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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Tolan v Kimball (10/19/2001) sp-5490

Tolan v Kimball (10/19/2001) sp-5490

     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.



             THE SUPREME COURT OF THE STATE OF ALASKA



DeANN TOLAN,                  )
                              )    Supreme Court No. S-9374
               Appellant,     )  
                              )    Superior Court No.
     v.                       )    3AN-98-3563 Civil
                              )
GARY KIMBALL,                 )    
                              )    O P I N I O N
               Appellee.      )
______________________________)    [No. 5490 - October 19, 2001]


          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
                      Dan A. Hensley, Judge.


          Appearances:  Vincent Vitale, Anchorage, for
Appellant.  Allison E. Mendel, Penny Agallianos, Mendel &
Associates, Anchorage, for Appellee.


          Before:  Fabe, Chief Justice, Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.


          PER CURIAM


     1.   DeAnn Tolan and Gary Kimball began dating in 1989.  In
April 1990 Tolan purchased, with the title issued in her name only,
a single-family house on Ruth Drive in Wasilla.  According to
Kimball, the Ruth Drive house was purchased with the intention that
Tolan and Kimball would share the home; accordingly he gave Tolan
approximately $3,600 toward the down payment and closing costs of
the house.  Tolan moved into the house in April 1990 and Kimball
moved in shortly thereafter.  They lived together in that home
until Tolan asked Kimball to leave in December 1997, remaining
unmarried throughout.  
     2.   Kimball testified at trial that the parties elected not
to place his name on the title of the house because he had
defaulted on his previous mortgage.  According to Kimball, the
parties agreed at that time that they would add his name to the
title as soon as his credit was cleared. 
     3.   From the purchase of the property in 1990 until the
parties' separation in December 1997, the property's value
increased from $66,000 to $168,000.  The parties dispute the cause
of the $102,000 increase.  Tolan attributes $88,000 of the increase
to an improved real estate market in the Mat-Su Valley.  Kimball
cites his investments of labor and materials used in making
extensive renovations and improvements on the property.  These
improvements include replacement of a collapsed porch with an
enclosed addition, and construction of a shed, a greenhouse, decks,
a wood workshop, and a two-car garage. 
     4.   The parties disputed the source of the funds used to
purchase the building materials.  Tolan testified that she had paid
for all materials from her cash savings regardless of who made the
actual purchase or held onto the receipt.  Kimball claimed at trial
to have paid for or salvaged from his prior home nearly all of the
building materials, which totaled approximately $40,000 in value. 
The superior court disbelieved both accounts and found it "[m]ost
likely [that] the parties pooled their cash in roughly equal
amounts to pay for the improvements." 
     5.   Kimball, who kept his retirement savings in cash in the
parties' bedroom, dealt mainly in cash and only occasionally wrote
checks.  Although she was employed as a financial planner, Tolan
also claimed to keep a substantial cash fund in the bedroom.  Tolan
testified that she ordinarily wrote checks for regular expenses. 
She also used automatic payroll deductions for her 401(k) and
insurance premiums. 
     6.   During the course of their cohabitation, Kimball paid
Tolan $200 per week, a figure which exceeded the monthly mortgage,
tax and insurance payments.  These payments were commonly in cash,
although they were occasionally paid by check.  Kimball testified
that such payments were "towards mortgage and bills and . . .
whatever it was needed for."  Tolan notes, however, Kimball made no
direct payments on the mortgage.  Tolan paid for all utility bills,
most of the food purchases, and most of the vehicle costs.  Tolan
did not report Kimball's weekly cash contributions as rent on her
tax returns. 
     7.   On two occasions -- in 1992 or 1993 and in 1994 -- Tolan
refused Kimball's requests to put his name on the deed, explaining
that she "didn't want him on any of [her] credit or financial
obligations."  
     8.   After their separation, Kimball filed suit in superior
court alleging that "[i]n the course of their domestic partnership,
plaintiff and defendant acquired property together, improved their
joint property, commingled their property, and acquired partnership
assets and debts, including but not limited to real estate,
personal property and a mortgage."  Kimball's amended complaint
presented six theories of recovery: partnership dissolution; breach
of express contract; breach of implied contract; resulting trust;
constructive trust; and reformation of deed and partition of real
property.   
     9.   On August 25, 1999, Superior Court Judge Dan A. Hensley
