Myers v. Myers

• Decision Date: 04 November 2020
• Docket Number: No. 20-0122,20-0122
• Citation: 955 N.W.2d 223
• Parties: Christina MYERS, Plaintiff-Appellee, v. Michael J. MYERS and Krisanne L. Myers, Defendants-Appellants.
• Court: Iowa Court of Appeals

955 N.W.2d 223

Christina MYERS, Plaintiff-Appellee,

v.Michael J. MYERS and Krisanne L. Myers, Defendants-Appellants.

No. 20-0122

Court of Appeals of Iowa.

Filed November 4, 2020

Amanda L. Green of Takekawa & Green, PLLC, Ankeny, for appellants.

James R. Hinchliff of Shindler, Anderson, Goplerud & Weese, P.C., West Des Moines, for appellee.

Considered by Vaitheswaran, P.J., and Tabor and Schumacher, JJ.

TABOR, Judge.

Christina Myers brought an equitable action against her son, Michael, and her daughter-in-law, Krisanne, to recoup $89,900 she paid to help them purchase a larger house.¹ As part of their arrangement, Christina remodeled and lived in the walkout basement. Michael and Krisanne argued Christina had no right to repayment because she signed three gift letters to facilitate Michael securing a mortgage on the house. Those letters stated, "[N]o repayment of this gift is expected or implied in either form of cash or services of the recipient."

The district court ruled for Christina, allowing her to recover the $89,900 in contributions. Michael and Krisanne appeal, contending the gift letters were enforceable contracts prohibiting Christina from recovering the gifted amounts. As part of that claim, they argue the court misapplied the equitable theories of unjust enrichment and promissory estoppel. They also contend the court violated the parol evidence rule by considering extrinsic proof of a prior oral agreement between the parties.

Like the district court, we find the gift letters are not enforceable because their terms do not meet the elements of a contract. That finding means the parol evidence rule does not preclude our consideration of extrinsic evidence surrounding Christina's gift. Applying the proper framework for inter vivos gifts,² we affirm.

I. Facts and Prior Proceedings

Christina is the mother of three adult children—Michael, Jennifer, and William. For many years, Christina lived alone in Arizona, working full-time as the co-owner of a dog-boarding business. After being hospitalized twice for serious health issues, she decided it was time to move closer to her children.

In August 2013, Christina sold her business, receiving close to $115,000 in proceeds. Seeking to invest the money, she looked into real estate. Because the market was "volatile" in Arizona, Christina entertained moving to Iowa, where Michael and Krisanne lived with their five children. Knowing Michael and Krisanne resided "in a very small home," Christina offered to use the proceeds from the sale of her business to help them buy a bigger house.³ She testified she "wanted to give them the opportunity to live in a beautiful home" and "to be with them," calling it a "win/win" situation.

Christina told her friend and former business partner, Margaret Brown, that "she decided to buy a home with Michael, her son, in Iowa." Brown understood that Christina would own one-third of the home. Brown testified that, after hearing Christina's plans, she was "nervous" that her friend would end up wishing she had her own space. Similarly, Christina's niece, Laurie Graham King, testified that, based on conversations with her aunt before the purchase, she believed Christina was "a one-third owner in the home."

With the understanding that Christina would help finance the home and live with them, Michael and Krisanne began house-hunting that fall. In December, Michael and Krisanne found a three-story home in Cumming with enough space for their children and Christina. Michael shared the listing with Christina, who was still living in Arizona. The house had a walkout basement—finished with two bedrooms, a bathroom, and a kitchen—which the parties agreed Christina would occupy as her private living quarters. Christina thought the arrangement was fair because the basement constituted nearly one-third of the property's total square footage. Michael referred to the space as a "mother's suite." Because the basement was set up as a recreation room, Christina anticipated making some renovations. She also planned to use the basement's unfinished space as a laundry room.

With that arrangement in mind, Michael and Krisanne made an offer of $490,000 on the Cumming house in January 2014. The seller requested an earnest-money deposit of $1500 at the time of the offer, which Michael paid. A day later, the seller made a counteroffer of $525,000 and requested another $3500 deposit due at acceptance. That same day, Michael accepted the deal and paid the deposit. Although the payments came from his personal bank account, he asked Christina to help pay for the deposits. Of the total $5000 earnest-money payments made by Michael, Christina contributed $4900.⁴

Under the purchase agreement, two things had to occur before the March closing date. First, Michael and Krisanne had to obtain a mortgage by early February. Second, they had to make a down payment of around $105,000, which was twenty percent of the purchase price. As promised, Christina planned to contribute $85,000 from her business-sale proceeds toward the down payment.

