Richard H. Lee v. Jane Lee, Born Barham

• Court: Louisiana Court of Appeal
• Decided: March 17, 2004
• Docket: CA-0003-1483
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

03-1483

RICHARD H. LEE, III

VERSUS

JANE LEE, BORN BARHAM

************

APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT, PARISH OF CALCASIEU, NO. 2001-2750, HONORABLE GUY BRADBERRY, DISTRICT JUDGE

MICHAEL G. SULLIVAN JUDGE

Court composed of Jimmie C. Peters, Michael G. Sullivan, and Glenn B. Gremillion, Judges.

REVERSED IN PART; AFFIRMED IN PART; AND RENDERED.

Michael R. Garber Attorney at Law 1801 Ryan Street Lake Charles, Louisiana 70601 (337) 494-5500 Counsel for Defendant/Appellant: Jane Lee, born Barham

Walter M. Sanchez Lorenzi, Sanchez & Palay, L.L.P. Post Office Box 3305 Lake Charles, Louisiana 70602-3305 (337) 436-8401 Counsel for Plaintiff/Appellee: Richard H. Lee, III SULLIVAN, Judge.

Jane Lee appeals the trial court’s judgment which awards her former husband,

Richard Lee, monies for payments he made on her separate debts with his separate

funds. For the following reasons, we reverse in part, affirm in part, and render.

Facts

Richard and Jane were married on July 29, 1976. They were divorced on

September 14, 1999. Prior to their marriage, they contracted to live under a separate

property regime and did so throughout their marriage. In 1988, they purchased an

interest in the Audubon Agency, an insurance business. Richard purchased a 26%

interest, and Jane purchased a 25% interest in the business. To finance the purchase,

Richard borrowed $38,250.00 individually. Jane admitted in requests for admissions

that none of her separate funds were used to repay the debt. However, the parties

stipulated that payments on the loan were made with funds from an account into

which they both deposited funds. Payments made from this “joint account” on Jane’s

behalf totaled $18,750.00, representing her 25% interest in the agency; payments on

Richard’s behalf totaled $19,500.00, representing his 26% interest in the agency.

During their marriage, Richard and Jane lived in Jane’s home. At times,

Richard deposited separate funds in the amount of $8,933.54 into Jane’s separate

account from which her mortgage payments were paid. Additionally, checks totaling

$19,890.00 issued on the Audubon Agency account were deposited into Jane’s

separate account to make her mortgage payments. Rick’s 26% interest in these agency

funds equals $10,140.00.

After the divorce, Richard filed suit, seeking to recover his separate funds paid

on the Audubon Agency loan, which represent Jane’s interest in the agency and his

separate funds paid on Jane’s mortgage. Jane answered, denying any debt was owed and seeking set-off for amounts she paid toward their joint obligations and toward

Richard’s separate obligations.

After a hearing at which the parties stipulated to the above information, the trial

court awarded Richard $9,375.00 for payments made on Jane’s behalf on the Audubon

Agency loan, $8,933.54 for payments made with his separate funds on Jane’s

mortgage, and $10,140.00 representing his interest in the Audubon Agency funds paid

on Jane’s mortgage. On August 5, 2003, the trial court signed a judgment in

Richard’s favor in the amount of $28,448.54. Jane appeals, assigning as error all of

the trial court’s awards.

Discussion

Audubon Agency Loan

Jane first assigns as error the $9,375.00 awarded to Richard for payments made

on the Audubon Agency loan. She asserts that the trial court’s award results in her

paying $28,125.00 of the loan and Richard only paying $9,375.00.

The parties stipulated that the funds deposited into the account from which

payments were made on this loan were “joint funds” because each party had deposited

funds into the account and neither could establish what amounts were their separate

funds. Accordingly, Richard did not prove what amount of his separate funds was

used to make payments on Jane’s behalf. Furthermore, Jane pleaded set-off in her

answer, and she is entitled to credit for her separate funds used to pay on Richard’s

portion of this indebtedness. For these reasons, we reverse the trial court’s award of

$9,375.00 to Richard.

2 Mortgage Payments on Jane’s Separate Property

Jane does not deny that Richard’s separate funds and Audubon Agency funds

in which he had an interest were used to make payments on her home mortgage.

Rather, she asserts that he is not entitled to recover 100% of those funds. This issue

is not specifically addressed by the Louisiana Civil Code.

Jane argues that the reimbursement rules applicable to community property

regimes also apply to Richard’s claims. Relying on jurisprudence concerning

reimbursements for payments made on community obligations with separate funds

and for payments made on separate obligations with community funds, she contends

that Richard is only entitled to recover the amount which represents the principal

reduction on her mortgage, not interest, taxes, or insurance also paid in conjunction

with her mortgage. In Willis v. Willis, 454 So.2d 429 (La.App. 3 Cir. 1984), this court

held that only principal reductions made on a spouse’s separate mortgage with

community funds, when the mortgaged property was used as the community’s

residence, were reimbursable to the spouse obligated under the mortgage. The court

reasoned: 1) the spouse, whose separate mortgage was paid with community funds,

had not reserved the fruits and revenues of his separate property, so they belonged to

the community; 2) use of that spouse’s residence by the community was “an

enjoyment of the ‘natural and civil fruits’ of the separate property”; 3) the payment

of interest on the separate mortgage was the cost to the community for using the

separate property; and 4) payment of principal on the separate mortgage “went to the

satisfaction of a separate obligation under article 2364, as well as to the ‘acquisition

. . . or benefit of the separate property’ under article 2366, and did not benefit the

community at all.” Id. at 431.

