Ngiraingas v. Burke

Opinion

IN THE SUPERIOR COURT OF GUAM

KIKUKO R. NGIRAINGAS, ) Case No. CV 1980-11 Plaintiff,

VS. FINDINGS O F FACT AND CONCLUSIONS OF LAW JOHN KENNEDY BURKE and JOHN R (Bench Trial) 8 BURKE, TRUSTEE OF THE JOHN 9 KENNEDY BURKE LIVING TRUST, 10 Defendants. 11

15 INTRODUCTION 16 This matter came before the Honorable Anita A. Sukola on January 27, 28, and 29, 2014

17 for a be nc h tria l. Attorney F. Randall Cunliffe represents Plaintiff and Attorneys Elyze M.

18 Iria rte and Mi chael J. Gat ewo o d represent Defendant s. The Court took the mat t er u nder advisement after the parties presented their cases. Upon review of the evidence, arguments, and 19 legal authorities presented by the parties, the Court hereby issues its Findings of Fact and 20 Conclusions of Law. 21 PROCEDURAL HISTORY 22 1. On December 29, 2011, Plaintiff filed he r C ompla int for Cancellation of Deed. 23 Pla intiff c onte nds tha t De fe nda nt Burke s e c ure d he r Prope rty through fra ud a nd, 24 therefore, the Court mu st cancel Defendant Burke 's warrant y de ed an d decl are 25 Plaintiff owner of the premises in fee simple. 26 2 . On July 12, 2012, Defendant Burke filed his Answer and Counterclaim, and on July

27 19, 2012, Defendant Burke filed hi s Ame nde d Counterclaim. Defen dant Bu rke

28 presents claims of quantum meruit for expenses incurred in relation to the Property,

Page 1 CV 1 9 8 0 - 1 1 : Ngir a ingas V. Burke F ind ing s o f Fa ct and C o n c l u s i o n s o f Law (B e n c h T r i a l ) i.e lain tiff s loan as well as taxes, maintenance- an re airs:Defendant Burke also alleges Plaintiff negligently damaged the Property. Defendants further 2 claim that, if a loan agreement existed between the parties, Plaintiff breached the contract. Finally, Defendant Burke seeks ejectment. 3. On January 27, 28, and 29, 2014, the Court conducted a bench trial and took the matter under advisement. 4 . On February 3, 2014, Plaintiff filed her Motion to Amend Complaint and Proposed

Amended Complaint . In addition to her fraud allegation, Plaintiff contends that her

8 reliance on Defendant Burke's statements entitles her to a constructive trust such that

9 she sha ll have the use and benefit o f the Property. Plaintiff also contends that

10 Defendant Burke granted her a life estate in the Property and Defendant Burke's attempt to evict P laintiff constitutes breach of contract. 11 5. On February 7, 2014, Defendant Burke filed his Opposition to the Motion to Amend 12 Plaintiff's Complaint. 13 6. On February 25, 2014, Plaintiff and Defendant Burke each filed Proposed Findings 14 of Fact and Conclusions of Law. 15 FINDINGS OF FACT 16 1. The property at issue is Lot 1, Block 11, Unit 11, Tract 10 0, Dededo, Guam, 17 otherwise designated as 108 West Daog Court, Dededo, Guam (Property).

18 2. Plaintiff is the former owner of the Property.

19 3. Plaintiff has resided at the Property at all times relevant to the instant matter, and

20 continues to reside at the P roperty.

