ROBERTSON v. ROBERTSON

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Court of Appeals of Georgia.

ROBERTSON v. ROBERTSON.

No. A15A0892.

Decided: September 23, 2015

Melissa Gifford Hise, Albert C. Palmour Jr., for Appellant. Larry Bush Hill, for Appellee.

Elizabeth Louise Robertson and her mother, Dorothy Keene, appeal the grant of partial summary judgment to Elizabeth's ex-husband, Robert Robertson, in their action to set aside or modify the Robertsons' divorce decree, for enforcement of an implied trust, and for conversion of property. On appeal, Elizabeth and Dorothy argue that the trial court erred in (1) finding that their request to set aside or modify the divorce decree was barred by a three-year statute of limitation; (2) rejecting their request for equitable relief, which was based on the existence of an implied trust, and finding that it was barred by a seven-year statute of limitation; and (3) finding that Elizabeth's claims were barred because she had unclean hands. For the reasons set forth infra, we affirm in part and reverse in part.

Viewed in the light most favorable to Elizabeth and Dorothy (i.e., the nonmoving parties),1 the record shows that the Robertsons were married on September 2, 1969. At some point during the 1990s, the couple purchased property that is the subject of this dispute, and the deed was in both of their names. Initially, the property was undeveloped, but the Robertsons eventually built their home there. In 2002, the Robertsons executed a warranty deed, conveying the property in fee simple to their only child, Melanie Collins. Elizabeth, who had a serious medical condition that often required hospitalization, testified that they conveyed the property to Collins because she was unable to obtain health insurance and Robert had retired. Specifically, Elizabeth was concerned that if she incurred substantial medical debt due to hospitalizations, a hospital or other medical creditor might obtain a judgment against the property. At the time of the conveyance, the Robertsons had a “verbal agreement” with Collins that they could continue to live on the property for the rest of their lives.

In May 2008, Elizabeth filed a verified complaint for divorce against Robert, asserting, inter alia, that she and Robert did not jointly own any real estate. On July 8, 2008, the superior court issued a final judgment and decree, granting the divorce. During the divorce proceeding, Elizabeth swore under oath that she and Robert were separated and that their marriage was “irretrievably broken.” But, in fact, the couple never separated, discontinued marital relations, or divided any of their assets.2 Around that time, the Robertsons learned that Collins had mortgaged ten acres of the property to facilitate the purchase of a car, and they demanded that she convey the property back to them. Subsequently, on August 26, 2008, Collins executed a warranty deed, conveying the property in fee simple solely to Robert in exchange for “ten dollars and other valuable consideration.”

In July 2009, Robert approached Dorothy, Elizabeth's mother, and convinced her to sell her home and move in with them. Robert told Dorothy that he would treat her as if she were his own mother and that she could reside at the property until her death. Thereafter, in December 2009, Dorothy moved in with the Robertsons, where she had a separate living quarters in the upstairs area of the house. Initially, Dorothy paid $450 per month to Robert for rent and utilities, and later, the monthly payments increased to $600.

At some point, while still living with Elizabeth, Robert became romantically involved with another woman, who he eventually married in August 2013. In February 2013, approximately six months before Robert remarried, he sent a letter to Elizabeth and Dorothy, notifying them that they must vacate the property within 60 days. But instead of vacating the property, Elizabeth and Dorothy filed a complaint against Robert, requesting that the trial court set aside the 2008 divorce decree because the Robertsons never actually separated and continued to live as husband and wife. They further contended that, in the alternative, the divorce decree should be modified to provide for disposition of the property, which they claimed had been held in trust for their benefit. Elizabeth and Dorothy also alleged that Robert acted willfully and fraudulently in converting their property to his own use and benefit. Finally, Elizabeth and Dorothy contended that they were each entitled to damages for Robert's conversion of the property. Later on, when Elizabeth and Dorothy failed to vacate the property, Robert filed a dispossessory action against them.

