May 16, 2007
RICHARD L. GRUBER, PLAINTIFF-APPELLANT,
SCOTT E. RIXFORD, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Passaic County, FM-16-827-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 17, 2006
Before Judges Coburn, Axelrad and R. B. Coleman.
Plaintiff Richard L. Gruber appeals from orders of the Chancery Division, Family Part, Passaic County, entered on February 25, 2005, and April 18, 2005. The February 25, 2005 order in favor of defendant Scott E. Rixford, dismissed Gruber's complaint, and discharged a previously filed notice of lis pendens. Whereas the February 25, 2005 order reserved judgment for forty-five days on the issue of Rixford's counterclaim, the April 18, 2005 order dismissed the counterclaim, without prejudice to defendant's right to re-file if plaintiff should succeed on the appeal. The dispute arises out of an alleged agreement and understanding between the parties regarding their respective interests in a townhouse in Wayne acquired during their mutually acknowledged long-term committed relationship. At issue is whether, as alleged by plaintiff, real property acquired solely in defendant's name was in actuality a joint asset in which each was to share equally in any appreciation, or whether, as defendant alleges, plaintiff was only entitled to be reimbursed money he loaned defendant to make it possible for defendant to acquire the property.
Although defendant had filed a pre-trial motion for summary judgment, the court entered an order dated December 3, 2004, that reserved decision until completion of plaintiff's case. By a separate order, also dated December 3, 2004, the court granted leave to extend discovery and party depositions were ordered to be completed by December 31, 2004. That order also filed a peremptory trial date of January 24, 2005 and memorialized plaintiff's withdrawal of any asserted claim for palimony.
Thereafter, by notice, dated January 20, 2005, defendant purported to renew his motion for summary judgment, returnable on short notice on January 24, 2005, the date for which the peremptory trial was set.
On January 31, 2005, when the trial actually commenced, the court refused to entertain the motion for summary judgment, observing that there is no provision in the rules for such a motion on short notice. The court reiterated its direction that defendant make his motion at the end of plaintiff's case. Thus, at the end of plaintiff's submission of proofs at trial, defendant again moved successfully this time, for what the trial participants characterized as summary judgment.*fn1 Because we are convinced that there existed genuine disputed issues as to material facts and that the trial court made factual findings that were impermissible at that stage of the proceedings, we reverse and remand for further proceedings. See R. 4:46-2(c) and R. 4:37-2(b).
Plaintiff and defendant were a homosexual couple who were in an on-and-off relationship between 1993 and 2002. When they first met in September 1993, plaintiff, an attorney, lived in Fort Lee and defendant, a teacher, lived in an apartment in Manhattan. Initially, plaintiff would spend nights in defendant's Manhattan apartment. Later, the lease on the Manhattan apartment was amended to add plaintiff's name. In 2000, they looked at a few properties together and on October 17, 2000, the property on Black Briar Lane in Wayne was purchased in defendant's sole name.
Defendant paid the initial deposit of $1,000, but plaintiff, who served as the closing attorney, advanced $55,000 for the down payment and closing costs. Actually, plaintiff did not pay the $55,000 directly; instead, he wired that sum to defendant's father who then wired it to defendant, ostensibly as a gift, the same day. Plaintiff also helped defendant to pay off credit card debts of between $10,000 to $15,000 so that defendant would be better qualified for a mortgage. Plaintiff also paid for an outstanding tax bill of approximately $1,300 that defendant received approximately two months after the closing.
The initial mortgage of $220,000, like the deed, was obtained solely in defendant's name and, about one year later, in 2001, the townhouse was refinanced at a lower interest rate and for a shorter term, from thirty years to fifteen. Again, the transaction was conducted solely in defendant's name; however, before the refinancing in June 2001, plaintiff alleges he provided $5,000 to pay down the principal of the mortgage.
While plaintiff made substantial financial contributions to facilitate the acquisition and improvement of the townhouse, plaintiff had significant financial and professional problems. He had failed to pay personal income taxes for years and there were substantial Internal Revenue Service (IRS) liens and civil judgments against him. Consequently, plaintiff recognized, and he was told by a bank representative, that he would not have been eligible for a mortgage and that he could not prudently take title jointly with the plaintiff. Plaintiff testified, however, that he and defendant had made a commitment to each other and that "[a]t any time I asked [defendant] he had always swore to me he would put my name on the deed." Defendant denies any such promise and denies, as well, any intent to have joint ownership of the townhouse.
