In re: James E. Detiege and Amy A. Detiege

• Court: United States Bankruptcy Appellate Panel for the Ninth Circuit
• Decided: March 22, 2022
• Docket: ID-21-1177-GBS
• Status: Unpublished

Opinion

FILED MAR 22 2022 SUSAN M. SPRAUL, CLERK NOT FOR PUBLICATION U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. ID-21-1177-GBS JAMES E. DETIEGE and AMY A. DETIEGE, Bk. No. 4:19-bk-40051-JMM Debtors. Adv. No. 4:19-ap-08029-JMM JAMES E. DETIEGE; AMY A. DETIEGE, Appellants, v. MEMORANDUM∗ MARIA JOSEFA VILMA ROSAUER, Appellee.

Appeal from the United States Bankruptcy Court for the District of Idaho Joseph M. Meier, Chief Bankruptcy Judge, Presiding

Before: GAN, BRAND, and SPRAKER, Bankruptcy Judges.

INTRODUCTION

Chapter 71 debtors, James and Amy Detiege (“Debtors”) appeal the

bankruptcy court’s judgment in favor of Mr. Detiege’s mother, appellee

Maria Josefa Vilma Rosauer. The bankruptcy court determined that Mrs.

∗ This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. 1 Unless specified otherwise, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101–1532. Rosauer contributed $92,000 for the purchase of a home (the “Property”) to

be co-owned by the parties, and it imposed a constructive trust and lien on

the Property in her favor.

Debtors argue that the court erred by imposing the constructive trust

because Mrs. Rosauer signed a letter stating that no repayment was

expected or implied (the “Gift Letter”). We agree with the bankruptcy

court that the Gift Letter was evidence of donative intent, but it was not

dispositive of the issue. The court’s factual determination that the funds

were not intended as a gift is supported by the record and is not clearly

erroneous. Accordingly, we AFFIRM.

FACTS

A. Prepetition Events

The relevant facts are largely undisputed. Prior to 2016, Mrs. Rosauer

lived in Iowa with her husband. After Mr. Rosauer’s health began

deteriorating, Debtors visited the Rosauers and discussed the possibility

that they sell their home in Iowa and move to Idaho to live with Debtors.

The Rosauers moved to Idaho in September 2016, but Mr. Rosauer

unfortunately died two months later.

Debtors continued discussions with Mrs. Rosauer about buying a

home together and shared their plan with multiple family members. They

were informed by their lender that Mrs. Rosauer could not qualify for a

mortgage on her own, but Debtors could potentially qualify if their credit

improved. Mrs. Rosauer then advanced $12,000 from the sale of her home

2 in Iowa to improve Debtors creditworthiness by paying some of their

existing debt. Debtors eventually qualified for a mortgage, and the parties

located a suitable home to purchase.

Mrs. Rosauer contributed an additional $80,000 towards the purchase

of the Property and signed the Gift Letter which was required by the

mortgage lender. Mrs. Rosauer expressed concern about signing the Gift

Letter but was assured by her son that he would not “screw her over” and

she would have a home to live in for the rest of her life. Mr. Detiege told

Mrs. Rosauer that, although title to the Property was placed only in

Debtors’ names, she would be added to the title after two years.

Soon after purchasing the Property, the relationship between the

parties began to suffer. The parties disagree about what caused the rift, but

ultimately, Debtors prevented Mrs. Rosauer from entering the Property or

accessing her personal belongings, which they eventually sold. Mrs.

Rosauer filed suit in state court, and Debtors filed a chapter 7 petition.

B. The Bankruptcy Case And Adversary Proceeding

In May 2019, Mrs. Rosauer filed an adversary complaint. She alleged

that Debtors obtained the Property through actual fraud,

misrepresentations, and concealments, and she alleged a nondischargeable

debt of $92,000 under § 523(a)(2)(A). She alternatively sought a constructive

trust and asserted that, despite the parties’ agreement to purchase the

Property as co-owners, Debtors wrongfully took the funds and deprived

her of any interest in the Property.

3 At trial, several family members testified that Debtors and Mrs.

Rosauer had discussed their agreement to purchase the Property together

and for Mrs. Rosauer to live there. Debtors each testified that Mrs. Rosauer

provided the funds as a gift so they could purchase the Property and Mrs.

