Opinion
No. CV 08 10826
March 25, 2008
MEMORANDUM OF DECISION
The present case arises out of a summary process action brought by the plaintiff, Vaughn R. Boudreau ("Vaughn"), seeking to evict the defendants, Kenneth Boudreau ("Kenneth") and Brenda Graham ("Brenda"), for non-payment of rent. On May 27, 2006, the plaintiff served a notice to quit possession requiring the defendants to vacate by June 12, 2006. The defendants appeared on October 6, 2006, and subsequently filed an answer denying that a verbal month-to-month rental lease began on May 1, 2006, and that rent was due and owing as the plaintiff alleged in his complaint. The defendants counterclaimed, alleging a constructive trust and unjust enrichment, both of which the plaintiff denies.
The matter was tried to this court on November 29, 2007. The court heard testimony from Vaughn, Kenneth, Brenda, Diane Boudreau ("Diane"), and Peter Barna ("Barna"), the coowner of Capitol Mortgage Network. Post-trial memoranda were submitted to the court on December 18, 2007. From the evidence and testimony, the court makes the following findings of fact.
I. FACTS
Vaughn is the father of the defendant Kenneth, and the defendant Brenda is Kenneth's girlfriend. Sometime in 2001, Vaughn and Kenneth began to search for a suitable property where both of them could reside, and where Kenneth could run his construction business. At that time, while their relationship was healthy, it was Vaughn's intention to purchase the property and eventually, Kenneth would own it. The manner in which the two would accomplish this transfer is in dispute. All alleged agreements were oral, and nothing was ever put into writing. Vaughn and Kenneth settled on an unimproved, 14-acre plot of land in Bethlehem, Connecticut. Vaughn purchased the property for $75,000 in cash. He was the sole purchaser of the property and is the only name on the title. While Kenneth testified that he and Vaughn had discussed putting Kenneth's name on the title many times, Vaughn testified this was only to occur after Kenneth purchased the house from him. The parties planned on building a house and a separate garage on the property. The buildings were designed and constructed by both parties over the course of a year and a half and a great deal of work was involved.
Shortly after purchasing the property, Vaughn and Kenneth erected the steel, five-bay garage. The construction involved leveling the property, digging and setting a foundation and raising steel girders, as well as the electrical work, the plumbing, and framing of an office. Kenneth estimated at the time of trial that it took "a couple hundred hours" to construct the garage, and that labor would have cost $22,000 to complete the job. Kenneth also testified that the total cost of the labor that he put into the house on the property was $135,000. He claims that the value of all of the work he performed, inclusive of the house and the garage on the property, totaled $157,000. It is undisputed that no money changed hands for Kenneth's work. Vaughn's answer to this claim for the cost of labor is that the work was provided in satisfaction of an unsubstantiated prior debt involving Kenneth's equipment. Vaughn did not testify to a dollar amount regarding this debt, nor did he provide any documentary evidence of the existence of the debt to the court. The court does not find the contention that Kenneth provided labor solely to repay Vaughn for this unsubstantiated debt credible.
Kenneth concedes that he has never expected payment, and never presented a bill to the plaintiff. In fact, no documentary proof substantiating this testimony was submitted to the court.
Vaughn took out a $150,000 mortgage in December 2001, in his own name, in order to finance the construction of the house with an attached 3-car garage and an in-law apartment above the garage. Kenneth and Brenda were to occupy the in-law apartment above the garage. Sometime in 2001, Vaughn banned Kenneth from the property, over a dispute during the construction of the house. Eventually, Kenneth was allowed back on the property, and continued with the construction of the house. As construction proceeded, it became apparent to the parties that they would need more money to complete the house. In December 2002, Vaughn took another mortgage for $200,000 from Thomaston Savings Bank, using the money to pay off the first mortgage, and the money leftover to complete the house. Vaughn was, once again, the only party to obligate himself on the mortgage.
Vaughn testified that the defendant was to pay monthly rent in the amount of $1,200 upon taking occupancy of the apartment, but Kenneth disputes this. What is clear, and has been agreed to by both parties' testimony, is that at some point Kenneth began making payments equal to the mortgage payments on the property. According to one of Kenneth's witnesses, Vaughn's wife, Diane, these payments were made directly to the bank. The purpose behind those payments are what is at issue. Vaughn claims these payments were to serve as rent. Kenneth on the other hand, claims that these payments were building his equity in the property. Diane testified that, while she was not privy to every discussion between the parties as to how title would pass, she believed it was a rental arrangement, and that Kenneth would eventually purchase the property from Vaughn.
According to Vaughn, there came a time when Kenneth's business was having trouble, and Kenneth was unable to make payments on much of his equipment. While Kenneth denied in his testimony that his business was in trouble, Vaughn testified that there were several occasions on which repossession agents came to take the equipment, and that he had to come up with money to pay enough for Kenneth to keep the equipment. Kenneth's contention that his business was healthy in order to discredit Vaughn's testimony is not credible.
