Murphey v. Pearson, 29766-PJD

CourtSupreme Court of South Dakota
Writing for the CourtDEVANEY, JUSTICE
Citation2022 S.D. 62
PartiesLISA MURPHEY, Plaintiff and Appellee, v. JARED PEARSON, Defendant and Appellant.
Docket Number29766-PJD
Decision Date19 October 2022

2022 S.D. 62

LISA MURPHEY, Plaintiff and Appellee,
v.

JARED PEARSON, Defendant and Appellant.

No. 29766-PJD

Supreme Court of South Dakota

October 19, 2022


CONSIDERED ON BRIEFS APRIL 25, 2022

APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT MEADE COUNTY, SOUTH DAKOTA THE HONORABLE KEVIN J. KRULL Judge

KASSIE MCKIE SHIFFERMILLER of

Lynn, Jackson, Shultz & Lebrun, P.C.

Rapid City, South Dakota

Attorneys for defendant and appellant.

ROBERT D. PASQUALUCCI

Rapid City, South Dakota

Attorney for plaintiff and appellee.

DEVANEY, JUSTICE

[¶1.] Lisa Murphey and Jared Pearson were in a romantic relationship and lived together from 2009 until February 2020. They never married, but they had a child together. When their relationship ended, Lisa instituted an action to determine custody, child support, and shared parenting. Jared counterclaimed for breach of an implied contract and unjust enrichment, asserting that the parties had impliedly agreed that the couple would jointly own the home and Jared would receive his share of the equity in the home acquired by virtue of his financial contributions toward the home mortgage. In her reply, Lisa denied that such an agreement existed, claiming instead that she owned the home and that Jared only paid her rent while living there. The circuit court, after a bench trial, denied Jared's claims; concluded that Lisa and Jared's relationship was that of a landlord and tenant and awarded Lisa back rent; and determined shared parenting and child support issues. Jared appeals, raising multiple issues. We affirm in part, reverse in part, and remand.

Factual and Procedural Background

[¶2.] In 1995, Jared and Lisa met while attending high school in Britton, South Dakota. They lost touch after graduation but reconnected in 2008 and began a long-distance, romantic relationship. At the time, Jared was living in Aberdeen, and Lisa was living in Sturgis in a mortgaged home with her two children from a previous relationship.

[¶3.] In December 2009, Jared moved to Sturgis to live with Lisa and her children. He worked as an optometrist and paid Lisa $500 per month for what he

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characterized as his contribution to household expenses. Lisa testified that they "didn't really have an arrangement" and that the $500 a month Jared "chose to pay . . . included his room, board, his food, toiletries." She characterized these payments as "rent."

[¶4.] In 2012, while Lisa and Jared were still living together, their son, B.P., was born. Lisa testified that their relationship was strained at this time, but she attempted to make it work for the sake of their child. The following year, Lisa and Jared decided to move away from Sturgis. Jared had plans to open an optometry business in Rapid City, and Lisa, who was working as an audiology technician and for the South Dakota National Guard, hoped to work in Rapid City at some point.

[¶5.] After looking at homes with Jared and her family members, Lisa decided to sell her home in Sturgis and purchase a home in Summerset, South Dakota. According to Jared, the couple considered multiple financing options but opted for a loan through the Department of Veterans Affairs (VA) because it had the most favorable terms. Jared further claimed that the loan could only be obtained in Lisa's name because Jared was not a veteran of the armed forces and was not married to Lisa. According to Lisa, she alone decided to obtain the VA loan after Jared told her he was not interested in contributing to the purchase of the home because he did not want the debt and was trying to open his own optometry practice.

[¶6.] In September 2013, Lisa closed on the purchase of the home. Jared did not attend the closing and did not contribute to any of the associated costs. Lisa used the proceeds from the sale of her home in Sturgis to personally pay $1,000 as

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earnest money and $1,467 in closing costs. Jared's name is not on the deed. Lisa obtained a homeowner's insurance policy in her name only, and Jared obtained a renter's insurance policy.

[¶7.] After the two moved into the Summerset home, Lisa began presenting Jared with monthly statements of expenses and asked him to pay half of the total amount listed. These statements included expenses such as the water bill, garbage bill, B.P.'s daycare bill and insurance premium, electric bill, mortgage payment, groceries, internet or television provider bill, and other miscellaneous expenses. Some of the monthly statements included amounts incurred for purchasing gifts for B.P. Lisa explained that she did not include her personal expenses or expenses incurred for her other two children.