issued a decision and order in which he found that the parties had
made "an informal, express agreement under which Tolan considered
[Kimball's] contributions of cash and labor as an 'investment' in
the house equal to one-half its value."  The court dismissed
Kimball's other claims, finding that the contract provided an
interest in the appreciation of the value to the home but not for
an interest in the title.  In addition, the court dismissed Tolan's
counterclaims for waste, negligence, and breach of contract.  After
settling several claims to the personal property contested by the
parties, the court awarded Kimball one-half the net value of the
home at the time he departed.  After several adjustments, the court
entered judgment for Kimball in the principal amount of $41,199.50.
     10.  Tolan now appeals.
     11.  Citing our opinion in Wood v. Collins, [Fn. 1] the
superior court held that the parties made an informal, express
agreement according to which each party was entitled to one-half
the value of the house.  Judge Hensley supported this conclusion
with factual findings based on the testimony presented at trial. 
In particular, the court was persuaded by the following factors:
(1) Kimball paid Tolan $200 per week in cash; (2) over the eight
years of their relationship, "Kimball contributed hundreds of hours
of labor making additions and improvements to the property"; (3)
Tolan told her friend Debbie Richter that she considered Kimball's
weekly payments to be contributions toward the mortgage and that
Kimball had an "investment" in the house; (4) Tolan "allowed
[Kimball] to make the kind of significant planning and design
decisions regarding [the] improvements that only a homeowner would
make"; and (5) "although Tolan insisted at trial that Kimball was
only a tenant, she did not declare Kimball's monthly payments as
rent on her tax returns."
     12.  On appeal Tolan argues that, for several reasons, the
superior court erred in holding that the parties formed a contract
regarding the ownership of the Ruth Drive house.  But in order to
affirm the judgment of the superior court we need not hold that a
contract between the parties existed. [Fn. 2]  Rather, we follow
Wood and the Oregon Supreme Court decision in Beal v. Beal [Fn. 3]
and hold that because property accumulated during a period of
cohabitation should be divided according the parties' intent, the
judgment of the superior court, which is supported by record
evidence regarding the parties' intent, was not error.  Because
Tolan's appellate arguments primarily address various aspects of
contract law, but do not challenge the notion that Tolan and
Kimball intended to share equally in the house, they are not
relevant. [Fn. 4]
     13.  In Wood we addressed the question of whether, in dividing
property acquired during the course of a relationship between
unmarried cohabitants, the superior court correctly credited the
man with one-half of the payments he had individually made on a
condominium owned by the two parties as tenants in common. [Fn. 5] 
We held that as a matter of law the superior court correctly
concluded that "for unmarried cohabitants, the intent of the
parties will control division for property acquired before
separation." We remanded there because the record did not support
the superior court's factual finding that the parties mutually
intended to share expenses incurred while in the relationship.
     14.  In Wood we relied heavily on Beal, in which Oregon
adopted the rule that property accumulated during cohabitation
should be determined by the express or implied intent of the
parties.  We described the facts and lower court proceedings of
that case:
          Barbara and Raymond Beal, recently divorced,
purchased property together, listing themselves as husband and
wife.  Both contributed to the down payment, Barbara paying $500
more.  Barbara made the first monthly payment; Raymond made all
subsequent payments.  The parties lived together in the house, both
contributing to the household.  After two years, Barbara moved out. 
Raymond remained and made all monthly payments on the house.  The
court decided the property dispute should be resolved by looking at
the parties' intent.  Before Barbara moved out, the trial court
found that the parties intended to pool their resources for their
common benefit.  Therefore, both parties were held to have an
undivided interest in the property.[]

Rejecting the rules of cotenancy, under which the parties would
have been required to share expenses based on ownership share, the
Beal court stated that 
          a division of property accumulated during a
period of cohabitation must be begun by inquiring into the intent
of the parties, and if an intent can be found, it should control
that property distribution.  While this is obviously true when the
parties have executed a written agreement, it is just as true if
there is no written agreement.  The difference is often only the
sophistication of the parties.  Thus, absent an express agreement,
courts should closely examine the facts in evidence to determine
what the parties implicitly agreed upon.

               . . . . 