Rosauer would have a place to stay when she visited, but they did not

agree she would be a co-owner of the Property or that she could stay there

indefinitely. Debtors testified that they asked Mrs. Rosauer to leave the

Property because of her behavior and waited two years for her to remove

her personal property before selling it.

After post-trial briefing, the bankruptcy court issued its

memorandum decision. The court concluded that the evidence did not

establish a nondischargeable debt under § 523(a)(2)(A), but it rejected

Debtors’ contention that the Gift Letter conclusively determined the funds

were a gift.

The bankruptcy court determined that Mrs. Rosauer’s testimony—

that the parties agreed to be equal co-owners—was corroborated by

multiple independent witnesses. It found Debtors’ testimony to be less

credible and belied by the fact that Mrs. Rosauer immediately moved into

the Property with all her personal belongings and began purchasing items

for the home and paying for utilities.

The court held that permitting Debtors to retain the benefit of Mrs.

Rosauer’s payments would constitute unjust enrichment, and it imposed a

4 constructive trust on the Property in the amount of $92,000. The court

entered judgment in favor of Mrs. Rosauer, and Debtors timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(O). We have jurisdiction under 28 U.S.C. § 158.

ISSUE

Did the bankruptcy court err by imposing a constructive trust on the

Property in favor of Mrs. Rosauer?

STANDARD OF REVIEW

We review a bankruptcy court’s decision to impose a constructive

trust for abuse of discretion. Goldberg v. Bank of Alex Brown (In re Goldberg),

168 B.R. 382, 384 (9th Cir. BAP 1994). A bankruptcy court abuses its

discretion if it applies an incorrect legal standard or its factual findings are

illogical, implausible, or without support in the record. TrafficSchool.com v.

Edriver, Inc., 653 F.3d 820, 832 (9th Cir. 2011).

DISCUSSION

The imposition of a constructive trust is an equitable remedy used to

prevent injustice. In re Goldberg, 168 B.R. at 384; Custer v. Dobbs (In re

Dobbs), 115 B.R. 258, 269 (Bankr. Idaho 1990). The propriety of a

constructive trust must be established under state law and be consistent

with the Bankruptcy Code. Torres v. Eastlick (In re N. Am. Coin & Currency,

Ltd.), 767 F.2d 1573, 1575 (9th Cir. 1985); In re Dobbs, 115 B.R. at 269.

5 A constructive trust may be imposed under Idaho law where “one

who holds title to property is subject to an equitable duty to convey the

property to another in order to prevent unjust enrichment.” Med. Recovery

Servs., LLC v. Bonneville Billing & Collections, Inc., 336 P.3d 802, 808 (Idaho

2014). Unjust enrichment consists of three elements: “(1) there was a benefit

conferred upon the defendant by the plaintiff; (2) appreciation by the

defendant of such benefit; and (3) acceptance of the benefit under

circumstances that would be inequitable for the defendant to retain the

benefit without payment to the plaintiff for the value thereof.” Vanderford

Co. v. Knudson, 165 P.3d 361, 272 (Idaho 2007).

A. The Bankruptcy Court Did Not Err By Considering All Evidence Of Donative Intent.

Debtors’ sole argument on appeal is that the bankruptcy court erred

by imposing the constructive trust because, under Idaho law, the Gift

Letter conclusively established Mrs. Rosauer’s intent to provide the funds

as a gift. They argue that consideration of other evidence of Mrs. Rosauer’s

intent was barred by the parol evidence rule, relying on an unpublished

Idaho Court of Appeals case, Wilson v. Wilson, 2020 WL 1487684 (Idaho Ct.

App., Mar. 23, 2020), for this proposition.

Mrs. Rosauer contends that Debtors failed to object to the admission

of parol evidence and, thus, waived the argument on appeal. Debtors did

not make evidentiary objections, but they preserved the issue by arguing in

their post-trial brief that Mrs. Rosauer should not be permitted to

6 contradict the Gift Letter. More importantly, the court did not err by

considering other evidence.

Under Idaho law, the parol evidence rule is a rule of contract

construction which provides:

[W]hen a contract has been reduced to a writing that the parties intend to be a final statement of their agreement, evidence of any prior or contemporaneous agreements or understandings which relate to the same subject matter is not admissible to vary, contradict, or enlarge the terms of the written contract.