4 . Plaintiff is 8 6 ye a rs o ld. She communicates in her native Palauan and possesses 21 limited English proficiency. 22 5. P laintiff' s daughters are Anita R. Ngiraingas, Josepha It. Ngiraingas, and Sandy R. 23 Ngiraingas. Plaintiffs son is Bolandis R. Ngiraingas, and his partner is Defendant 24 Burke. 25 6. Plaintiff requires translation of English into Palawan to communicate; translation is 26 typically performed by Bolandis, one of her daughters, or another family member. 27 7. On November 29, 1996, Plaintiff and her daughters entered into an Open -End Loan

28 Account Agreement with a credit limit of $45, 000, as well as an Open-End Loan

Page 2 CV 1 9 8 0 - 1 1 : N g i r a i n g a s v . B ur ke Findings o f Fa ct and Conclusions o f Law (B e n c h T r i a l ) count M ortgage on the Property. Plaintiff aughters signed all pertinent documents. 8. On Aug ust 3 , 2 0 0 1 , Defendant Burke established the John Kennedy Burke Living Trust (Trust) to ena ble efficient administration o f his estate upon his death.

Defendant Burke is a party to the instant action in his individual and trustee

capacities.

9. On December 27, 2001, the loan matured and the outstanding principal and interest-about $48,000- became due on March 4, 2002. 6 10. Plaintiff and her daughters we re una ble to repay the balance and therefore the

9 Property was at risk of foreclosure.

10 11. Although Bolandis was unable to provide financial assistance, he secured assistance from Defendant Burke for the funds to prevent foreclosure on the Property. 11 12. Defendant Burke agreed to purchase the Property, v ia a lo a n fro m his fa the r. His 12 intention was that Plaintiff could continue to reside there, rent-free, without risk of 13 foreclosure. 14 13. On April 30, 2002, Plaintiff sold the Property to Defendant Burke in exchange for 15 the outstanding balance of the loan. De fe nda nt B urke a lso pa id c lo sing fe e s and 16 outstanding taxes on the Property. Plaintiff and Defendant Burke signed all pertinent 17 documents. N o valua tion of the Property wa s conducted. The re wa s no loan

18 agreement betwe en the parties.

19 14. Plaintiff exhibits limited comprehension of the nature of the instant proceedings as

20 well as of the loan, mortgage, and eventual transfer of the Property to Defendant Burke. In particular, Plaintiff evinces an erroneous belief that she never sold the 21 house. 22 15. Notwithstanding Plaintiffs apparent confusion, Defendant Burke did not make any 23 misrepresentations in acquiring the Property. Defendant Burke denies any intention 24 to purchase the Property without Plaintiff's kno wle dg e, Defendant Burke relied on 25 members of Plaintiff's family to translate for her. 26 16. On May 10, 2005, Defendant Burke amended the Trust. Section 6.02(c) of the First 27 Amendment to the Trust provides, in pertinent part, that if neither Bolandis nor his

28 nephew, Drayson Josh Ngiraingas, survives Defendant Burke, then the Property

Page 3 CV 1 9 8 0 - 1 1 : N g i r a i n g a s v . B ur ke Findings o f Fa ct and C o n c l u s i o n s o f Law ( Bench Tr ial) "shall continue to be held in trust= m i n g - te`1Tetime of [Plaintiff, and she] shall have the right to oc cupy [ the Property] without payment of rent." The subsection further 2 provides for distribution o f t he Property upon her death or in the event she is not 3 living at a time when the Property would be distributed. 4 17. Section 6.03(e ) of the First Amendment to the Trust provides, in pertinent part, that s if Bolandis does not survive Defendant Burke, then Defendant Burke " shall hold, 6 administer and distribute the trust for the benefit" of Drayson. The subsection further 7 provides that if Plaintiff " is living at the time the trust is established under this

8 section 6.03, she shall have the right to live in the [ Property] during her lifetime,

9 without payment of rent," unless Defendant Burke exercises the right to sell due to insufficient funds or changed circumstances, or until Drayson reaches age 21. 10 18. Plaintiff, Defendant Burke, Bolandis, and Drayson are alive. 11 19. On November 30, 2011 , counsel for Defendant Burke delivered to Plaintiff a notice 12 that " Mr. Burke has elected to terminate the month to month tenancy at w ill b y 13 which [ Plaintiff and her daughters] occupy the [Property]." 14 20. Defendant Burke sought to " terminate the month to month tenancy at will" because 15 Plaintiff continually allowed other persons to stay in the home against his wishes and 16 at risk to the condition of the Property. 17 21. On March 15, 2012, Defendant Burke amended the Trust to delete Sections 6.02 and