               In summary, we hold that courts, when
dealing with the property disputes of a man and a woman who have
been living together in a nonmarital domestic relationship, should
distribute the property based upon the express or implied intent of
those parties.[]

     15.  We reaffirm our approval first stated in Wood of the Beal
rule that, to the extent it is ascertainable, intent of the parties
should control the distribution of property accumulated during the
course of cohabitation.  Hence the trial court was correct to
follow Wood and Beal in looking to the intent of the parties to
resolve the disputes regarding the property acquired during their
relationship.  In addition, the factual findings of the superior
court are well supported by the record and present a compelling
case that the parties intended to share the equity in the home
equally. 
     16.  As the Beal court explained, in cases such as this one,
"inferences can be drawn from factual settings in which the parties
lived."  Here, both parties contributed to the down payment and
both made financial contributions to the upkeep of the house
throughout their cohabitation.  Tolan argues on appeal that Kimball
was Tolan's tenant and his weekly payments were understood to be
rent.  But we believe that the superior court did not err in
rejecting Tolan's version based on the fact that she never claimed
the payments as rent on her tax returns, on the fact that "Tolan
needed Kimball's $200 per week to help pay . . . expenses,
including the mortgage," and on the testimony of Tolan's friend
that Tolan confided to her that she considered the payments to be
contributions to the mortgage.
     17.  Also compelling evidence of the parties' intent is the
extensive renovations which Kimball performed with neither
direction from Tolan nor expectation of payment.  As the trial
court found, "[Tolan] encouraged him to spend hundreds of hours
making improvements in the property, and allowed him to make the
kind of significant planning and design decisions regarding the
improvements that only a homeowner would make."
     18.  Tolan argues that her repeated refusals to add Kimball's
name to the title to the property, as Kimball requested,
demonstrate that she did not intend that the property be jointly
owned.  Under this view, if both parties had intended to share the
property equally, they would have formalized that intent by adding
Kimball to the title.  But we, as did the Beal court, reject "[t]he
unannounced but inherent rule . . . that the party who has title,
or in some instances who is in possession, will enjoy the rights of
ownership of the property concerned."  That rule is unfair, for it
"tends to operate purely by accident or perhaps by reason of the
cunning, anticipatory designs of just one of the parties."  Though
we reject a rule that title or possession equals ownership, Tolan
raises a valid point that an express refusal to add Kimball's name
to the title could be an indicator of intent not to share an
interest of the property.  But here a disinterested witness, Debbie
Richter, testified that Tolan "made a comment one time that
[Kimball] was stupid for putting all of his cash into a house that
his name was not on the title to" and stated that "since [Kimball]
paid in cash, [he] had no proof that he was anything other than a
tenant."  Thus the trial court did not err by discounting Tolan's
failure to put Kimball's name on the title.  Tolan's refusal
appears, in light of Richter's testimony, to be a "cunning,
anticipatory design[] of just one of the parties," rather than an
indicator of the parties' mutual intent.
     19.  For these reasons, we AFFIRM the judgment of the superior
court.


                            FOOTNOTES


Footnote 1:

     812 P.2d 951 (Alaska 1991).


Footnote 2:

     See In re A.B., 791 P.2d 615, 621 n.9 (Alaska 1990) (noting
that this court "may affirm a lower court's decision without
embracing the reasoning employed in it").


Footnote 3:

     577 P.2d 507 (Or. 1978).


Footnote 4:

     Tolan argues, citing Sykes v. Melba Creek Mining, Inc., 952
P.2d 1164, 1167 (Alaska 1998), that the essential elements of a
contract were not present: there was no offer encompassing the
essential terms of a contract; there was no unequivocal acceptance;
no consideration was defined; and there was no mutual intent to be
bound.  But we affirm under Wood and Beal, which ask what the
parties intended, not whether they formed a contract. Therefore
these arguments are irrelevant. 

          Tolan also argues that the trial court failed to apply
the clear and convincing evidence standard as is required for proof
of an oral contract to convey an interest in land.  Again, because
this argument applies only in a contract setting, it is not
persuasive.

          Tolan also contends that the statute of frauds bars the
contract. Because the statute of frauds is a defense to contract
cause of action only, it is not relevant to our analysis under
Wood.

          Tolan also argues that the superior court erred by
dismissing her breach of contract counterclaim.  Because this claim
also depends on the existence of a contract between the parties, it
is not relevant to our holding.


Footnote 5:

     See Wood, 812 P.2d 955-57.


Footnote 6:

     Id. at 957.
 [Fn. 6]