Furlow v. Macdonald (In re), C/A No. 19-06512-JW
| Decision Date | 27 July 2020 |
| Docket Number | C/A No. 19-06512-JW,Adv. Pro. No. 20-80027-JW |
| Court | U.S. Bankruptcy Court — District of South Carolina |
| Parties | IN RE, Brian James MACDONALD, Debtor. Michael Furlow, Cathy Furlow, Plaintiffs, v. Brian J. Macdonald, Defendant. |
Magalie A. Creech, Finkel Law Firm LLC, Columbia, SC, Wendi M. Freeman, Freeman Wine, LLC, Mt. Pleasant, SC, for Defendant.
Sean P. Markham, Markham Law Firm, LLC, Charleston, SC, for Plaintiffs.
John E. Waites, U.S. Bankruptcy Judge This matter comes before the Court upon the Motion for Summary Judgment filed by Brian J. Macdonald ("Defendant") on June 23, 2020, seeking judgment as to the unjust enrichment cause of action asserted by Michael Furlow and Cathy Furlow ("Plaintiffs"). Plaintiffs filed a Memorandum in Opposition to Defendant's Motion for Summary Judgment on June 25, 2020, alleging that issues of material fact remain as to the unjust enrichment cause of action. A hearing was held on the Motion, and the matter was taken under advisement. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. Further, the Court has the authority to make final determinations over this matter as the parties consented to this Court's entry of final orders or judgments on any issue in this adversary proceeding as part of the Consent Scheduling Order entered on May 4, 2020. Pursuant to Fed. R. Bankr. P. 7056, the facts of the case and applicable law, the Court makes the following findings of fact and conclusions of law.1
1. On August 26, 2015, in consideration of $1,224,455, a deed was executed conveying the property better known as 5718 Captain Kidd Road in Hollywood, South Carolina ("Subject Property") to Plaintiffs, Defendant, and M. Leigh Macdonald ("Mrs. Macdonald") as tenants in common. Mrs. Macdonald was Defendant's wife as well as Plaintiffs' daughter.3
2. The Subject Property was purchased with the intent that the Subject Property would be the primary and personal residence for Mrs. Macdonald and Defendant and their children. As such, Defendant and Mrs. Macdonald resided in the Subject Property as their marital home with their children while Plaintiffs resided at a different property. Defendant and Mrs. Macdonald were to be responsible for all improvements, construction, maintenance and expenses associated with the Subject Property after its purchase.
3. Plaintiffs had previously assisted with the purchase of other real property in Florida and Virginia at which Defendant and Mrs. Macdonald resided. On those occasions, Plaintiffs, Defendant and Mrs. Macdonald had in various ways co-owned the properties, and in at least one prior arrangement, the parties executed a written agreement regarding the real property. However, no written agreement was executed as to the Subject Property.
4. At some point, familial disputes arose between the Plaintiffs, Defendant and Mrs. Macdonald with Mrs. Macdonald primarily telling the Plaintiffs to "stay away from [the Subject Property, the Macdonalds, and their children]."
5. It appears that during times relevant to this proceeding Mrs. Macdonald suffered from substance abuse issues, which resulted in the involvement of the South Carolina Department of Social Services ("Social Services"). In or before February 2018, Social Services required Mrs. Macdonald to no longer reside in the Subject Property if Defendant and Mrs. Macdonald's children were to reside there. After initially leaving the property, it appears that Mrs. Macdonald briefly reconciled with Defendant and returned to the Subject Property. She left the property again upon a reoccurrence of the substance abuse issues and related marital discord between her and Defendant.
6. It appears Mrs. Macdonald separated from Defendant on February 9, 2018. Soon thereafter, on February 16, 2018, Defendant changed the locks to the Subject Property.4
7. On February 21, 2018, divorce proceedings were commenced by Mrs. Macdonald. In her complaint, she asserted that the parties separated on February 9, 2018 and that Mrs. Macdonald "is informed and believes that Defendant should continue to reside at the martial home and that Defendant should be responsible for all costs and liability associated therewith, pendente lite ." A temporary consent order was entered on March 27, 2018 by the Family Court that provided Defendant with custody of the couple's two children and continued occupancy of the Subject Property during the divorce proceedings. Specifically, the March 27, 2018 Consent Order provided that Defendant would have sole and exclusive use and possession of the Subject Property.
