JOEL v. JOEL, NO. 2009-CA-00474-SCT

CourtUnited States State Supreme Court of Mississippi
Writing for the CourtDICKINSON, JUSTICE.
Docket NumberNO. 2009-CA-00474-SCT
PartiesDEBRA JOEL, AS EXECUTRIX OF THE ESTATE OF JIMMY JOEL, LINDSEY MEADOR, AS TRUSTEE FOR THE JAMES J. "JIMMY" JOEL, TESTAMENTARY MARITAL TRUST AND AS TRUSTEE FOR THE JAMES J. "JIMMY" JOEL FAMILY TRUST v. JAMES H. JOEL AND ESTATE OF MARGARET R. JOEL
Decision Date01 July 2010

DEBRA JOEL, AS EXECUTRIX OF THE ESTATE
OF JIMMY JOEL, LINDSEY MEADOR, AS
TRUSTEE FOR THE JAMES J. "JIMMY" JOEL,
TESTAMENTARY MARITAL TRUST AND AS
TRUSTEE FOR THE JAMES J. "JIMMY" JOEL FAMILY TRUST
v.
JAMES H. JOEL AND ESTATE OF MARGARET R. JOEL

NO. 2009-CA-00474-SCT

Supreme Court Of Mississippi

DATE OF JUDGMENT:03/11/2009
July 1, 2010


ATTORNEYS FOR APPELLANTS: CHARLES EDWIN ROSS KATHERINE A. HALL WILLIAM B. LOVETT, JR

ATTORNEYS FOR APPELLEES: GERALD H. JACKS AMY CHICORELLI

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TRIAL JUDGE: HON. WILLIAM G. WILLARD, JR.

COURT FROM WHICH APPEALED: BOLIVAR COUNTY CHANCERY COURT

NATURE OF THE CASE: CIVIL-WILLS, TRUSTS, AND ESTATES

MOTION FOR REHEARING FILED:

MANDATE ISSUED:

BEFORE CARLSON, P.J., DICKINSON AND PIERCE, JJ.

FOR THE COURT:

DICKINSON, JUSTICE.

¶1. Jimmy Joel persuaded his elderly parents ("the Joels") to purchase a house from the Shackelfords. Without the Joels' knowledge, Jimmy had his lawyer include in the deed a provision that transferred title to himself upon the death of either of his parents. When the Joels learned what Jimmy had done, they confronted him, and Jimmy agreed to remove the

provision. But before doing so, he unexpectedly died. Unable to persuade Jimmy's widow to change the deed, the Joels filed this suit to obtain fee-simple title.

¶2. In Mississippi, equity must follow the law. But where the law provides no remedy, equity may do so. Because the Joels had no contract with Jimmy, they had no legal remedy, so the chancellor imposed an equitable trust. We affirm.

BACKGROUND FACTS AND PROCEEDINGS

¶3. Jimmy was a successful real estate developer, and his wife, Debbie, was a realtor. Jimmy built a small house and sold it to the Shackelfords for $93,500. In a verbal sideagreement, Jimmy promised the Shackelfords, according to Debbie, that if they ever wanted to sell the house, he would buy it back for what they paid plus $1,000. Two years later, they did decide to sell. But rather than repurchasing the house, Jimmy persuaded his parents to buy it.

¶4. After setting up financing through his banker, Jimmy instructed his attorney, Lindsey Meador, to include in his parents' deed a life-estate provision that transferred title to Jimmy upon the death of either of his parents. Even though the Joels had paid the full price for the home, and Jimmy had paid nothing, Jimmy's surviving parent would be left without title to the home.

¶5. In discussing the life-estate provision with his parents, Jimmy, according to Debbie, said the life-estate provision would protect them from losing the house to Medicaid. Mr. Joel, who was relatively unsophisticated in real estate matters, voiced concern about the life estate provision. He told Jimmy that he and his wife wanted to be sure they could pass the

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house to their three children under the terms of their wills or, if they needed to, sell it. Jimmy assured them that they could.

¶6. Also, Debbie and Jimmy, according to Debbie, worried that Jimmy's sister, Ann, might try to take advantage of her elderly parents; and Jimmy believed that the life-estate provision in the deed would give him control over whether Ann lived in the house.

¶7. The closing took place in August 2001. The Joels admitted they did not read the deed, relying instead on Jimmy's assurances that all was as promised. With the proceeds from the sale of their old house, the Joels reduced their loan balance to an amount they were able to pay off within a few years. When Jimmy paid for some improvements to the house, the Joels tried to reimburse him, but he would not accept any money.

¶8. According to Mr. Joel, the subject of the deed came up during a visit from their other son, Mike, in 2005 or 2006. Mrs. Joel said to him, "Son, I wish you'd get the papers out of that box in there and look at them and see if everything looks all right. We couldn't read that stuff. We don't really know." After reading the deed, Mike said it didn't look right to him, and that he wanted to take it to a real estate lawyer for review.

