Kellogg v. Shushereba

Citation2013 VT 76,194 Vt. 446,82 A.3d 1121
Decision Date06 September 2013
Docket NumberNo. 11–355.,11–355.
CourtVermont Supreme Court
PartiesThomas KELLOGG v. Cindy SHUSHEREBA.

194 Vt. 446
82 A.3d 1121
2013 VT 76


No. 11–355.

Supreme Court of Vermont.

Sept. 6, 2013.

[82 A.3d 1124]

Frank F. Berk, South Royalton, for Plaintiff–Appellee/Cross–Appellant.

Thomas Hayes and Susan J. Manley of Hayes & Windish, Woodstock, for Defendant–Appellant.



¶ 1. This case presents the difficult task of equitably resolving the fallout from a collapsed, unwritten real estate transaction. Both parties challenge the monetary award arrived at by the trial court, sitting in equity. We conclude that, although correct in some respects, the trial court's decision mistakenly treated the parties' agreement as though it were an agreement for rent. The decision is therefore affirmed in part, reversed in part, and remanded for further proceedings.

¶ 2. Plaintiff Thomas Kellogg owns a house and land on Christian Hill Road in Bethel. In roughly 1999, he entered into a rent-to-own agreement with William Oren—who is not a party to this case—whereby Oren would pay $180,000 over time for the property, at which point ownership would be transferred to him.

¶ 3. Not long thereafter, beginning for several months in 2000 and then from 2001 onwards, defendant Cindy Shushereba began to occupy the house with Oren in a romantic relationship. By August 2004, it was contemplated that defendant would come to co-own the property. Plaintiff indicated that he wished to come to an agreement to sell the property to defendant and Oren.

¶ 4. To that end, in August 2004, defendant liquidated her savings and paid plaintiff the sum of $41,793 as a downpayment on the house. Plaintiff again set the sales price at $180,000 and credited Oren and defendant with the $39,486 that Oren had paid in rent. These two contributions left roughly $98,721 to be paid to reach the purchase price. The parties agreed orally that the balance would be paid over fifteen years in the amount of $833 per month based on a six-percent interest rate. In addition, Oren and defendant agreed to be responsible for the real estate taxes and the property insurance. No written purchase and sale agreement was ever prepared, but the parties intended that Oren and defendant would receive title immediately and give a mortgage secured by a promissory note for the installments. Oren was concerned about having his name appear on the deed due to outstanding tax debts, so a warranty deed, mortgage and promissory note were drawn up in defendant's name only. Plaintiff delivered the signed warranty deed to defendant, but defendant never signed the promissory note or the mortgage. Because defendant could not pay the property transfer tax that would be due on recording, she never recorded the warranty deed. Plaintiff testified that, at this time,

[82 A.3d 1125]

he considered himself the mortgage holder only.

¶ 5. From 2004 until 2008, Oren made the $833 monthly payments. He also paid the property taxes until the final quarter of 2007 when plaintiff resumed paying the property taxes.1 Ultimately, the relationship between Oren and defendant dissolved,2 and, in May 2008, Oren moved out after defendant obtained a relief-from-abuse order against him.

¶ 6. A couple of months after Oren moved out, plaintiff and defendant became sexually involved. Although the parties dispute whether to characterize the relationship as “romantic,” both parties testified that they regularly spent the night together at each other's residences from 2008 until 2010. During this time, plaintiff sought neither rent nor the purchase installments from defendant, and she made no payments. There was testimony that defendant unsuccessfully sought financing to complete the purchase. At some point in 2010, plaintiff began seeking rent from defendant, and she did make between two and four monthly rental payments of $650 at this time. Plaintiff paid the property taxes on the property throughout the time that defendant lived by herself in the house.

¶ 7. In 2008, not long after moving out, Oren brought suit against both plaintiff and defendant, seeking to be declared half-owner of the property along with defendant, from whom he sought a partition and accounting. Of relevance to this case, defendant filed a cross-claim—although erroneously styled as a counterclaim—in that action, seeking an order requiring plaintiff to execute a warranty deed in her name and seeking to be declared sole owner of the property.3 In September 2009, the superior court rejected the claims of both Oren and defendant. In regard to defendant's cross-claim, the court concluded, “There is no testimony before the court that the parties ever agreed that [defendant] would be sold this property for $41,793.48, the amount which she has paid to [plaintiff] to date.” Plaintiff testified that, even after this decision and despite the fact that defendant was not making payments, he still expected that defendant would, at some point, pay the remaining balance due on the purchase price. Defendant's testimony about her desire to buy the house was confused, but she stated on more than one occasion during her testimony that she still wished to purchase the house after the conclusion of the first lawsuit.

