Gregory v. Gregory

• Decision Date: 30 January 2013
• Docket Number: No. CA 12–268.,CA 12–268.
• Citation: 2013 Ark. App. 57,425 S.W.3d 845
• Parties: Dallas R. GREGORY, Appellant v. Pauline L. GREGORY, Appellee.
• Court: Arkansas Court of Appeals

2013 Ark. App. 57

425 S.W.3d 845

Dallas R. GREGORY, Appellant

v.Pauline L. GREGORY, Appellee.

No. CA 12–268.

Court of Appeals of Arkansas.

Jan. 30, 2013.

Jordan Law Firm, LLP, by: Michael R. Unger, for appellant.

No response.

KENNETH S. HIXSON, Judge.

AppellantDallas R. Gregory appeals from an order entered on January 30, 2012, wherein the Little River County Circuit Court found that appelleePauline L. Gregory had established a constructive trust to real properly she had previously deeded to Mr. Gregory in May 2002.For reversal of the trial court's order, Mr. Gregory raises numerous arguments, including that Ms. Gregory's claims were not ripe for adjudication; that the trial court erred in permitting testimony on an unpleaded theory of recovery; that the trial court erred in establishing a constructive trust on the basis of a future event; that Ms. Gregory's action was barred by the statute of limitations; and that the establishment of a constructive trust on the basis of a confidential relationship between the parties was not established by clear and convincing evidence.Upon our review of the record, we conclude that there was no error, and we affirm.

Our supreme court has stated that a constructive trust is an implied trust, arising by operation of law to satisfy the demands of justice.J.W. Reynolds Lumber Co. v. Smackover State Bank,310 Ark. 342, 836 S.W.2d 853(1992).A constructive trust is based on unjust enrichment, and may be applied when one who holds title to property orally agrees to hold the property for the benefit of another; it is an implied trust that arises when it appears from the evidence that the beneficial interest should not go with the legal title.Mitchell v. Mitchell,28 Ark.App. 295, 773 S.W.2d 853(1989).Such trusts are frequently imposed to remedy the breach of a fiduciary duty, to remedy fraud or overreaching, and to prevent unjust enrichment.Cole v. Rivers,43 Ark.App. 123, 861 S.W.2d 551(1993).While a confidential or fiduciary relationship does not in itself give rise to a constructive trust, an abuse of confidence rendering the acquisition or retention of property by one person unconscionable against the other suffices generally to ground equitable relief in the form of declaration and enforcement of a constructive trust.J.W. Reynolds, supra.In Berry v. Walker,2012 Ark. App. 16, 2012 WL 11263, we held that a constructive trust may be imposed against a person who secures legal title by violating a confidential relationship or fiduciary duty.To impose a constructive trust, there must be full, clear, and convincing evidence leaving no doubt with respect to the necessary facts, and the burden is especially great when title to real estate is sought to be overturned by parol evidence.Id.

Although we review equity cases de novo, the test on review is not whether we are convinced that there is clear and convincing evidence to support the trial court's findings, but whether we can say that the trial court's findings are clearly erroneous.Hankins v. Austin,2012 Ark. App. 641, 425 S.W.3d 8.A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake was made.Id.In reviewing a trial court's findings of fact, we give due deference to the trial court's superior position to determine the credibility of witnesses and the weight to be accorded their testimony.Id.

The appellee herein, Pauline L. Gregory, is an elderly widow and has five children.The youngest of Ms. Gregory's children is the appellant, Dallas R. Gregory.In May 2002, when Ms. Gregory was seventy-nine years old, she conveyed her homestead property to Mr. Gregory.Ms. Gregory has continued to live on the homestead properly since that time.

On January 7, 2011, Ms. Gregory filed a complaint against Mr. Gregory for the imposition of a constructive trust.In her complaint, Ms. Gregory alleged that, in May 2002, Mr. Gregory asked her to convey to him her homestead properly, assuring her that under Arkansas law her youngest child would receive the property upon her death and urging her to just “give it to him now.”Ms. Gregory further alleged that Mr. Gregory advised her that if she were to become ill and needed government assistance, the government would take her house.Based on this advice, Ms. Gregory conveyed fee-simple ownership to Mr. Gregory.In her complaint, Ms. Gregory asserted that in June 2009she requested that Mr. Gregory reconvey the property to her, but that he refused.Ms. Gregory alleged that at the time of the conveyance there existed a fiduciary relationship between the parties such that Mr. Gregory had gained her trust and confidence, and that he purportedly acted in her best interests.Ms. Gregory alleged that Mr. Gregory made intentionally false oral promises and abused her trust, and as a result of his actions she requested that a constructive trust be imposed upon the property for her benefit.

Dallas Gregory testified at the bench trial held on September 28, 2011.Mr. Gregory described his acquisition of his mother's property as follows:

After witnessing Medicaid take the house of a lady who lived in Foreman following her stay in 2001, I approached my mother and said we need to get the house out of your name and into one of our names.In the event mother ever had to go into a nursing home under Medicaid, the government would come and take the house for payment.Mother said she would talk it over with my siblings and see what they think.A few months later, mother called me and said she had talked to them and they all agreed to put it in my name.I obtained this deed from mother in the event that she had to go in a nursing home under Medicaid, and then Medicaid would have the right to come back and lay claim to the house to reimburse themselves for the expenses that mother had been out for what Medicaid paid for her care.

Over Mr. Gregory's objection, opposing counsel was permitted to question him about an alleged oral agreement between the parties that was not relied upon in Ms. Gregory's complaint.In this regard, the trial court allowed Ms. Gregory to amend her complaint to conform to the proof.Mr. Gregory testified that there was an agreement that, if his mother signed the house over to him, then at the time of her death he would buy out his siblings, or if one of them wanted to buy the house, that sibling could buy out the rest of them.Mr. Gregory stated that this agreement was for the benefit of him and his siblings, and he said that his intention has always been that the siblings would be equal partners in the house when their mother died.

Mr. Gregory testified that in 2009, his oldest brother Roy called him and demanded that he sign the house back to their mother because she wanted to execute a reverse mortgage on the property to pay off Ms. Gregory's credit-card debt.Mr. Gregory refused to comply with that demand, and he explained that he did not want the property to go back to his mother and have the property mortgaged away.Mr. Gregory testified, “I am still holding the property for mother to be divided among the five children at her death.”

Ms. Gregory testified that it was her understanding that, when she gave Mr. Gregory the deed in 2002, the property would become his at the time of her death.She stated that Mr. Gregory advised her that “the youngest child would get the house anyway” and also warned her that if she did not get the property out of her name the government could take it in the event she got sick and went on Medicaid.Ms. Gregory indicated that it was her assumption that Mr. Gregory would divide her property equally among her children in the event of her death.Ms. Gregory testified that she first learned that Mr. Gregory intended to keep the property in 2009 after her oldest son called him and asked Mr. Gregory to sign the deed back to her, and Mr. Gregory refused.At that time, she assumed that Mr. Gregory was going to keep the property for himself, contrary to their oral agreement, because he would not give it back to her.

On January 30, 2012, the trial court entered an order in favor of Ms. Gregory, granting her a constructive trust in the homestead property.In pertinent part, the trial court made the following detailed findings:

By clear and convincing evidence the Court finds that Plaintiff has established a constructive trust in said property.The Plaintiff and Defendant are mother and son.On May 22, 2002Plaintiff gave the Defendant a quitclaim deed to her home and one acre of land.At that time Plaintiff was seventy-nine years of age.The Defendant has a college degree and is a minister.The Defendant had assisted Plaintiff in the past, including helping her financially, and was placed on her bank account.The defendant testified that h...