After the men moved into the townhouse together in 2000, they set up what they mutually referred to as a joint account, for shared expenses including mortgage payments. Again, that account was solely in defendant's name. From October 2000 to June 2002, plaintiff and defendant contributed $4,500 and $3,500 per month respectively toward the shared expenses. However, in or about July 2002, plaintiff ceased making any contributions to the joint account.
Between early and mid-2002, the parties' romantic relationship became strained, but they continued to live together in the townhouse, and they began to discuss the unraveling of their financial interests, the repayment of plaintiff's down payment and his "investment" in the Wayne property. Toward that end, defendant wrote a letter to plaintiff, which defendant left on the breakfast table for plaintiff in May 2002, to express his views on a variety of issues. Responding to, among other things, a suggestion by plaintiff that defendant record a second mortgage in plaintiff's favor, defendant wrote:
[w]hile I never have and-nor never will-deny the initial investment you have made in this house . . . it has been many years since you personally filed income taxes [and] . . . any recorded mortgage in your favor could be attached should anything happen with the IRS for instance.
In that same letter, defendant stated that "[t]he amount of funds due to you for your personal investment in the house dating back to October 2000 remains at $83,776.00."
On another occasion, defendant appears to have acknowledged that plaintiff may have had an equity interest in the townhouse when he sent an e-mail dated December 2, 2002, to friends from Vermont. That e-mail, addressed to Bill and Woodie, stated "[m]y refinancing of the house is almost completed to buy out Richard's half, and he has tentatively set the middle of January to move" (emphasis added). Plaintiff did not move out until September or October 2003, but he no longer contributed to the joint expense account.
Although defendant did not provide any document to support his claim that the parties eventually reached a settlement, he testified that in November 2002, they did reach an agreement, pursuant to which defendant was to pay plaintiff a total of $93,000 for all the sums plaintiff had contributed toward the purchase and improvements of the townhouse. Plaintiff denied that he ever agreed to such a settlement. He did acknowledge, however, that defendant "offered it . . . and I said, when you have it let me know." In addition, plaintiff disputes deductions that defendant claims are applicable to the asserted settlement amount. For example, defendant testified that, since plaintiff stopped contributing to the joint expenses, plaintiff's share of the expenses should be deducted beginning in or about July 2002. Based on a ledger that defendant started keeping around that time, without plaintiff's concurrence, defendant began deducting $950 per month, the amount his research led him to believe was the fair rental value, as plaintiff's "rent." Defendant testified that, according to his calculations, eight months after their settlement agreement, he only owed plaintiff the sum of $37,755.81. That figure took account of various payments defendant had made to plaintiff and deductions for rent. Eventually, defendant obtained and tendered to plaintiff a certified check in the amount of $38,000, representing the balance of what defendant contends he owed plaintiff. Plaintiff did not accept it.
Instead, on November 24, 2003, plaintiff filed a notice of lis pendens and a complaint alleging: (1) a joint venture; (2) a resulting trust; (3) conversion; (4) fraud; (5) unjust enrichment (palimony); and (6) partition. Defendant filed an answer denying that plaintiff had any interest in the property and he filed a counterclaim seeking: (1) enforcement of the parties' oral agreement to dismiss plaintiff's complaint based on defendant's forbearance from collecting $950 per month rent for the period of July 1, 2002 to September 30, 2003, his advancement of $6,700, and the direct payment of $38,200; (2) quantum meruit for past services provided to plaintiff; (3) rent due and owing; (4) an implied agreement for rent and contribution towards household expenses; and (5) damages for unjust enrichment.*fn2
As noted above, in a December 3, 2004 order, resolution of defendant's motion for summary judgment was reserved pending completion of the plaintiff's case in chief, and when defendant attempted to renew the motion on short notice, returnable prior to the start of the bench trial peremptorily scheduled for January 24, 2005, the court declined to entertain the application. Rather, plaintiff was permitted to present proofs to the court on January 31, February 1 and February 14, 2005; and then on February 25, 2005, following the completion of plaintiff's case in chief, which included testimony from the defendant, called as an adverse witness, the court considered the oral arguments of counsel and rendered an oral opinion granting the motion.