3 Jane and Richard opted for a separate property regime. Therefore, there were

no “natural and civil fruits” of Jane’s separate property which became community

property, and this analysis is inapplicable to Richard’s claims.

Jane also cites Hawes v. Hawes, 94-1088 (La.App. 1 Cir. 4/7/95), 655 So.2d

357, writ denied, 95-1904 (La. 11/3/95), 661 So.2d 1388, and Fogg v. Fogg, 571

So.2d 838 (La.App. 3 Cir. 1990), writ denied, 575 So.2d 372 (La.1991), in support of

her position. In these cases, the courts held that La.Civ.Code art. 2367.1 applies to

divorced persons who lived under a community property regime and to divorced

persons who lived under a separate property regime. Article 2367.1 provides:

Buildings, other constructions permanently attached to the ground, and plantings made on the land of a spouse with the separate assets of the other spouse belong to the owner of the ground. Upon alienation of the land, legal separation, or termination of the community, the spouse whose assets were used is entitled to reimbursement for the amount or value that the assets had at the time they were used.

However, a literal reading of Article 2367.1 indicates that it is not applicable to the

facts presented by Richard’s claims.

Richard contends that his claims should be governed by general principles of

law. In KATHERINE S. SPAHT & W. LEE HARGRAVE, LOUISIANA CIVIL LAW TREATISE,

MATRIMONIAL REGIMES, § 7.17, at p. 413 (2d ed. 1997), the authors observed:

Despite [jurisprudence which applies reimbursement principles to the use of a spouse’s separate property to satisfy a separate obligation of the other spouse], the only explicitlegislative authority for applying reimbursement principles when a spouse’s separate property benefits the other spouse’s separate property is Article 2367.1. Rather than apply Article 2367.1, which clearly does not apply to the use by a spouse of separate property to satisfy a separate obligation of the other spouse or to spouses who have a separation of property regime, the court should rely on general principles of law to permit recovery – such as mandate, management of the affairs of another (negotiorum gestio), or unjust enrichment.

In Toups v. Toups, 97-393 (La.App. 3 Cir. 10/8/97), 702 So.2d 822, this court

rejected the argument that, pursuant to Hawes, 655 So.2d 357, and Fogg, 571 So.2d

4 838, all of the reimbursement rules applicable to community property regimes are

applicable to separate property regimes. InToups, the former wife claimed that during

the marriage her husband had undertaken the management of her separate property, had

mismanaged it, and was liable to her for his mismanagement. The trial court granted

the former husband’s exception of no cause of action, agreeing that the former wife had

failed to allege a fiduciary relationship which required him to make an accounting to

her.

The former wife had asserted at the trial level that her claim presented an issue

of negotiorum gestio. Because she had consented to her husband’s management of her

property, this court determined negotiorum gestio was inapplicable. See La.Civ.Code

art. 2292, which requires that one person act on another’s behalf without his authority.

On appeal, she asserted that her former husband was liable to her under the principle

of mandate. After distinguishing Hawes, 655 So.2d 357, and Fogg, 571 So.2d 838,

and considering Professors Spaht and Hargrave’s observations, this court remanded the

matter to allow her to amend her pleadings to allege facts which stated a cause of

action under the law of mandate.

Pursuant to our decision in Toups, 702 So.2d 822, we decline to apply the

provisions governing community property regimes to the claims presented herein and

follow the recommendations of Professors Spaht and Hargrave instead. Accordingly,

we now consider which general principles of law govern Richard’s claims.

Mandate is “a contract by which a person, the principal, confers authority on

another person, the mandatary, to transact one or more affairs for the principal.”

La.Civ.Code art. 2989. Negotiorum gestio, or management of affairs, is “when a

person, the manager, acts without authority to protect the interests of another, the

5 owner, in the reasonable belief that the owner would approve of the action if made

aware of the circumstances.” La.Civ.Code art. 2292.

The evidence established that Richard’s separate funds and the Audubon Agency

funds were deposited into Jane’s account and that her mortgage payments were made

from that account. There is no evidence of who wrote the checks for the payments, but

Jane does not assert that she did not consent to the payments. Therefore, negotiorum

gestio is inapplicable. See La.Civ.Code art. 2292. Furthermore, there is no evidence

that Jane authorized Richard to manage the account from which her mortgage

payments were made; therefore, Richard was not her mandatary. See La.Civ.Code art.

2989.

Enrichment without cause is defined by La.Civ.Code art. 2298:

A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term “without cause” is used in this context to exclude cases in which the enrichment results from a valid juridical act or the law. The remedy declared here is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule.

The amount of compensation due is measured by the extent to which one has been enriched or the other has been impoverished, whichever is less.

The extent of the enrichment or impoverishment is measured as of the time the suit is brought or, according to the circumstances, as of the time the judgment is rendered.

The situation presented here falls within the parameters of Article 2298: Jane

was enriched by Richard’s contributions toward payments on her mortgage; the

enrichment was not the result of a valid juridical act; and the law does not provide

Richard any other remedy. Richard and Jane could have, but did not, address the claims

presented here in their contract or in an amendment to their contract. We conclude that

Richard is entitled to recover $8,933.54, all of his separate funds paid on Jane’s

6 mortgage, and $10,140.00, which represents his interest in the Audubon Agency funds

used to pay on Jane’s mortgage.

Decree

The trial court’s award of $9,375.00 in favor of Richard Lee is reversed; the

awards of $8,933.54 and $10,140.00 in his favor are affirmed. Costs are assessed one-

third to Richard Lee and two-thirds to Jane Lee.