18 6.03, as well as any mention of Plaintiff, as set forth in the First Amendment to the

19 Trust.

20 22. Since acquiring title to the Property, Defendant Burke expended about $111 , 000 for repairs, renova tions, taxes, and insurance o n t h e Property. S o me expenses we re 21 incurred for the benefit of Plaintiff. 22 23. Defendant Burke intends to sell the Property. 23 CONCLUSIONS OF LAW 24 1. This Court has jurisdiction pursuant to 7 GCA § 3105. 25 2. After the c lo se o f e v ide nc e, Plaintiff filed her M otion to Amend Complaint and 26 P roposed Amended Complaint . Rule 15 of the Guam Rules of Civil P rocedure 27 provides, in pertinent part, that " [ w]hen issues not raised by the pleadings are tried

28 by express or implied consent of the parties, t hey shal l be treated in all respects as if

Page 4 CV 1 9 6 0 - 1 1 : N g i r a i n g a s v . Burke Findings o f Fa ct and Conclusions o f Law (B e n c h T r i a l ) they had been raised in the zdi gs. Such amendment of the pleadings asmrny

necessary to cause them to conform to the evidence and to raise these issues may be made by motion of any party a t a n y time [ . ] " Gua m's Rule 15 i s based o n the

substantially similar Ru le 15 o f the F ederal Ru l es o f Civil Procedure. " An a me ndme nt will be a llowe d only if the pa rtie s ha ve re c e ive d a c tua l notic e of a n unpleaded issue and have been given an adequate opportunity to cure any surprise that might result from the change in the pleadings." 6A Fed. Prac. & Proc. Civ. § 1491 (3d ed.). 3 . The evidence adduced at trial demonstrates that the Plaintiff believes she owns the

9 Property, the Trust provides lifetime occupancy for Plaintiff at least under some

10 circumstances, an d Defendant Burke pu rchased t he Property with the intent o f allowing Plaintiff to reside there indefinitely an d rent-free without risk o f 11 foreclosure. Plaintiffs proposed amended claims plainly conform to this evidence in 12 that each is premised on the fact that Plaintiff believed that she could continue to live 13 on the Property indefinitely. Althou gh the cl ai ms initially were unpleaded, both 14 parties were well on notice that this issue was at the core of the dispute. Plaintiff's 1s Motion to Amend is therefore granted. 16 4. Plaintiff first seeks cancellation of Defendants' warranty deed on grounds of fraud. 17 The elements of fraud are: 1) a misrepresentation ; 2) knowle dge of its fa ls ity; 3) 18 intent to defraud to induce reliance; 4) justifiable reliance; and 5) resulting damages.

19 Hemlani v. Flaherty, 2003 Guam 17, 19 (quoting Transpacific Export Co. v. Oka Towers Coro., 2000 Guam 3, ¶ 23). There is no evidence that Defendant Burke made 20 a misrepresentation and, accordingly, there is like wis e no e vide nc e to suppo rt a 21 fording that Defendant Burke had kno wl edge of falsity, intent t o defrau d, an d 22 i ndu ced j u st i fi abl e reliance o n a misrepresentation. The el em ent s o f fraud are 23 t herefo re no t me t, and P l ai nt i ff has fai l e d t o demonstrate that she i s entitled to 24 cancellation of the deed. 25 5 . Plaintiff next presents two related claims to support her contention that she may not 26 be evicted from the Property. Each appears to be premised on the grant of a life 27 estate, which must be written and which entitles such an owner to "use the land in 28

