Kellogg v. Shushereba

Plaintiff Thomas Kellogg owned a house and land in Bethel.  In 1999, he entered into a rent-to-own agreement with William Oren whereby Oren would pay over time for the property, at which point ownership would be transferred to him. Beginning in 2000 and then from 2001 onwards, defendant Cindy Shushereba began to occupy the house with Oren in a romantic relationship. By August 2004, it was contemplated that defendant would co-own the property.  Plaintiff indicated that he wished to come to an agreement to sell the property to defendant and Oren. To that end, defendant liquidated her savings and paid plaintiff for a downpayment on the house.  Plaintiff credited Oren and defendant with the amount Oren had paid in rent.  These two contributions left roughly $98,721 to be paid to reach the purchase price.  The parties agreed orally that the balance would be paid monthly over fifteen years. No written purchase and sale agreement was ever prepared, but the parties intended that Oren and defendant would receive title immediately and give a mortgage secured by a promissory note for the installments. Plaintiff delivered a signed warranty deed to defendant, but defendant never signed the promissory note or the mortgage.  Because defendant could not pay the property transfer tax that would be due on recording, she never recorded the warranty deed.  Plaintiff testified that, at the time, he considered himself the mortgage holder only. Ultimately, the relationship between Oren and defendant dissolved, and, in May 2008, Oren moved out. A couple of months later, plaintiff and defendant became sexually involved.  During this time, plaintiff sought neither rent nor the purchase installments from defendant, and she made no payments. At some point in 2010, plaintiff began seeking rent from defendant, and she did make between two and four monthly rental payments of $650. Plaintiff paid the property taxes on the property throughout the time that defendant lived by herself in the house. Oren then sued plaintiff and defendant, seeking to be declared half-owner of the property along with defendant, from whom he sought a partition and accounting.  In September 2009, the superior court rejected Oren's claims. Defendant counterclaimed, contending that she owned the property or, in the alternative, that plaintiff had been unjustly enriched by defendant’s payments to him.  Prior to trial, the court dismissed as res judicata defendant’s claim that she owned the property, leaving the unjust-enrichment claim in her counterclaim. After a bench trial, the trial court ruled in favor of plaintiff’s claims for back rent and property taxes. However, the trial court ruled in favor of defendant with regard to her unjust enrichment claims for the return of the downpayment on the purchase price and several of her alleged capital and repair contributions. Both parties appealed. Upon review, the Supreme Court concluded that the contract between plaintiff and defendant was a contract for deed; the trial court erred in concluding it was a landlord-tenant relationship. Because the agreement between plaintiff and defendant was a contract for deed, the amount of $833 per month that defendant had agreed to pay plaintiff went entirely toward the purchase price plus interest. When the periodic payments were complete, defendant would become the owner of the property, free and clear of any interest of plaintiff, without a further payment. There was not an agreement to pay rent; the $833 monthly payment was not part of a rental agreement between plaintiff and defendant. View "Kellogg v. Shushereba" on Justia Law