8. During March of 2018, Cathy Furlow requested and received access to the Subject Property from Defendant to collect Mrs. Macdonald's items that had remained in the house after her departure.
9. On March 19, 2018, Plaintiffs filed a complaint against Defendant and Mrs. Macdonald in the Court of Common Pleas for the County of Charleston, South Carolina ("Partition Lawsuit"). The complaint included a cause of action for partition and a request for attorney's fees and costs for bringing the lawsuit.
10. On April 11, 2018, Mrs. Macdonald executed a quit claim deed of her interest in the Subject Property to the Plaintiffs for consideration in the amount of $38,794.50. This quit claim deed was not recorded in the public records of Charleston County until October 23, 2018.
11. On September 25, 2018, Plaintiffs filed an amended complaint in the Partition Lawsuit that added an unjust enrichment cause of action seeking reimbursement for Plaintiffs' payment of taxes and insurance for the Subject Property as well as seeking an award of rent against Defendant and their daughter, Mrs. Macdonald, for a purported ouster of Plaintiffs from the Subject Property. However, the amended complaint as well as statements of counsel for the Plaintiffs at the hearing on the Motion for Summary Judgment both indicate that Plaintiffs are only seeking an award of rent from February 2018, the time of Mrs. Macdonald's departure from the property and the changing of the locks, to the present. No claim of ouster is being made for the period since the purchase of the Subject Property.
12. It appears on March 25, 2019, a second divorce proceeding was commenced by Defendant pro se . In that divorce complaint, Defendant asserts that Mrs. Macdonald "has a chronic alcohol abuse problem that has caused ongoing issues in the martial home and has now led to the breakdown of the parties' marriage." Defendant sought a divorce based on the grounds of Mrs. Macdonald's habitual drunkenness. It does not appear that the Family Court finalized a divorce between Mrs. Macdonald and Defendant prior to Mrs. Macdonald's death in February 2020.
13. On April 2, 2019, approximately one year after receipt of the quit claim deed, Plaintiffs dismissed without prejudice Mrs. Macdonald from the Partition Lawsuit.
14. On December 12, 2019, Defendant filed a petition for relief under chapter 13 of the Bankruptcy Code (C/A No. 19-06512).
15. On January 13, 2020, Plaintiffs filed a motion for relief from stay to continue their prosecution of the Partition Lawsuit in state court.
16. On March 16, 2020, this Court entered a consent order in which the parties agreed to remove the Partition Lawsuit to this Court in order for the Court to determine the parties' respective ownership interests in the Subject Property as well as address the unjust enrichment cause of action as a prepetition claim asserted against Defendant.5 Accordingly, on March 20, 2020, the Partition Lawsuit was removed to this Court as an adversary proceeding.
17. On May 4, 2020, with the consent of the parties, the Court entered a scheduling order, which provided for the parties to complete discovery by May 30, 2020. The discovery included the deposition of Plaintiffs by Defendant to determine the facts on which Plaintiffs' relied for the unjust enrichment cause of action.
18. On June 23, 2020, Defendant filed the Motion for Summary Judgment, which challenged the sufficiency of the facts necessary to support the claim of ouster and the award of rent sought by Plaintiffs' unjust enrichment cause of action.6
19. On June 25, 2020, Plaintiffs filed the Memorandum in Opposition to Defendant's Motion.
20. The Court held a hearing on the Motion for Summary Judgment on July 8, 2020.
21. The record submitted by the parties for consideration with the Motion for Summary Judgment was limited. Plaintiffs submitted excerpts from the depositions of Plaintiffs Cathy and Michael Furlow. Plaintiffs initially attached an affidavit of Michael Furlow with their Memorandum in Opposition; however, at the hearing, after Defendant raised objections to the introduction of the affidavit, counsel for Plaintiffs indicated that Plaintiffs were not relying upon the affidavit to oppose the Motion for Summary Judgment.
22. The relevant portions of the deposition of Cathy Furlow that was presented to Court are:
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