Page 5 CV 1 9 8 0 - 1 1 : Ngir aingas v . B u r k e Findings o f F a c t and Conc lusions o f Law (Bench T r i a l ) the same manneras a-owner of a fee simple, except that he musti o the 1 injury of the inheritance." 18 G.C.A. § 86106; 21 G.C.A . § 9101. 2 6. Plaintiff first argues that she is entitled to a constructive trust because Defendant 3 Burke obtained the Property for less than half of its valuation and because Plaintiff relied on representations made by Bolandis on behalf of Defendant Burke insofar as she believed she would be able to continue to live on the Property without restriction and rent-free . " One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust , or other wrongful act is, unless he has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person

who wo uld o the rwise have had it." 18 G .C.A. § 65110; se e also Black's La w

10 Dictionary (9th ed. 2009 ) ( defining constructive trust as "[a]n equitable remedy that a court imposes against one who has obta ined property by wrongdoing"). 11 Importantly, a constructive trust need not be based on fraud or intentional 12 misrepresentation. In re Movlan, 2011 Guam 16, 1 19. A mis take is defined as "[a]n 13 error, misconception, or misunderstanding ; an erroneous belief." Black's La w 14 Dictionary (9th ed. 20 09 ) (citing Re statement ( Sec ond ) of Contracts § 151). 15 7. P laintiff, although uncertain about the nature of this dispute, unequivocally testified 16 that she believed she owned the house and was entitled to continue to reside there. 17 Nevertheless, Plaintiff signed the loan, mortgage, and sale documents. In lig ht o f 18 these facts, as well as the fact that Plaintiff relied on interpretation to supplement her

19 limited English, the Court concludes that Plaintiff' s understanding of the key aspects

20 of this case rests on a mistake , i.e., an error, misconception, misunderstanding, or erroneous belief. 21 8. Defendant Burke purchased the Property so that Plaintiff could continue to reside 22 there, rent-free, without risk of foreclosure . The Trust te rms c le a rly o utline a life 23 estate for Plaintiff according to whether beneficiaries Bolandis and Drayson did or 24 did not survive Defe ndant Burke. However, the First Amendment to the Trust did 25 not address the status of the Property in relation to Plaintiff while Bolandis, Drayson, 26 Defendant Burke, and Plaintiff all remained alive. Indeed, Section 6,03 of the Trust, 27 which permits Defendant Burke to sell the Property and evict Plaintiff, applie s only

Page 6 CV 1 9 8 0 - 1 1 : N g i r a i n g a s v . Burke F ind ing s o f Fact and Conclusions o f Law (B e n c h T r i a l ) if-Bo1 iilis=d-oes not survive Defendant Burke. The Secofid- Vrncndment eliminated 1 all reference to Plaintiff. 2 9 . Were this Court to adopt Defendant Burke's position, then the practical effect of his 3 purchase would be that he bought the home for about $50,000, without respect to its 4 actual value, and reserved the right to evict Plaintiff whenever he wished to sell or 5 i dent i fi ed changed ci rcu mst ances. The Gu am Su preme Co u rt has made cl ear t hat t he 6 "the primary reason for imposing a constructive trust is to avoid unjust enrichment." 7 In re Moylan , 2 0 1 1 Gu am 1 6 , ¶ ¶ 6 6 , 6 9 . Whi l e i t may be u ncl ear fro m t he evi dence

8 what precise legal interest the Plaintiff expected to retain in the Property, it is clear

9 that she at a minimum intended to remain on the Property free of rent. Inde ed,

10 Defendant Burke purchased the Property so that she could reside there rent-free, and inserted life est at e pro vi si o ns into the Trust. The Co u rt t herefo re co ncl u des that 11 Defendant Burke would be unjustly enriched at the expense of Plaintiff if he were 12 allowed evict Plaintiff from the Property. See id.; Gu am Ba r Ethic s C omm. v. 13 Mau u era , 2001 Guam 20,1130-33. Plaintiff has established grounds for the Court to 14 impose a constructive tru st. Acco rdi ngl y, Plaintiff shall have a l i fe e s ta te in the 15 Property such that she may reside there rent-free until her death. The conveyance of 16 the Property from Plaintiff to Defendant Burke otherwise is unaffected. 17 10. Plaintiff also premises her right to a life estate in the Property on a theory of breach 18 o f co nt ract . "A co nt ract i s an agreement t o do o r no t t o do a cert ai n t hi ng." 1 8 GCA