On February 18, 2005, Vaughn once again refinanced the property for $500,000. Vaughn testified that this money was used to pay off the $185,045 balance on the Thomaston Savings Bank mortgage, his credit card debt of approximately $40-45,000, and the remaining money was used to pay off Kenneth's business debts. This testimony is consistent with the testimony of Peter Barna, co-owner of Capitol Mortgage and the person that assisted the parties with their mortgage application. Barna testified that it was his understanding that the parties were refinancing in order to pay off the former mortgage, the credit card debt and to pay off Kenneth's equipment debts.
There is conflicting testimony as to the intent of the parties as they applied for the 2005 mortgage. Vaughn testified that he and Kenneth contemplated adding Kenneth to the mortgage, however this would have raised the interest rate on the mortgage due to Kenneth's below average credit, and consequently the mortgage was put in Vaughn's name only. Barna testified that originally, both parties appeared on the application for the new mortgage. He testified that he advised the parties that "whoever is listed on the application will be listed on the title," and that it was his understanding that at some point during the loan transaction, Kenneth's name would be added to the title. There was also testimony indicating that Vaughn had not disclosed any rental income on the mortgage application. A review of the application submitted into evidence reveals a section of the document that reads "Title will be held in what Name(s)" followed by the names of both parties. Barna testified that Kenneth's name was not, in fact, added to the title because he was removed from the mortgage application due to the credit situation. Kenneth testified that although he attended the mortgage meetings where this was decided, and he attended the closing, he was still under the impression that he had been added to the title of the property.
Kenneth testified that he ceased making payments after April 2006, when he found out that his name was not included on the title. On May 27, 2006, Vaughn served a notice to quit possession for non-payment of rent, requiring Kenneth and Brenda to vacate by June 12, 2006. Between that time and the trial date, nineteen payments were due on the mortgage, of which Kenneth paid three. The three payments were made pursuant to a court ordered use and occupancy agreement, put in place during the pendency of these proceedings. As a consequence of this non-payment, the property was foreclosed upon, and Vaughn was forced to borrow money from Diane to bring the payments up to date.
After listening to all of the testimony during the trial, and reviewing the evidence submitted, the court reaches the following conclusions.
II. DISCUSSION A. Summary process
"The ultimate issue in a summary process action is the right to possession." Southland Corporation v. Vernon, 1 Conn.App. 439, 443, 473 A.2d 318 (1984). "[E]quitable defenses and counterclaims implicating the right to possession are available in a summary process proceeding." (Emphasis added.) Cumberland Farms, Inc. v. Dairy Mart, Inc., 225 Conn. 771, 777, 627 A.2d 386 (1993) (e.g., the equitable doctrine against forfeitures, laches and specific performance). Counterclaims for money damages are not permitted. Fellows v. Martin, 217 Conn. 57, 70, 584 A.2d 458 (1991) ("We affirm the dismissal of the counterclaim to the extent that it claimed damages, because its prayers for monetary relief did not implicate the right to possession").
The parties dispute whether there existed a rental agreement. General Statutes § 47a-1(I) defines "rental agreement," in relevant part, as "all agreements, written or oral . . . embodying the terms and conditions concerning the use and occupancy of a dwelling unit or premises." "Rent" is defined in General Statutes § 47a-1(h) as "all periodic payments to be made to the landlord under the rental agreement." "A landlord and tenant relationship will never be implied where the acts and conduct of the parties are inconsistent with its existence." (Internal quotation marks omitted.) Chomko v. Patmon, 19 Conn.App. 483, 486, 563 A.2d 311 (1989).
The court finds that the facts presented above are consistent with the existence of a rental agreement between Vaughn and the defendants. Kenneth has conceded that he made periodic payments, equal to the value of the mortgage. Further, the testimony presented on the defendants' side of the case was contradictory. Despite Kenneth's testimony that there was no rental agreement, his mother Diane, a witness presented in the defendants' case, consistently testified that the arrangement was a rental agreement, and eventually Kenneth would have the option to purchase the property. The testimony to the effect that Vaughn did not disclose rental income in the application for the 2005 mortgage does not carry the weight necessary to overcome the credible testimony presented that this was a rental arrangement. The court finds that the parties entered into an oral rental agreement, and that pursuant to this agreement the defendants were to pay the monthly mortgage payment in exchange for the use of the premises. The defendants failed to make the required payments.
Accordingly, having found that there existed a rental agreement and that the defendants are in default of this agreement, Vaughn is entitled to possession of the premises.