The judge observed that, since plaintiff's palimony cause of action had been withdrawn, this case had become "nothing more than a contracts case." He noted that "[t]he new domestic partnership statute and law, which went into effect in July " did not apply. The judge perceived, however, that "the plaintiff has a problem with regard to that statute of frauds issue[.]" Although the judge promised to "come back to that," he did not address that issue more fully. Rather, the judge proceeded to dismiss each of the counts in plaintiff's complaint, in what we regard as a rather conclusory fashion and without a detailed analysis of the specific elements.*fn3
Essentially, the court concluded that plaintiff failed to satisfy his burden of proof on each of the counts. The judge emphasized that if the plaintiff, an attorney, had really wanted to protect his so-called "interest" in the property, there was no reason why he could not have prepared a written document of understanding between the two of them, as to what he believed their intentions were regarding the property. The judge rejected plaintiff's position that he had not prepared such a document because "it was a matter of trust between them." Indeed, the judge characterized that position as nonsense. In the same vein, the judge told plaintiff "[Y]our answer was, I made a bad business judgment. I don't buy that for one second.
You're a pretty smart man, Mr. Gruber. You can't tell me that you made a layman's mistake. I don't believe it."
The judge also commented that plaintiff had showered defendant with extravagant gifts such as a Rolex watch, down payments for a Rolls Royce and a BMW, a fur coat, jewelry and vacations, and he drew an analogy between this case and a situation where a man buys gifts to impress his girlfriend. On the basis of that analogy and the apparent view that a signed writing was required for plaintiff to have any cognizable interest in the realty, the court granted defendant's motion for summary judgment and preserved his right to pursue his counterclaims if plaintiff succeeded on his appeal.
On May 20, 2005, plaintiff filed his notice of appeal from both the April 18, 2005 order and the February 25, 2005 order, whereupon defendant filed a motion before this court, on May 25, 2005, seeking to dismiss the appeal as untimely. By order, dated June 27, 2005, that motion to dismiss was denied.
In his brief on his appeal, plaintiff raised two points of argument:
POINT I: THE TRIAL COURT ERRED IN DECIDING THIS MATTER BY WAY OF SUMMARY JUDGMENT APPLICATION BY FAILING TO MAKE FINDINGS OF FACTS AND CONCLUSIONS OF LAW WITH RESPECT TO EACH COUNT SET FORTH IN THE PLAINTIFF'S COMPLAINT.
POINT II: THE TRIAL COURT ERRED IN DETERMINING THAT THERE WAS NO UNJUST ENRICHMENT TO THE RESPONDENT.
Besides countering these two arguments, defendant renews his argument that this court should dismiss plaintiff's appeal as untimely. We shall address first defendant's argument that the appeal should be dismissed.
In our order dated May 25, 2005, we denied defendant's earlier motion to dismiss the appeal. We already rejected defendant's argument that plaintiff's appeal was untimely. Having previously decided the issue, we see no reason to reconsider it, except to note that, the order of February 25, 2005 failed to dispose of transactionally-related counterclaims. Such an order is not final within the meaning of R. 2:4-1 and R. 2:2-3. In order to be eligible for appeal as a final judgment, an order or judgment must be final as to all parties and all issues. Caggiano v. Fontoura, 354 N.J. Super. 111, 123 (App. Div. 2002). The February 25, 2005 order expressly reserved the court's decision on defendant's counterclaims. The April 18, 2005 order likewise was not final because it also initially reserved decision on the counterclaims and then dismissed them without prejudice to their reassertion if plaintiff filed an appeal and succeeded therein. An order is not final when it is entered on such a contingent basis.
Notwithstanding our conclusion that neither of the orders was final when entered, we deem it in the interest of justice to grant plaintiff leave to appeal, nunc pro tunc, particularly since defendant has withdrawn his counterclaims, unequivocally and without reservation or condition. R. 2:2-4.
We now turn to the consideration of the errors asserted by plaintiff. Immediately before the start of the trial, defendant sought to resurrect, on short notice, his motion for summary judgment, but the court did not entertain the motion at that time. When the court considered the motion at the conclusion of plaintiff's case in chief, the motion was, functionally, a motion for involuntary dismissal, pursuant to R. 4:37-2(b). Rule 4:37-2(b) provides:
After having completed the presentation of the evidence on all matters other than the matter of damages (if that is an issue), the plaintiff shall so announce to the court, and thereupon the defendant, without waiving the right to offer evidence in the event the motion is not granted, may move for a dismissal of the action or of any claim on the ground that upon the facts and upon the law the plaintiff has shown no right to relief. Whether the action is tried with or without a jury, such motion shall be denied if the evidence, together with the legitimate inferences therefrom, could sustain a judgment in plaintiff's favor. (Emphasis added).
Hence, although the court stated it was deciding the reserved summary judgment motion, after having allowed plaintiff to present his proofs at trial, the timing and procedural posture of the motion were consistent with the court's consideration of a motion for involuntary dismissal at trial.