19 § 85101. The elements of a contract are: 1) parties capable of contracting; 2) consent

20 of the parties; 3) a lawful object; and 4) sufficient consideration. 18 GCA § 85102; Bl as v. Cru z , 2009 Guam 12, ¶ 18. Here, there is no evidence to support a finding 21 that the parties agreed to a contract granting Plaintiff a life estate. It bears repeating 22 P l ai nt i ff apparent l y i s u nder the belief that she continues to o w n t he P ro pert y 23 unencumbered. Plaintiff therefore has failed to demonstrate that Defendant Burke is 24 liable for breach of contract. And, in any event, Plaintiff is entitled to a life estate on 25 the basis of the constructive trust discussed above. 26 1 1 . Defendant Bu rke present s a co u nt ercl ai m o f qu ant u m meru i t t o reco ver expenses he 27 incurred in relation to the Property such as payment of P laintiffs loan as well as 28 taxes, insurance, repairs, and i mpro ve ment s. "T he essence o f qu an t u m meruit

Page 7 CV 1 9 8 0 - 1 1 : Ngir a ingas v . B u r k e Findings o f F a c t and Conc lusions o f Law ( Bench Tr ial) liability is the receipt of a benefit by one pa ty-whwouldbe inequitable for that 1 party to retain," and the elements of such liability are the performance of services by 2 the claimant, the receipt of the benefit of those services by the opposing party, and the unjustness of the latter party's retention of that benefit without compensating the cl ai mant . Tanagu chi -Ru t h Assoc iates v. MD I Gua m Corp., 2005 Gua m 7 , 2 7 (quoting Midcoast Aviation, Inc. v. Gen. Elec. Credit Corp. , 907 F.2d 732, 737 (7th Ci r. 199 0)) (additional citations omitted). Ho wever, o ne ma y no t reco ver o n

qu an t u m meruit where the services are rendered without anticipation that

8 compensation will be received, i.e., "[t]here can be no recovery for services rendered

9 volunta rily a nd with no e xpe c ta tion a t the time of the re ndition tha t the y will be

10 compensated." Tanaeuchi-Ruth Associates, 2 0 0 5 G u a m 7 , ¶ 5 5 (citing Sparks v. Gustafson , 750 P.2d 338, 342 (Alaska 1988) ("Courts will allow the defendant to 11 retain a benefit without compensating plaintiff in several situations, one of which is 12 where the benefit was given gratuitously without expectation of payment.")). 13 12. T here i s no evi dence that Defendant Burke incurred expe nse i n rel at i o n t o t he 14 Property wi t h t he understanding that he would be repaid anything. Instead, 15 Defendant Burke purchased the Property with the intention to allow Plaintiff to 16 res ide there rent-free. Moreover, Defendant Bu rke incurred other expenses i n 17 relation to the Property for the sake of maintaining the Property both for Plaintiff and 18 fo r benefi ci ari es of the Trust. O n t h e facts presented here, therefore, Defen dant

19 Burke has failed to demonstrate that he is entitled to quantum meruit recovery from

20 Plaintiff.

22 SO ORDERED this / 0 day of April, 2014. 23

24 SERVICE VIA COURT BOX I ecM aMtdOt mat a copy ame 25 cdgb,tl nets v . P � mnr m W c. HONORABLE ANITA A. SUKOLA 26 Judge, Superior Court of Guam Cvgle. Loa d 27 gs,Iu 17-pm 28

Page 8 CV 1 9 8 0 - 1 1 : Ngir a ingas v . Burke F ind ing s o f F a c t a n d C o n c l u s i o n s o f Law ( Bench Tr ial)