Spike and Gracie lived together for ten years. They purchased a home together which was titled in both their names. They each contributed $10,000 to the down payment and got a $180,000 mortgage. Over the ten years, only Spike paid the mortgage payments totaling $25,000 and all of the property taxes amounting to $15,000. He also paid for the supplies and personally provided the labor for the

Question

addition of a sunroom, which increased the value of the property by at least $20,000. At the present time, the house is valued at $250,000 and the balance on the mortgage is $160,000. The parties never executed a cohabitation agreement. When their relationship ended, Gracie moved into an apartment. To pay for the rent for six months, she withdrew, without Spike's consent, approximately $10,000 from the joint account she and Spike had contributed to equally over the ten years they were together. They had used the account to cover household expenses, traveling, and entertainment.

The house is going to be sold for the $250,000 figure and Spike is seeking $75,000 of the $90,000 equity in the property ($10,000 deposit + $25,000 paid on mortgage + $15,000 property taxes + $20,000 improvement on property + $5,000 = 1/2 unassigned equity of $10,000; Gracie would get $10,000 deposit plus $5,000. = 1/2 unassigned equity). He is seeking all of the $10,000 Gracie took from the joint account and now has in a new account in her name only. Should the court grant Spike the relief he requests? What theories might be used as a basis for relief?

Answer 1

a) The court may impose a constructive trust on $5,000 of the $10,000 Gracie now has in an account in her name only or possibly all of the $10,000 given her conduct. The parties contributed equally to the original account in their joint names and she removed $10,000 without his consent. She might argue she is entitled to $5,000 based on an implied in fact theory and that he should be entitled to at most the other $5,000.
b) The court may accept Spike's reasoning about the mortgage and tax amounts — that half of the amounts were his responsibility and should be credited to him and that Gracie owed him the other half based on an implied-in-fact theory since they appear to have equally shared other expenses and he paid her share as well as his own. Gracie may argue that Spike paid 1/2 of the $25,000 paid on the mortgage and $15,000 in taxes as a gift to her as she was liable for it.
c) The court may say he is entitled to the $20,000 for the improvements he made to the property based on a quasi-contract theory to avoid unjust enrichment particularly given Gracie's conduct.