Simons v. Simons, 11 P.3d 20, 24 (Idaho 2000). The rule applies only when

the “integrated character of the writing is established.” Valley Bank v.

Christensen, 808 P.2d 415, 417 (Idaho 1991). The mere existence of the

document does not establish integration; it must be determined from the

surrounding circumstances. Nysingh v. Warren, 488 P.2d 355, 356 (Idaho

1971).

The parol evidence rule is inapplicable here because the Gift Letter is

not a written contract between Debtors and Mrs. Rosauer, and there is no

evidence in the record that they intended the Gift Letter to integrate their

previous discussions about purchasing a home together. The Gift Letter is a

form document that contains no terms and, at best, evidences an agreement

between Debtors and their lender, not one between Debtors and Mrs.

Rosauer.

Wilson v. Wilson is also inapposite. That case was an appeal from a

divorce proceeding in which the parties disputed the characterization of a

7 home purchased before the marriage as either separate or community

property. 2020 WL 1487684, at *1. The Court of Appeals affirmed the trial

court’s decision not to impose an equitable lien because the appellant

offered no authority for a premarital unjust enrichment claim in a divorce

proceeding. Id. at *2. The court further noted that even if the trial court

could decide the issue, appellant would not be able to rely on parol

evidence because he signed, not only a “gift letter,” but a quitclaim deed

conveying any interest to his spouse as her sole and separate property. Id.

at *1-3; see also Hall v. Hall, 777 P.2d 255, 256 (Idaho 1989) (“Where the

language of a deed is plain and unambiguous the intention of the parties

must be determined from the deed itself, and parol evidence is not

admissible to show intent.”).

Here, there was no deed or integrated contract between Mrs. Rosauer

and Debtors and the bankruptcy court was not precluded from considering

other evidence about the nature of the funds provided by Mrs. Rosauer.

B. The Bankruptcy Court Did Not Clearly Err By Determining The Funds Were Not A Gift.

Under Idaho law, a gift is “a voluntary transfer of property by

one to another without consideration or compensation therefor.”

Banner Life Ins. v. Mark Wallace Dixson Irrevocable Tr., 206 P.3d 481, 490

(Idaho 2009) (quoting Stanger v. Stanger, 571 P.2d 1126, 1129 (Idaho

1977)). To effectuate a gift, “a donor must deliver property to a

8 donee . . . with a manifested intent to make a gift of the property.” Id.

(citations omitted).

The bankruptcy court determined that the funds were not a gift for

two reasons. First, whether Mrs. Rosauer provided the funds in exchange

for an ownership stake, as she testified, or to have a place to stay when

visiting the grandchildren, as Mr. Detiege testified, she did so for

consideration. See, e.g., Weisel v. Beaver Springs Owners Ass’n, 272 P.3d 491,

498 (Idaho 2012) (explaining what constitutes consideration under Idaho

law). Second, the court held that the evidence did not support a finding of

donative intent.

Under Idaho law, the question of donative intent is one of fact. Wilson

v. Mocabee, 467 P.3d 423, 432 (Idaho 2020). Donative intent may be proved

“by direct evidence, including statements of donative intent, or inferences

drawn from the surrounding circumstances . . .” Banner Life Ins., 206 P.3d at

490; see also Mocabee, 467 P.3d at 432 (“[D]onative intent is ascertained from

inferences drawn when examining all surrounding circumstances. The

facts . . . are not to be viewed in a vacuum; rather, all evidence of donative

intent must be reviewed as contained in the entire record.”) (internal

citation omitted).

The bankruptcy court properly considered all evidence of donative

intent, including corroborating testimony from other witnesses, the

surrounding circumstances, and witness credibility. It determined that

Mrs. Rosauer provided the funds, not as a gift, but as part of an agreement

9 to be co-owner of the Property. The court’s factual findings are not illogical,

implausible, or without support in the record. See Anderson v. City of

Bessemer City, 470 U.S. 564, 574 (1985) (“Where there are two permissible

views of the evidence, the factfinder’s choice between them cannot be

clearly erroneous.”).

CONCLUSION

Because the bankruptcy court did not clearly err in finding that Mrs.

Rosauer’s transfers were not gifts, Debtors have not demonstrated an abuse

of discretion. We AFFIRM the bankruptcy court’s judgment.