together, and we were purchasing the property to live on .... We were moving from Georgia and buying us a house and property and fixing to have kids and have a family.

Petersen explained, "Like he said, we were starting a life together, and we had planned on having children and such." The parties likewise agreed that Johnson did not contribute to the purchase price of the property or pay for any of the improvements, although Johnson testified he did maintain and repair the property. The money to purchase and improve the house came from Petersen's trust fund, and the money to buy the additional acreage was a loan from Petersen's mother that Petersen repaid.

When the marriage failed, it was equally clear Petersen regretted her decision to include Johnson as an owner:

The only thing I can tell you is [I was] young and dumb and made mistakes. That was my first love .... We were going in as partners, and he led me to believe he was going to do his portion of the partnership .... [H]e never contributed anything back to the relationship, to the marriage, emotionally, financially, anything.

In written reasons, the trial court found Petersen acquired sole ownership of the property because she paid the purchase price. The court further found Petersen conveyed half of her interest to Fairbanks and retained the remaining half interest. The court ordered the property partitioned by licitation. A judgment was signed decreeing Petersen and Fairbanks to be owners of an undivided one-half interest each in the property, declaring Johnson to have no ownership interest in the property, and ordering the property be partitioned. Johnson appealed.

The court of appeal reversed the ownership determination and held Johnson owns an undivided half interest in the property. See Fairbanks Development, LLC v. Johnson , 53,427 (La. App. 2 Cir. 4/22/20), 295 So. 3d 1279, 1291. This court granted Petersen's writ application. Fairbanks Development, LLC v. Johnson , 20-01031 (La. 12/8/20), 305 So. 3d 865.

DISCUSSION

The form requirements for conveyances of immovable property are well established. A transfer of immovable property must be made by authentic act or by act under private signature. La. Civ. Code art. 1839 ; see also La. Civ. Code art. 2440. An authentic act constitutes full proof of the agreement it contains, as against the parties, their heirs, and successors by universal or particular title. La. Civ. Code art. 1835. Testimonial or other evidence may not be admitted to negate or vary the contents of an authentic act or an act under private signature. La. Civ. Code art. 1848. However, in the interest of justice, testimonial or other evidence may be admitted to prove such circumstances as a vice of consent or to prove the written act was modified by a subsequent and valid oral agreement. See id . When the law requires a contract to be in written form, the contract may not be proved by testimony or by presumption, unless the written instrument has been destroyed, lost, or stolen. La. Civ. Code art. 1832.

To establish his ownership, Johnson relies on the acts of sale whereby the former owners of the property expressly conveyed their ownership interests to him and Petersen. These authentic acts constitute full proof of the agreements they contain. See La. Civ. Code art. 1835. Petersen does not assert a vice of consent invalidates the acts. No evidence was offered suggesting the prior owners mistakenly transferred the property to Petersen and Johnson due to some error, fraud, or duress. See La. Civ. Code arts. 1848 and 1948. To the contrary, the evidence uniformly establishes the conveyances were prepared, explained, and executed precisely as the parties directed and intended: the sellers conveyed ownership of the property to both Petersen and Johnson. The conveyances were in accordance with, not contrary to, Petersen's instructions. While Petersen later regretted including Johnson in the conveyances, that regret, however legitimate, is not a vice of consent that permits negating the terms of authentic acts that correctly reflect the parties’ intentions when the documents were executed. See La. Civ. Code arts. 1835 and 1848.

Despite the authentic acts of sale, Petersen and Fairbanks argue Johnson is not a co-owner of the property. They contend, and the trial court agreed, that Petersen acquired sole ownership of the property because she alone paid the purchase price. The payment of the purchase price, according to their argument, demonstrates a "mutual intent ... that Petersen retain full ownership" of the property. To bypass the authentic acts that expressly say otherwise, Petersen and Fairbanks rely on Louisiana Civil Code article 797, which provides:

Ownership of the same thing by two or more persons is ownership in indivision. In the absence of other provisions of law or juridical act, the shares of all co-owners are presumed to be equal.

Petersen and Fairbanks contend this provision allows them to prove Johnson is not a co-owner by "rebutting the presumption of equal shares." They further maintain the trial court's conclusion in that regard is a factual finding subject to the manifest-error standard of review. We disagree with this interpretation of Article 797.

The interpretation of a statute presents a question of law subject to de novo review. Kirt v. Metzinger , 19-1162 (La. 4/3/20), ––– So. 3d ––––, –––– (2020 WL 1671571, *3). When a law is clear and unambiguous and its application does not lead to absurd consequences, its language must be given effect; and its provisions must be construed to give effect to the purpose indicated by a fair interpretation of the language used. See La. Civ. Code art. 9 ; La. R.S. 1:4. Words and phrases must be read in context and construed according to the common and approved usage of the language. La. R.S. 1:3. Courts are bound to give effect, if possible, to all parts of a law and to construe no sentence, clause, or word as meaningless and surplusage if a construction giving force to and preserving every word can legitimately be found. See Kirt , ––– So. 3d at –––– (2020 WL 1671571, *3).

Article 797 has two sentences, each of which is significant. The first sentence declares that "ownership in indivision" occurs when two or more persons...