Michael applied for a mortgage as the sole borrower.⁵ But because Michael was relying on Christina for financial support, he did not qualify for the mortgage on his own. The lender told Michael that Christina needed to submit gift letters memorializing her contributions.⁶ The contributions totaled $89,900, including the $900 and $4000 earnest-money payments and the anticipated $85,000 partial down payment. At the lender's request, Michael sent Christina three standardized gift letters, informing her the letters were necessary to obtain the mortgage.⁷

On February 1, February 11, and February 12, 2014, Christina signed three separate gift letters for $900, $85,000, and $4000 respectively. Christina testified she had no direct communications with the mortgage company but did what Michael asked her to do because he was "the hands-on person" with the mortgage.

Each gift letter contained the following language:

I/We do hereby certify to the following:

I/We [Christina] have made a gift of [$900, $85,000, $4000] dollars to [Michael] named below, and no repayment of this gift is expected or implied either in the form of cash or future services of the recipient.^[8]

Christina wrote an email to Michael with the gift letters attached, saying, "Here you go! I sure must like you a lot to be giving you all this money! 1-4-3."⁹ Thanks to the gift letters, Michael obtained a mortgage at a favorable rate. On February 26, Christina sent her final contribution of $85,000 to the Wasker Law Firm in Des Moines to be held in escrow until the closing. The closing took place on March 7.

After moving into the Cumming house, Christina became responsible for one-third of the monthly bills. On the first of every month, Michael and Krisanne sent Christina a recurring reminder to pay around $800 to $900—the amount varying based on property taxes, utilities, and other expenses. Although Michael called the monthly payments "rent," Christina testified she never thought of herself as a renter because she also shared the costs of the mortgage, the homeowner's association fees, and the home warranty. And she paid for major improvements in the basement, including remodeling the kitchen and repairing the bathroom. In the first few months of living there, Christina bought a new refrigerator, microwave, oven, washer, and dryer for her personal use. When asked if she would have made those improvements if she knew she had no ownership interest in the home, she testified: "[M]y expectation was that they were going to carry me out of that place in a coffin. This was my bridge into old age." Michael agreed in his testimony that Christina's plan was to live in that home until her death—"that's how she proposed it to us."

Despite Christina's contributions, her name did not appear in the transfer deed. The deed conveyed the property to "Michael J. Myers and Krisanne L. Myers, husband and wife, as Joint Tenants with full rights of survivorship and not as Tenants In Common." Although Christina acknowledged she was not publicly listed as a co-owner, she believed her $85,000 down payment and her monthly mortgage payments established her one-third ownership of the home.

Tensions flared between the parties in 2017 over the living arrangement. Christina felt like her personal living space was "overrun" by Michael, Krisanne, and the children, contrary to what she had agreed to before moving in. Although the parties tried to reconcile their differences, the situation only worsened.¹⁰ So in April 2018, Christina and Michael began to discuss an "exit strategy."

But that fall, rather than agreeing to an exit plan, Christina sued Michael and Krisanne to recover her contributions and "the full value of her share of their joint property, including her portion of the increased value of the joint property." Shortly after filing the petition, Christina received an eviction notice from Michael and Krisanne. That notice gave her thirty days to vacate the property. But because Christina had nowhere to move, Michael allowed her to stay until she bought her own place in January 2019.

The district court held a two-day trial in October 2019. After considering witness testimony and documentary evidence, the court ordered Michael and Krisanne to repay Christina for her contributions in the amount of $89,900 (plus interest).¹¹ Michael and Krisanne appeal.

II. Standard of Review

Because the district court heard this case in equity, our review is de novo. Iowa R. App. P. 6.907. We give weight to the court's factual findings, especially when assessing witness credibility, but they do not bind us. Newhall v. Roll , 888 N.W.2d 636, 640 (Iowa 2016) (citing Iowa R. App. P. 6.904(3)(g) ; Martin v. Martin , 720 N.W.2d 732, 735 (Iowa 2006) ).

III. Discussion

A. Contract Analysis

Michael and Krisanne assert the down payments made by Christina were outright gifts with no obligation of repayment. Despite this assertion, Michael and Krisanne spend much of...