¶ 8. While defendant lived in the house, the water source for the residence—a spring dug many years earlier—had deficiencies that became acute beginning around 2007. The spring water was not potable due to a bacterial contamination producing high coliform levels. Furthermore, the water was extremely hard, which led to rust stains and mineral buildup in the appliances. Defendant testified that the water would turn her hair and laundry orange. Eventually, and over some resistance from plaintiff, defendant arranged to have a well dug, and she paid for this herself at a cost of $3992, plus $995 for the installation of a water pump. During her residency, defendant also paid $787

[82 A.3d 1126]

for roof repairs and $750 for repairs to a plumbing leak.

¶ 9. By August 2010, whatever relationship existed between plaintiff and defendant had ended. Plaintiff served defendant with an eviction notice alleging defendant owed $25,823 in back rent. As a result of this notice, defendant moved out of the property in early September 2010. In October 2010, plaintiff initiated this action for unpaid rent of $26,656, based on a “rent” of $833 per month for thirty-two months. At trial, plaintiff also sought compensation for the property taxes he paid during her residency and for the value of certain appliances and personal property that he alleged should have been left at the property.

¶ 10. Defendant counterclaimed, contending that she owned the property or, in the alternative, that plaintiff had been unjustly enriched by defendant's payments to him. Prior to trial, the court dismissed as res judicata defendant's claim that she owned the property, leaving the unjust-enrichment claim in her counterclaim. At trial, defendant additionally contended that she was owed for various capital contributions that she had made and the value of certain personal property.

¶ 11. After a bench trial consisting entirely of testimony from plaintiff and defendant, the trial court ruled in favor of plaintiff's claims for back rent and property taxes, amounting to $40,063. Of this amount, $23,324 was awarded for rent, representing $833 per month from May, 2008 through August, 2010. The remaining $16,739 was awarded for property taxes, covering the last quarter of 2007 through eight months of 2010. However, the trial court ruled in favor of defendant with regard to her unjust enrichment claims for the return of the $41,793 downpayment on the purchase price and several of her alleged capital and repair contributions. The court concluded that defendant was owed $50,067 on the counterclaim, meaning defendant received a net judgment of $10,004.

¶ 12. Both parties appealed. Defendant argues that the court erred in finding an agreement that she would pay the property taxes and in finding that she owed $833 per month as rent. Plaintiff argues that defendant's unjust-enrichment claim should have been dismissed as res judicata or as securing an option that was never exercised and that defendant was not entitled to an offset for her capital contributions because she did not follow the statutory notice requirements before making the changes. In summary, plaintiff wants rent and property taxes for the period defendant occupied the property, without returning defendant's lump-sum payment or her capital contributions. Defendant wants return of the lump-sum payment and an amount equal to the capital contributions without paying any more for her occupancy after Oren left.

¶ 13. In reviewing the trial court's decision, we accept its findings of fact as long as they are supported by the record. See V.R.C.P. 52(a)(2); Mann v. Levin, 2004 VT 100, ¶ 17, 177 Vt. 261, 861 A.2d 1138 (“[W]e will uphold the court's factual findings unless, taking the evidence in the light most favorable to the prevailing party, and excluding the effect of modifying evidence, there is no reasonable or credible evidence to support them.”). We review the trial court's legal conclusions without deference, Charbonneau v. Gorczyk, 2003 VT 105, ¶ 2, 176 Vt. 140, 838 A.2d 117, but we give deference to the trial court's decision to grant or withhold equitable remedies, see Weed v. Weed, 2008 VT 121, ¶ 16, 185 Vt. 83, 968 A.2d 310.

[82 A.3d 1127]

¶ 14. We begin with defendant's assertions of error challenging the judgment amounts for rent and property taxes. The rental award was based on the assumption, not explored, that there was a landlord-tenant relationship between the parties because they had entered into a rent-to-own contract. The trial court's opinion is somewhat ambiguous on this point and is focused more on the nature of the payment, rather than the nature of the relationship. On the one hand, the trial court referred to “their informal and...

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