B. Constructive Trust
The court finds against the defendants on the counterclaim for constructive trust. "[A] constructive trust arises where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it." Filosi v. Hawkins, 1 Conn.App. 634, 639, 474 A.2d 1261 (1984); Gulack v. Gulack, 30 Conn.App. 305, 311-12, 620 A.2d 181 (1993). In order to find that a constructive trust exists and should be imposed, the court must find that a special or confidential relationship existed between the parties. Gulack v. Gulack, supra, 30 Conn.App. 312; Filosi v. Hawkins, supra, 1 Conn.App. 639. "[I]n Connecticut, there are two types of confidential relationships in the context of constructive trusts: (1) where one party is under the domination of another and (2) where circumstances justify a party's belief that his or her welfare or instructions will guide the other's actions." Riccio v. Riccio, 75 Conn.App. 556, 559, 816 A.2d 733 (2003); see also Starzec v. Kida, 183 Conn. 41, 43 n. 1, 438 A.2d 1157 (1981). Here, there were no allegations of domination. Further, the circumstances presented by the facts do not justify Kenneth's belief that Vaughn was going to put him on the title to the property. While the court is aware that the relationship between parent and child "generate[s] a natural inclination to repose great confidence and trust;" (Internal quotation marks omitted.) Cohen v. Cohen, CT Page 4790 182 Conn. 193, 203-04, 438 A.2d 55 (1980); the "relationship between parent and child is not per se a fiduciary one." Id. This is especially relevant given the rocky relationship between Vaughn and Kenneth. During his testimony, Kenneth indicated that he had raised the issue with Vaughn on several occasions to no avail. Kenneth's presence at the closing further undermines his contention that he thought he was placed on the title.
"A constructive trust arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy . . . A constructive trust arises whenever another's property has been wrongfully appropriated and converted into a different form . . . [or] when a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it . . . The issue raised by a claim for a constructive trust is, in essence, whether a party has committed actual or constructive fraud or whether he or she has been unjustly enriched." (Citation omitted; internal quotation marks omitted.) Stornawaye Properties, Inc. v. O'Brien, 94 Conn.App. 170, 175-76, 891 A.2d 123 (2006); see also Schmaling v. Schmaling, 48 Conn.App. 1, 13, 707 A.2d 339, cert. denied, 244 Conn. 929, 711 A.2d 727 (1998) ("a constructive trust should be imposed . . . to prevent the abuse of a confidential relationship"). The plaintiff bears the burden of establishing clear and satisfactory facts from which such a trust may be implied. Starzec v. Kida, 183 Conn. 41, 45 (1981).
It is the opinion of the court that the defendants have not carried their burden of establishing a constructive trust. The testimony presented on the defendants' side of the case was conflicting on this issue. Despite Kenneth's claim that he was supposed to be on the title of the property from the time it was purchased, Graham testified that the first she had heard of Kenneth's name being added to the title was during discussions surrounding the 2005 mortgage. Another of the defendants' witnesses, Diane, testified that it was her understanding that Kenneth would purchase the property from Vaughn at a later date. As to the question of the mortgage application in 2005, Kenneth knew that he was not a co-borrower on the mortgage. Barna, again the defendants' witness, testified that Kenneth's name was not, in fact, added to the title because he was removed from the mortgage application due to the credit situation. Kenneth testified that although he attended the mortgage meetings where this was decided, and he attended the closing, he was still under the impression that he had been added to the title of the property. Although he claims to have "signed a paper" at the closing, no such document has been produced and that was the extent of the description of the paper.
The question comes down to whether Vaughn is "subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it." (Citation omitted, internal quotation marks omitted.) Stornawaye Properties, Inc. v. O'Brien, supra, 94 Conn.App. 176. Kenneth has not carried his burden to establish any equitable duty on the part of Vaughn to convey an interest in the property to Kenneth. As described above, evidence on the existence of any agreement to that effect was severely contradictory. Legal title is, and has always remained, in Vaughn's name. Vaughn has consistently remained the sole party liable under all mortgages on the property. Vaughn would not be unjustly enriched by the court permitting him to retain the property.
Accordingly the court finds against the defendants in their claim for constructive trust.
C. Unjust Enrichment
The court is unable to resolve the defendants' counterclaim alleging unjust enrichment, as it is outside the scope of a summary process action. "[E]quitable defenses and counterclaims implicating the right to possession are available in a summary process proceeding." (Internal quotation marks omitted; emphasis added.) Cumberland Farms, Inc. v. Dairy Mart, Inc., 225 Conn. 771, 777, 627 A.2d 386 (1993) (e.g., the equitable doctrine against forfeitures, laches and specific performance). Counterclaims for money damages are not permitted. Fellows v. Martin, 217 Conn. 57, 70, 584 A.2d 458 (1991) ("We affirm the dismissal of the counterclaim to the extent that it claimed damages, because its prayers for monetary relief did not implicate the right to possession").
While Vaughn may very well have been unjustly enriched by Kenneth's uncompensated contributions to the construction of the property, this issue is not properly before the court in a summary process action and should be addressed in a separate action if necessary.
III. CONCLUSION
Pursuant to the facts and conclusions above, the court finds in favor of the plaintiff on his summary process action. As to the counterclaims, the court finds in favor of the plaintiff on the defendants' counterclaims of constructive trust. The defendants' separate counterclaim for unjust enrichment is dismissed sua sponte without prejudice.