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Kelley v. Richardson

Superior Court of Maine, Penobscot

June 17, 2019



          Ann M. Murray, Justice Maine Superior Court

         This matter came before the court for trial on, June 4, 5, and 6, 2019. Plaintiff appeared with his attorney, Scott Lynch. Defendant appeared with her attorney, Ezra Willey.

         The Plaintiff filed his 4-count complaint on October 18, 2017. Defendant filed her 11-count counterclaim on November 14, 2017, and an amended counterclaim on January 11, 2018.

         General Factual Background

         The parties became involved in a romantic relationship shortly after they met in South Carolina, They then decided to move to Maine together, the place where the Plaintiff grew up and where his children were located. Defendant owned a home in South Carolina, and before moving to Maine, the parties readied that home to be rented.

         Upon the parties move to Maine in early 2010, they lived with the Plaintiffs twin brother and his fiancee for a few months. Thereafter, together they moved into 738 N. Main Street in Brewer, Maine under what they believed was a rent-to-own situation. While the arrangement did not turn out to be a rent-to-own situation, the parties purchased 738 N. Main Street in Brewer, Maine in June of 2011. They are joint tenants on the deed.

         The parties continued to co-habit at 738 N. Main Street in Brewer, Maine until April of 2015. Both parties worked hard and shared household expenses. Defendant handled the finances for the couple. Defendant was careful with money and the bills were paid on time. Defendant had an excellent credit score, In 2011 -2012, Plaintiff went through bankruptcy.

         After purchase of the home, the parties made many improvements to it. Most importantly, the roof was completely replaced. Additionally, new windows were installed, the interior walls were refinished, new hardwood floors were installed, and new tile was installed. The parties also removed the asbestos siding and replaced it with boards. These boards were painted with a product which was designed to delay the need to put permanent exterior materials (siding) on the house. Plaintiff did a great deal of the work himself, Defendant contributed to some of the work, and the parties hired others to help with the work. The materials for the improvements were paid in a general way through the earnings of both parties. While some of the work may need to be redone, these improvements were made.

         Plaintiff was a floor installer by trade and Defendant was a waitress. They both had success in their jobs. In fact, Plaintiff was so successful in his work that after working for another company, he struck out on his own and did business as "Kelley Flooring." After a couple of years, his work had increased to such a degree that he needed help with the administrative aspects of the business. Defendant stepped into this role, and demonstrated skill with the administration.

         Apparently, "Kelley Flooring" did not keep traditional books, such as a ledger of income and expenses (Accounts/Payable and Accounts/Receivable). This failure to keep traditional books has made it more difficult for the parties to recreate their history and makes it more difficult for the Court to be as precise as it might like. The Court cannot emphasize enough the difficulties this case presents with the commingling of the monies earned by each party, the personal expenses paid from a variety of accounts, the business expenses paid from a variety of accounts, and the general lack of an organized bookkeeping system. It appears that neither party drew a paycheck or wages from "Kelley Flooring," nor were there identified distributions from the business. Finally, the ownership of "Kelley Flooring" changing over the period of time in question further complicates the analysis.

         The parties wished to develop the "Kelley Flooring" business. In particular, they hoped to open a "storefront" which would be a show room for floor coverings. In connection with this effort, on September 19, 2013, Plaintiff sold "Kelley Flooring" to the Defendant for $1.00. Kelley Flooring rented a building at 46 Center Street in Brewer, Maine, and began to make leasehold improvements. The first floor, which was intended to be used for the Kelley Flooring store, was gutted. Before December 31, 2013, $8, 000 to $10, 000 was spent to improve the building on Center Street to create the "Kelley Flooring" showroom.

         At some point, the parties learned the Center Street building was in foreclosure, and plans were made to purchase the building. While purchasing the building was, at least in part, an attempt not to lose the value of the leasehold improvements, because of his poor credit, Mr. Kelley could not take advantage of this opportunity. On December 31, 2013, Defendant became the record owner of the Center Street real estate. In connection with the purchase, Plaintiff became a "guarantor" of the loan and he provided his interest in the N. Main Street home as surety for the loan.

         The first floor of the Center Street building was never finished and "Kelley Flooring" never created the show room, It does not appear that any substantial money was spent in renovating or upkeeping the Center Street property between December 31, 2013 and April 2015.