Either way, the governing standard would have been the same. Compare motion for summary judgment, R. 4:46-2, and a motion for involuntary dismissal, R. 4:37-2(b). In Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536 (1995), the Court explained:
The only distinction between 1) a directed verdict at the end of plaintiff's case pursuant to R. 4:37-2 (b), 2) a directed verdict pursuant to R. 4:40-1 after all the evidence has been presented, 3) a judgment notwithstanding the verdict pursuant to R. 4:40-2, and a summary judgment that allows a R. 4:37-2(b) weighing of evidence to determine if a genuine issue of material fact exists, is that summary judgment motions are generally decided on documentary-evidential materials, while the directed verdicts are based on evidence presented during a trial. Under our holding today, the essence of the inquiry in each is the same: "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." [(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 2512, 91 L.Ed. 2d 202, 214 (1986)).]
"[A] dismissal under R. 4:37-2(b) requires a more generous view of a plaintiff's evidence then does one at the close of evidence under R. 2:10-1." Cameco, Inc. v. Gedicke, 157 N.J. 504, 510 (1999). Moreover, "[t]he trial court should not rely on credibility findings in deciding the motion for an involuntary dismissal except where the testimony is so persuasive that no reasonable person could disbelieve it." Rycoline Prods., Inc. v. Walsh, 334 N.J. Super. 62, 70 (App. Div.), certif. denied, 165 N.J. 678 (2000). "When reviewing a dismissal at the close of a plaintiff's case, [an] appellate court accepts the truth of the plaintiff's evidence together with the legitimate inferences that the evidence supports." Cameco, Inc., supra, 157 N.J. at 509.
Here, plaintiff testified that the agreement and understanding between himself and defendant went beyond the mere reimbursement of funds contributed by plaintiff. According to plaintiff, he was also to enjoy the benefit of any appreciation in the value of the property. He testified that defendant had promised him he would put plaintiff's name on the deed any time he asked. It is, of course, not disputed that plaintiff made substantial monetary contributions toward the acquisition, improvement and maintenance of the townhouse. But there is a material dispute surrounding the agreements, if any, concerning the effect of such contributions. Plaintiff testified he was to be repaid and to enjoy equally any appreciation in value in the event of a sale or other disposition. Defendant testified that plaintiff's contribution was purely a loan and that he and plaintiff never had any intention that plaintiff would have any equity interest in the property. Defendant denies that he ever promised plaintiff any ownership interest in the property and points out that there were sound reasons for him not to have contemplated co-ownership with plaintiff.
Obviously, an element of ambiguity existed at the time of the court's decision because the matter was tried before the court without a jury, and because the defendant had already testified, having been called as an adverse witness in plaintiff's case in chief. Still, at the juncture when the judge issued his ruling, his function was not to weigh the evidence and determine the truth of the matter but to determine whether there was a genuine issue for trial. Brill, supra, 142 N.J. at 540. Even though the trial court had heard from all the critical witnesses, it was required to view the competent evidential material and any legitimate inferences derived therefrom in the light most favorable to the non-moving party. Cameco, Inc., supra, 157 N.J. at 509. "Only when the evidence is utterly one-sided may a judge decide that a party should prevail as a matter of law." Gilhooley v. County of Union, 164 N.J. 533, 545 (2000). This is not such a case.
The trial court recognized that, upon the withdrawal of the palimony claim, "[f]or all intents and purposes of the case, . . . it really became nothing more than a contracts case[.]" The testimonies of the two parties to the putative agreement were irreconcilably in conflict and neither the circumstances nor the evidence were so persuasively in favor of either party that judgment could be entered as a matter of law. We are convinced the court could not have found in favor of the moving party without making credibility assessments that were not permitted at the close of the plaintiff's case.
We also discern that the trial judge attached undue significance to the absence of any signed writing setting forth the understanding and agreement of the parties. Without intending to express a view as to ultimate outcome upon remand, we do note that for centuries the law in this State required that an agreement for the sale of an interest in land had to be reduced to writing, but the New Jersey statute of fraud was amended in 1996. See Morton v. 4 Orchard Land Trust, 180 N.J. 118, 126 (2004) (recognizing that the legislative commission recommending the change stated: "the focus of inquiry in a situation involving an agreement for the sale of an interest in real estate . . . should be whether an agreement has been made between the parties by which they intend to be bound."). Hence, the applicable statute of frauds, more particularly, N.J.S.A. 25:1-13b, does not now require a signed writing to establish an agreement to transfer an interest in real estate or to hold an interest in real estate. It requires a higher standard of proof. The statute provides:
An agreement to transfer an interest in real estate or to hold an interest in real estate for the benefit of another shall not be enforceable unless:
b. a description of the real estate sufficient to identify it, the nature of the interest to be transferred, the existence of the agreement and the identity of the transferor and the transferee are proved by clear and convincing evidence.