[¶8.] According to Jared, the couple's financial arrangement made it "easier for one individual to pay [all of the expenses] rather than to have each of [them] paying things and then try to keep track of everything and come to some conclusion on who owed who[m] what." In his view, Lisa oversaw the finances and made the decisions as to what was included and what was not. Jared claimed that "[f]or the most part," he paid the amount Lisa requested, but he admitted that some months he did not pay any amount or only partially paid the amount on the statement. He explained that in 2014, he and three other optometrists started an optometry practice in Rapid City, which for the first few years, reduced his income stream. He asserted that when his income became more stable, he contributed more than what Lisa requested during a given month, which he believed made up for months he did not fully contribute.

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[¶9.] In August 2016, Lisa refinanced the loan on her home. She claimed that she had to do so to stay current on the bills because Jared had not been contributing his share of the household expenses. Jared, in contrast, claimed that the couple jointly made the decision to refinance. It is undisputed that Jared did not attend the closing or contribute to the $500 closing cost when Lisa refinanced.

[¶10.] While they lived in the Summerset home, both parties contributed funds and labor for improvements. Jared claimed that he installed a camper pad and sandbox, did landscaping, stained the fence and deck, and built raised garden beds and garage cabinets. He asserted that he personally paid for some of the expenses for these projects and some of the expenses Lisa paid were included on the monthly statements she provided to him.

[¶11.] According to Lisa, in 2015, the couple's romantic relationship had ended, and she asked him many times to move out, but he refused to do so. Both parties testified that Jared started sleeping on the couch at this time. Lisa further testified that in November 2019, while Jared was still living in the home, she consulted with an attorney about evicting Jared. The attorney drafted an eviction letter, but Lisa did not commence an official eviction action. However, she did file a petition to establish paternity, child custody, parenting time, and child support.

[¶12.] In February 2020, Jared moved out of the home. In his initial answer to Lisa's petition, Jared did not dispute paternity or Lisa's proposed joint legal custody of B.P. However, he believed he was entitled to 50% of the accrued equity in the home, and in December 2020, he filed an amended answer asserting counterclaims for, among other things, breach of implied contract and unjust

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enrichment.[1] He alleged the parties had agreed that the purchase of the Summerset home was a joint purchase and that they would jointly pay the monthly mortgage. He claimed that from September 2013 until February 2020, he contributed 50% to each month's mortgage payment by reimbursing Lisa directly. He further claimed that Lisa's acceptance of these payments indicated assent to be bound by an implied contract whereby he would receive a commensurate share of the accrued equity in the home in exchange for his payments. Alternatively, he claimed it would be inequitable to allow Lisa to retain his payments without him being awarded his share of the accrued equity.

[¶13.] In reply to his counterclaims, Lisa denied that the purchase of the home was to be a joint purchase. She claimed Jared "was not involved in any aspect of the purchase." She further asserted that Jared "was supposed to pay rent but often could not" and "[t]here were many months that [he] did not pay his rent." In her prayer for relief, she requested that Jared's counterclaims be dismissed with prejudice and that she be awarded "such other and further relief as the [c]ourt deems just and equitable in the premises."

[¶14.] During a one-day trial to the court, Lisa testified that Jared should not be awarded 50% of the accrued equity in the home because, to her, his payments were "the expenses of him living there, his food, room, board." Lisa further testified that Jared had an option to be part of the purchase of the home but chose not to,

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and as a result, the debt was hers and if she became delinquent on the loan, "he could pack his bags and walk out." During cross-examination, she was asked whether "the renting concept" was "ever discussed[.]" She replied, "No." She agreed that there was no lease agreement and that she never reported rental income on her taxes, but she disagreed that there was an agreement that Jared would pay half of the mortgage.

[¶15.] Jeannine Lecy testified as an expert witness for Lisa. Lecy had examined Lisa's and Jared's finances, including each party's bank and credit card statements and Lisa's Quick Books reports. Based on her examination, she concluded that between September 2013 and February 2020, Jared did not make payments for ten months and made only partial payments for 24 months. She explained that she did not have the handwritten statements Lisa had given Jared each month listing his amount due, so she "estimated what the rent would be by the payments that were made for that year." Lecy concluded that...

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