         There are three apartments at the Center Street location, two on the 2nd floor and one on the third floor. It appeal's that at least the two apartments on the 2nd floor have generally been rented. In 2015, the rents were sufficient to cover the payment of the mortgage, insurance, and taxes. However, in 2014, 2016, and 2017 the rents have not been sufficient to cover the mortgage, insurance, and taxes.

         On April 14, 2014, the parties signed a Partnership Agreement. The Agreement was drafted by the Defendant, after finding an example on-line. The Partnership Agreement was to be known as "Kelley Flooring". There appears to have been no change in the operation of Kelley Flooring from when Defendant began keeping the books through the time the Plaintiff left the relationship in April of 2015. Thus, before the business was sold by the Plaintiff to the Defendant on September 19, 2013, between September 19, 2013 and April 14, 2014 when the Partnership Agreement was signed, and between April 14, 2014 and April of 2015, things remained the same: Plaintiff continued to do installation work along with his crews and Defendant continued to perform the administrative work.

         In late March, 2015, Plaintiff was admitted to a short-term substance abuse rehabilitation program[1]. In early April, 2015, the romantic relationship ended when Plaintiff left the N. Main Street home. Between April, 2015 and June, 2015, "Kelley Flooring" operated in a confusing manner. Plaintiff did some installations and Defendant did some administrative work, but it was not coordinated, "Kelley Flooring" effectively ended on June 25, 2015.

         On March 16, 2016, Mr. Kelley filed a Complaint for Recovery of Personal Property. On April 14, 2016, Ms, Richardson filed a Complaint from Protection from Abuse. Ultimately these cases were resolved through the issuance of a Protection from Abuse Order by agreement and without findings, but with an order that certain personal property of Mr. Kelley be given to him and that other personal property of Mr. Kelley would remain with Ms. Richardson "for the time being." The Complaint for Return of Personal Property was dismissed in connection with the Amended PFA Order.

         Eric Clifford and Timothy Kelley picked up some of Plaintiff s personal property from the Defendant, but they did not retrieve the larger items, In April, 2016, Defendant filed a document with the Court stating that she had made Mr. Kelley's personal property available for pick-up, but that Mr. Kelley's agents only retrieved a few personal items.


         The Court will analyze each claim in turn.

         Complaint Count I - Partition

A. 738 N. Main Street - this property is owned by the parties jointly, and the parties agree the property should be sold. Therefore, it is ordered that the property be sold in a commercially reasonable manner. The parties, through their attorneys, shall agree upon a broker to list the property. If the parties cannot agree, Mike Rair, Esq., if he is willing, shall select a broker. The parties shall follow the advice of that broker as to listing price, any price reductions, and the selling price.
The parties do not agree about the distribution of the proceeds. The main disputes relate to: (i) the down payment, (ii) each party's contributions to the house, and (iii)

         Defendant's payment of the mortgage, taxes, insurance, and utilities for the home after Plaintiffs departure in April of 2015.

(i) One party's funds used for the down payment for the home is not a proper item to be considered in this partition. See Libby v. Lorraine, 430 A.2d 37 (Me. 1981); Boulette v. Boulette, 627 A.2d 1017, 1018 (Me. 1993) ("Contributions of the parties to the property prior to the joint tenancy, however, are not equities growing out of the joint tenancy relationship. To allow the consideration of contributions preceding the joint tenancy would defeat joint ownership.");
(ii) The Court finds that Plaintiff contributed more of the labor than did the Defendant in the improvements made to the home. In particular, Plaintiff replaced the roof, fixed interior walls, installed windows, installed flooring, and worked on the exterior walls. Defendant contributed to some of this work, but her labor was far less than the Plaintiffs;
(iii) During the relationship, both parties contributed to the expenses related to 738 N. Main Street on a basis that satisfied them both at the time; and
(iv) The Court finds that the Defendant has kept the mortgage, taxes, insurance, and utilities paid for the home since Plaintiffs departure and has spent some minor amount of money on improvements. On the other hand, Defendant has had exclusive use and possession of the home since that time. Additionally, Defendant has shared the residence with a third-party for close to the last two years, and this third-party has contributed to the household expenses.
After considering the factors above and balancing all the equities, the Court orders that upon sale of 738 N. Main Street, after payment of the mortgage and costs of the sale, the proceeds will be divided equally by the parties,
Between now and the sale, Defendant shall continue to have exclusive possession of the home and shall keep the regular mortgage payments, insurance, taxes and utilities paid.

