Sanders v. Gould

• Docket Number: ED110814
• Decision Date: 16 January 2024
• Parties: HELEN SANDERS, Respondent, v. COLLEEN GOULD, Appellant.
• Court: Missouri Court of Appeals

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HELEN SANDERS, Respondent,
v.
COLLEEN GOULD, Appellant.

No. ED110814

Court of Appeals of Missouri, Eastern District, Second Division

January 16, 2024

Appeal from the Circuit Court of St. Louis County Honorable Kristine A. Kerr

MICHAEL E. GARDNER, JUDGE

Introduction

This appeal arises from a dispute between two sisters over the purchase of a house. Helen Sanders alleged that her sister, Colleen Gould, promised her she would co-sign a loan so that Sanders could buy a house for her family. According to Sanders, instead of simply co-signing the loan, Gould purchased the house in Gould's name only and then told Sanders that she and her family could live there and make payments toward the mortgage. Sanders claimed that Gould promised to transfer title to Sanders when Sanders was more financially stable. After years of Sanders paying toward the mortgage and making improvements to the house, Gould refused to transfer title to Sanders.

Sanders sued Gould for fraudulent misrepresentation and sought damages based on the amount of money she had put into the house in mortgage payments and improvements. A jury found in favor of Sanders and awarded her damages. Gould appeals the verdict as to liability,

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claiming there was insufficient evidence to support the falsity and reasonable reliance elements of fraudulent misrepresentation. We disagree and affirm the judgment entered on the jury's verdict.

After the jury trial, the trial court entered judgment on Sanders's alternative request for a constructive trust, ordering Gould to sell the house to Sanders. Gould appeals that judgment on the ground that it results in a double recovery to Sanders, allowing her to receive title to the house in addition to the damages awarded by the jury. We agree and reverse the constructive trust judgment.

Factual and Procedural Background

Sanders was looking for a house to buy for her family. Sanders's and Gould's mother planned to loan Sanders money for a down payment. After many months, Sanders found a house that she was interested in buying, at which point Gould got involved in the matter. Sanders testified that Gould tried "to sell [Sanders] on the idea of [Gould] getting a mortgage in her name because her credit was better than [Sanders's] at the time." Gould also touted that she was "very smart" and had experience buying a house, whereas Sanders would be "confused" and "taken advantage of' without Gould's help. Sanders agreed that Gould should co-sign the loan for the house. Sanders understood that, as co-signors, both she and Gould would be on the title of the house, which was something she and Gould had discussed many times. But Gould did not honor that arrangement. Instead, without informing Sanders, Gould signed the mortgage loan and purchased the house in her name only, using a $21,000 loan she obtained from their mother for the down payment. Sanders learned this a week or two later and was "furious." She told Gould that she would not move into the house unless her own name was on the title. Gould responded by convincing Sanders that she had no choice but to live in the house because their mother would not loan her more money to buy another house. Sanders also believed it was unlikely she would find

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another house for the right price. Gould dismissed Sanders's concerns about not having her name on the title and told her that Gould considered this to be Sanders's house. Sanders explained at trial:

[Gould] said that the house is mine, I was being ridiculous She was my sister I could trust her, and that the house was mine, not to worry. Oh, I'm being ridiculous I should calm down. Of course the house is mine and me and the kids and, you know, my husband would all be happy there.

In later testimony, Sanders again described how Gould reassured her:

[D]on't worry about it, I will sign it over to you. We will add your name. You will be okay. I won't screw you over, it will be all right, you should move in. We'll give you the house just make all the payments, the house is yours. It's your house it's not my house, why would I need two houses? It's your house.

Sanders testified that Gould specifically represented that "she would have [Sanders] get the house when [Sanders] was in a better financial state," which, according to Sanders, meant when she was "earning more money." Sanders testified that she relied on this representation when she began living in the house and making payments to Gould for the mortgage. When Sanders was asked why she relied on that representation after how Gould had handled the purchase of the house, Sanders explained:

Because [Gould] led me to believe that she would put the house in my name when I was able to get financing. She . . . understood it was my house, and that if I paid all the mortgage, the tax, and the insurance that it, you know, yes, of course it was my house. In fact, she would say of course it's your house. And I even said why- you know, she doesn't need two houses, my mother would never [buy] two houses for her and none for me.

