Plaintiff paid off Defendant's 2nd mortgage in amount of $70,000 in 2007. D gives P a check for 8,000 in 2008, with no memo. P claims it was a loan and that the check was the first payment with terms of repayment never being fully discussed. In 2013, D claims no such discussion took place, that P paid off mortgage alone without D's knowledge, and that, as a result, the payoff was considered an investment into the property. Property was short sold in 2009. D claims loss was shared and does not owe money.
Addt'l facts - P lived with D from 2007 to 2008. P owned different property with mortgage at the time.
Addt'l claims - P had no access to mortgage info without D's knowledge. P was asked to move out. P was not consulted during short sale.
Can P win? Does P have preponderance of evidence?
What other obstacles or problems does P have, aside from proving the existence of the oral contract? Barring that, would it be enough to simply disprove the notion that the mortgage payoff was a gift or investment?
Contracts / Agreements Lawyer
Restitution is ordered by the court where a party has conferred a benefit on another under circumstances where the other party would be unjustly enriched if the court did not restore the benefit to the first party. Where a party makes a gift to another, however, the court will not order restitution, because there is no unjust enrichment. Where parties live together as husband and wife at the time of the conferring of the benefit, the court will presume a gift was made. Since P and D were not living together as husband and wife, the presumption is inapplicable.
The issue is whether or not a gift was made. When one makes a gift, one does not harbor the expectation that the gift will be returned. Here P certainly wanted to help D out with D's debt problems, but the facts do not preclude a finding that P had the expectation of being repaid sometime down the line. If there was no gift made, then the issue becomes one of unjust enrichment supported by other facts.
Sometimes a change in circumstances will put the kibosh on restitution. Here, a short sale of the property wiped out D's debt (I assume) secured by the property as well as his ownership. If D can establish that his change in position in interest in the property was due to his reasonable reliance on the benefit of $70,000 being a gift, D may have something to talk about. It seems reasonable to conclude that the short sale would have wiped out the 2nd mortgage regardless of the benefit conferred. I doubt that the 2nd would have survived the short sale. It is unlikely that D can show any reliance on the benefit, reasonable or otherwise.
Obviously, if P had invested in the property to the tune of $70,000, P would not be entitled to restitution. There simply would be no unjust enrichment. P would have a piece of the action, an interest in the property, with all risks associated with ownership. The facts, however, indicate otherwise. P was never advised about the short sale. Most likely, P would have been told about it so that P could have intervened, if possible, to protect P's interest in the property. This lack of involvement by P suggests that even D did not believe that P had any interest in the property or that D totally disregarded P's interest and went forward with the short sale. If so, D looks like D was unjustly enriched.
Lastly, D claims D had no knowledge of the benefit conferred. D suggests that lack of knowledge of the benefit somehow changes the ballgame. D, however, knew he had a 2nd. He most certainly knew that it went away. At the very least, D had reason to know that P, D's good friend with access to D's mortgage file, was the probable payor. Why else would D give $8,000 to P?
On the facts stated, P should recover P's $70,000 from D, less the $8,000 payment.
James C. Glassford
Attorney at Law
Elder Law Attorney
Is this a law school question? Are you trying to get help with your take home exam?
You have too many separate questions for one posting. You should re post each question separately.
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Family Law Attorney
P should have consulted a lawyer and had an agreement written, now his moneys are all at risk in a lawsuit and that will be up to a judge or jury to decide. P has a very poor hand and he needs 51%
My name is Stephen R. Cohen and have practiced since 1974. I practice in Los Angeles and Orange County, CA. These answers do not create an attorney client relationship. My answers may offend I believe in telling the truth, I use common sense as well as the law. Other state's laws may differ.. There are a lot of really good attorneys on this site, I will do limited appearances which are preparation of court documents it is , less expensive. However generally I believe an attorney is better than none.