         B. Center Street

         The Center Street property presents the most difficult issue in this case.

Plaintiff claims that he has an ownership interest in the Center Street property, and Defendant claims that she is the sole owner of the Center Street property. Plaintiff claims he made substantial improvements to the property, and that the April 14, 2014 Partnership Agreement was an attempt to memorialize the partnership's acquisition of the building.
Plaintiff has suggested, among other things, that his being a "guarantor" and putting his ½ interest in the N. Main Street home at risk to secure the mortgage on the Center Street property, that his contribution of labor to renovations, that his agreement that Defendant's son should be re-paid for the down payment he loaned for the purchase of the building, and Defendant's taking a photograph of Plaintiff putting a key in the door of the building are all factors the Court should consider in determining that he has an ownership interest in the property.
The Court finds that the purpose of looking into the Center Street property was to find a showroom for "Kelley Flooring." All of the above considerations suggested by the Plaintiff are consistent with Plaintiff wishing to do what he could, particularly given his poor credit, to make the showroom a reality. Even the photograph is consistent with Plaintiff being proud to be advancing the "Kelley Flooring" business, a business that still contained his name (even though he no longer owned it).
On December 31, 2013 when the building was purchased, title to the property was taken by Kathryn Richardson, and remains in that form. Importantly, title is not in the name of "Kelley Flooring", or even Kathryn Richardson, d/b/a "Kelley Flooring."
On April 14, 2014, the date of the Partnership Agreement, "Kelley Flooring" did not have a store at the Center Street property and the storefront was far from complete. The Partnership Agreement itself listed the "Kelley Flooring" business address as 738 N. Main Street in Brewer, Maine.
Finally, during his testimony when asked about his concern that the Center Street property was not in his name, Mr. Kelley stated, among other things that "I wanted it back.[2]" This suggests Mr. Kelley wanted back what he owned in September of 2013 when he sold Kelley Flooring to Ms. Richardson. When Mr. Kelley sold his interest in "Kelley Flooring" in September of 2013, the Center Street building was not owned by "Kelley Flooring" or Mr. Kelley (or Ms. Richardson).
On the other hand, a careful review of Ms. Richardson's tax returns reflects that the "Kelley Flooring" business was reported on her Schedule C for years 2013 through 2015. The Center Street property was reported on Schedule E, beginning in 2014. The 2014 and 2015 Schedule C's for "Kelley Flooring" show that ½ of the mortgage, ½ of the taxes, ½ of the insurance and perhaps some utility payments for the Center Street property were listed as expenses for "Kelley Flooring.[3]" The Court has carefully considered whether this tax return information accurately evidences ownership by "Kelley Flooring" of the Center Street real estate, and has concluded that it does not. Simply by reporting something on a tax return does not make it so.
The Court does not find that Mr, Kelley made substantial improvements to the Center Street property in reliance on a promise that the property would be conveyed to him: the substantial improvements were made before the Defendant owned the Center Street property and the court does not find that Defendant promised to convey any interest in the Center Street property to the Plaintiff or that Plaintiff performed any work on the property in reliance on any such promise. See Tozier v. Tozier, 437 A.2d 645 (Me. 1981) (promisee made substantial improvements to land in reliance on promise that the land would be conveyed to him). The Court does not find that, by her actions, Ms. Richardson impliedly promised to convey the Center Street property to Mr. Kelley. And, despite other evidence, while the Court finds that the April 14, 2014 Partnership Agreement conveyed 49% of the interest of "Kelley Flooring" to the Plaintiff, the Court is not satisfied that "Kelley Flooring" owned the Center Street property or that the Partnership Agreement conveyed or intended to convey the Center Street property to the Partnership (or to Mr. Kelley).
Plaintiff has the burden to establish an ownership interest in the Center Street property, and the Court finds that he has not met his burden. Therefore, the Center Street ...

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