At trial, Gould denied promising to transfer title to Sanders, claiming instead that she told Sanders she could buy the house from her when Sanders was able to secure her own financing. Gould repeatedly testified that her intent was for Sanders to "actually buy the house" when she was financially able to do so.

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The house was not livable at the time Gould bought it, and Sanders paid for the repairs needed to obtain an occupancy permit. Sanders testified that she and her family moved into the house in the spring of 2009 and continued to make repairs and improvements. Years later, Sanders asked Gould for documentation to prove that Sanders was living in the house and paying Gould for the mortgage because Sanders needed that information to apply for certain government benefits. In response, Gould presented Sanders with a two-year lease backdated to December 15, 2008, which Sanders signed even though Gould would not correct the date.

In 2017, Sanders's income doubled and she informed Gould she was in a "better financial position" and was ready to take over the mortgage and title to the house. After Gould refused, Sanders filed this lawsuit in June 2017. The amended petition alleged that Gould fraudulently misrepresented that "once [Sanders] had a more stable financial situation, [Gould] would transfer the title and mortgage to [Sanders]." Gould filed a motion for judgment on the pleadings, arguing that the representation was too vague as a matter of law to be actionable. The trial court denied the motion, and the case proceeded to a jury trial in November 2021. At trial, Sanders sought damages to compensate her for the $55,000 in monthly payments she had made to Gould over the years, the $38,000 in repairs and improvements, and the $21,000 her mother loaned to Gould but wanted Sanders to have. The jury found in favor of Sanders as to her fraudulent misrepresentation claim and awarded her $95,000 in damages.

Gould also filed a claim for unpaid rent against Sanders based on the written lease, which was consolidated with and tried at the same time as Sanders's fraudulent misrepresentation claim. Sanders and her family still lived in the house at the time of trial, and she acknowledged that Gould had not accepted a payment from her since May 2017. The jury found in favor of Gould on this claim, awarding her $30,000 in damages for unpaid rent.

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Sanders's amended petition also included an alternative request for equitable relief to be determined by the trial court. The constructive trust count alleged that Sanders had "a right, expectancy and interest in the ownership" of the house, which Gould "fraudulently deprived" her of by (1) falsely representing that Gould "would be a co-signor on a loan for [the house] when, in reality, [Gould] obtained a loan and ownership in her name only," (2) then falsely representing that she would transfer ownership of the house to Sanders when Sanders's financial position improved, and (3) falsely representing that Sanders's family could live in the house as long as Sanders made the mortgage payments. Sanders alleged that Gould had "been unjustly enriched by depriving [Sanders] of her ownership of [the house]" and requested that the trial court impose a constructive trust giving her "restitution" of the house.

Based on the evidence at the jury trial, the trial court entered a judgment granting Sanders's request for a constructive trust and ordered Gould to "convey title of the house to [Sanders] as follows:" (1) the parties "shall execute a standard Missouri residential sale contract, contingent on [Sanders's] ability to qualify for financing, with a sale price of $70,729.98" (based on the mortgage balance of $40,729.98 plus the $30,000 Sanders owed Gould pursuant to the jury's verdict for unpaid rent) and (2) Gould shall sign a "warranty deed conveying title to Sanders" at or before closing on the sales contract "with the proceeds used to pay off the mortgage so that the current deed of trust can be released." The trial court later supplemented the constructive trust judgment "to note that it made its findings and orders on that date by clear, cogent and convincing evidence." Gould now appeals.

Discussion

In her first three points on appeal, Gould challenges the judgment on the fraudulent misrepresentation count. We conclude those arguments have no merit. Gould's remaining two

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points contend the trial court erred with regard to the constructive trust judgment. Because we agree with Gould that the constructive trust judgment resulted in an impermissible double recovery for Sanders, we grant her fifth point on appeal and deny her fourth point as moot.^[1]

Fraudulent Misrepresentation

To prove liability for fraudulent misrepresentation, a plaintiff must prove the following elements: (1) a representation; (2) its falsity; (3) its...