Further, and even before the statutory amendment, well-established principles relating to the statute of frauds and to the applicability of resulting trusts suggest that plaintiff's claims were not necessarily foreclosed by the absence of a writing:
[I]t is a settled principle, that where one person purchases property for a stranger [to the deed], and the purchase money is paid by the stranger, or out of his funds, although the title is taken in the name of the person making the purchase, a trust results, and the land is held in trust for the party whose money is paid. This trust arises without any declaration in writing, for it is expressly excepted by the statute of frauds from the operation of that statute, and the facts, necessary to constitute such trust, may be provided by parol evidence. A similar rule prevails in cases where the consideration proceeds from two or more persons jointly. A resulting trust will arise in proportion to the amount of the consideration which they may have respectively contributed.
[Cutler v. Tuttle, 19 N.J. Eq. 549, 558 (E&A 1868) (internal citations omitted).]
But see Yeiser v. Rogers, 19 N.J. 284, 288 (1955) (indicating that illegality of purpose may preclude enforcement of a resulting trust that might otherwise arise).
In this matter, there was conflicting evidence as to whether the down payment on the townhouse was a gift or was intended as a loan or an investment. Plaintiff maintains that he intended the money to be an investment in the property and that he was to be repaid accordingly in the event the relationship came to an end. This is arguably supported by defendant's characterization of plaintiff's contribution as an "investment" and his statement in an e-mail that he was refinancing "to buy out Richard's half." We recognize, of course, that these may be no more than examples of imprecise expression, but they may also typify expression of intent and evidence a state of mind. What is inescapable is that there existed a genuine dispute as to the nature of the money spent by plaintiff and the nature of the agreement, if any, between the parties.
In addressing the plaintiff's assertion that the agreement between the parties contemplated that when plaintiff "got his life back together, that he would get his name on the deed[,]" the court stated "But that's just his position. The defendant clearly denies that, and his testimony indicates why that wouldn't be so." In light of the procedural posture of the case at the time the court was making its ruling, the court was obligated to view the evidence in the light most favorable to plaintiff. At that point, the "'judge's function [was] not himself [or herself] to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'" Brill, supra, 142 N.J. at 540 (quoting Anderson, supra, 477 U.S. at 249, 106 S.Ct. at 2511, 91 L.Ed. 2d at 212 (1986)).
It is obvious from a review of the transcript of the court's ruling that the court made credibility findings favoring defendant concerning the nature of the money used for the down payment and plaintiff's motivation for giving the money, and in his opinion, he discounted plaintiff's testimony as not credible. Such credibility determinations are not appropriate at the summary judgment stage or at the close of the plaintiff's case. Brill, supra, 142 N.J. at 540. Where credibility determinations are required, summary judgment should not be granted. Ricciardi v. Weber, 350 N.J. Super. 453, 470 (App. Div.), certif. denied, 175 N.J. 433 (2003).
Finally, in order to prevail on an action for unjust enrichment, the plaintiff must "'show both that defendant received a benefit and that retention of that benefit without payment would be unjust.'" Caputo v. Nice-Pak Prods., Inc., 300 N.J. Super. 498, 507 (App. Div.), certif. denied, 151 N.J. 463 (1997) (quoting VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994)). Granting all favorable inferences to plaintiff with regard to the alleged agreement between the parties, when plaintiff gave defendant the down payment on the Wayne home, there was sufficient evidence of unjust enrichment to withstand involuntary dismissal.
Since the record does not reveal whether defendant, who was called as a witness in plaintiff's case, would have rested or whether he intended to put forth additional evidence relevant to his claims, we are constrained to reverse and remand. We recognize that at the time of the court's ruling, defendant was being non-committal about the pursuit of his asserted counterclaims and that the procedural posture of the court's ruling is consequently ambiguous. In order that the factual and procedural basis of the decision may be more clearly delineated, the court ultimately will be required to make clear findings of fact and to state conclusions regarding plaintiff's claims. R. 1:7-4.
Accordingly, we reverse and remand this case for further proceedings consistent with this opinion.