¶9. Upon learning from the lawyer how the life-estate provision would work, the Joels became alarmed. Mr. Joel talked with Jimmy about the deed and told him, as he had before, that he wanted the house to pass to all three children according to his and Mrs. Joel's wills. He asked Jimmy to change the deed. Jimmy said he would, but in June 2007, he died unexpectedly of a heart attack. The deed remained unchanged.

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¶10. Jimmy's will devised his property to two trusts, with his attorney, Meador, as trustee of both. Debbie was executrix of Jimmy's estate. Mr. Joel tried to get Debbie to change the deed, but she refused. On December 6, 2007, the Joels filed suit, seeking equitable relief including imposition of a constructive trust.

¶11. In their complaint, the Joels characterized the deed as a "mistake," claiming they thought they were taking title in fee simple. The complaint did not allege any wrongdoing such as fraud, overreaching, or undue influence, but instead alleged that Jimmy "agreed that his parents... were supposed to have fee simple title...."

¶12. But when the Joels deposed Meador, they learned that Jimmy had met secretly with the attorney to dictate the terms of the deed. Then, with the court's permission (and over the Estate's objection), they abandoned the "mistake" theory and filed an amended complaint alleging that Jimmy had made false representations, knowing they would rely on his statements. The Joels also alleged that Jimmy had abused a confidential relationship with "substantial overreaching, and/or wrongdoing, and/or unconscionable conduct, and/or fraud." (13. Following a two-day trial, the chancellor imposed a constructive trust based on his Findings of Fact and Conclusions of Law ("FFCL"). He ordered that Mr. Joel1 receive title to the house in fee simple. The Estate brings this appeal.

STANDARD OF REVIEW

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¶14. We do not review a trial court's findings of fact under the same standard used for its conclusions of law. When reviewing a chancellor's findings of fact, we

will reverse a chancellor only where he is manifestly wrong. A chancellor's findings will not be disturbed unless he was manifestly wrong, clearly erroneous or an erroneous legal standard was applied. Where there is substantial evidence to support his findings, this Court is without the authority to disturb his conclusions, although it might have found otherwise as an original matter.2

¶15. We recognize the following exception to the Ferrara v. Walters rule:

Where the chancellor adopts, verbatim, findings of fact and conclusions of law prepared by a party to the litigation, this Court analyzes such findings with greater care, and the evidence is subjected to heightened scrutiny. Because the chancellor erred in adopting3 the litigant's findings of facts and conclusions of law in the case sub judice, the deference normally afforded a chancellor's findings of fact is lessened.4

¶16. The FFCL proposed by the Joels and the one eventually entered by the court were essentially the same. So we must apply the Brooks v. Brooks heightened-scrutiny standard of review.

¶17. Heightened scrutiny requires that "the deference afforded the findings of fact is lessened...," and we " must view the challenged findings and the record as a whole 'with

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a more critical eye to ensure that the trial court has adequately performed its judicial function.'"5

¶18. When we review conclusions of law, including the applicability of a constructive trust, we afford the trial judge no discretion. Rather, we reach our own conclusions of the applicable law and how it should be applied.6

ANALYSIS

¶19. The U.S. Supreme Court has stated:

The established rule, although not of universal application, is that equity follows the law or, as stated in Magniac v. Thomson, 15 How. 299, "that, wherever the rights or the situation of parties are clearly defined and established by law, equity has no power to change or unsettle those rights or that situation, but in all such instances the maxim 'equitas sequitur legem'7 is strictly applicable."8

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¶20. In Mississippi, the law is the same equity indeed must follow the law.9 As we put it seventy years ago:

The rule is that equity follows the law as far as the law goes in securing the rights of the parties and no further. When the law stops short of securing this object, equity continues the remedy until complete justice is done.10

We now turn to this case's central question of whether an equitable remedy was available to the Joels.

¶21. Although Jimmy arranged for the Shackelfords to sell the house to his parents, he was not a party to the sale. He neither bargained for nor paid for the benefit he arranged for himself in the deed. Neither party to the sale was accused of any wrongful conduct, so the Joels had no legal remedy, and the chancellor appropriately turned to equity.

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¶22. We have held that "clear and convincing evidence is required to establish a constructive trust."11 The estate has raised several challenges, each of which we must reject.

¶23. The Estate argues that, unless the chancellor found a confidential relationship, he was without authority to impose a constructive trust. While a confidential relationship is sometimes required, sometimes it is not. We have held:

A constructive trust is one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.12

¶24. So a constructive trust is a proper remedy in a variety of circumstances. The McNeil v. Hester definition provides several examples of wrongful conduct that may justify imposition of a constructive trust:

(1) fraud, actual or constructive

(2) duress

(3) abuse of
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