Robert answered Elizabeth and Dorothy's complaint against him, asserting several defenses. Discovery then ensued, and on August 14, 2013, Robert filed a motion for partial summary judgment as to Elizabeth and Dorothy's request to modify or set aside the divorce decree, arguing that they had no legal or equitable interest in the property. Robert further argued that Elizabeth and Dorothy's action to set aside or modify the divorce decree was barred by a three-year statute of limitation. Likewise, he argued that their request for the enforcement of an implied trust was barred by a seven-year statute of limitation. After Elizabeth and Dorothy responded, Robert amended his motion to assert that Elizabeth is precluded from claiming a legal or equitable interest in the property because she has “unclean hands.” Specifically, he contended that Elizabeth conveyed the property to Collins in an attempt to defraud her potential medical creditors. Ultimately, in a summary order, the trial court granted Robert's motion for partial summary judgment.3 The court also granted Elizabeth and Dorothy's petition for a certificate of immediate review, and we granted their application for an interlocutory appeal. This appeal follows.4

At the outset, we note that summary judgment is appropriate when the moving party can show that “there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.”5 And a movant meets this burden when “the court is shown that the documents, affidavits, depositions and other evidence in the record reveal that there is no evidence sufficient to create a jury issue on at least one essential element of the plaintiff's case.”6 Finally, if the moving party satisfies this burden, “the nonmoving party cannot rest on its pleadings, but must point to specific evidence giving rise to a triable issue.”7 With these guiding principles in mind, we turn now to Elizabeth and Dorothy's specific claims of error.

1. Elizabeth and Dorothy first argue that the trial court erred in finding that their action to set aside or modify the 2008 divorce decree was barred by a three-year statute of limitation.8 We disagree.

OCGA § 9–11–60(f) provides, in relevant part, that “all motions to set aside judgments [except motions asserting lack of personal or subject matter jurisdiction, and motions for a new trial] shall be brought within three years from entry of the judgment complained of.” And here, Elizabeth and Dorothy's complaint to set aside or modify the 2008 divorce decree was filed on April 10, 2013, well over three years after the decree was entered. Thus, the trial court did not err to the extent that it found that the request to set aside or modify the divorce decree was time-barred.9

Nevertheless, Elizabeth and Dorothy argue that the divorce decree and the incorporated settlement agreement were the product of fraud, and the statute of limitation for fraud does not begin to run until the parties discover the fraud. And according to Elizabeth and Dorothy, they did not become aware of Robert's “plan to defraud them of their interest in the property” until immediately before they filed this action. To be sure, Elizabeth and Dorothy are correct that under OCGA § 9–3–96,”[i]f the defendant or those under whom he claims are guilty of a fraud by which the plaintiff has been debarred or deterred from bringing an action, the period of limitation shall run only from the time of the plaintiff's discovery of the fraud.” And to toll the limitation period under this statute, a plaintiff must show that: (1) a defendant committed actual fraud;10 (2) the fraud concealed the cause of action from the plaintiff; and (3) the plaintiff exercised reasonable diligence to discover the cause of action despite her failure to do so within the statute of limitation.11 Finally, a plaintiff bringing an action for fraud “has the burden of showing the existence of facts that would toll the statute of limitation.”12

But here, Elizabeth and Dorothy have not presented evidence that Robert committed any act of fraud concealing their action to set aside or modify the divorce decree. Nevertheless, they argue that there is a genuine issue of material fact regarding whether the Robertsons actually intended to divorce because, after the divorce, Elizabeth and Robert continued living as if they were married. But at the time of the divorce, Elizabeth was well aware that she and Robert had no intention of separating, discontinuing marital relations, or dividing assets. Indeed, Elizabeth and Dorothy admit that “[t]he divorce was to keep the parties from financial ruin if [Elizabeth] Robertson ․ incurred astronomical medical bills and to allow her more benefits financially.” Moreover, Elizabeth falsely represented to the divorce court that she and Robert were separated and that their marriage was “irretrievably broken” when she knew at the time that the divorce was a sham. Thus, although Elizabeth and Dorothy now claim that the divorce decree should be set aside because it was fraudulent, Elizabeth was well aware of the alleged fraud in 2008, more than three years before she filed the instant complaint.13

Elizabeth and Dorothy further contend that their action is not barred by the three-year statute of limitation because the Robertsons' divorce settlement agreement did not provide for the disposition of the property. They also contend that the settlement agreement itself was fraudulent because Elizabeth was unaware of Robert's intent to have their daughter deed the property back only to him. But Elizabeth knew at the time of the divorce that the property had been conveyed to her daughter, via warranty deed, four years earlier, and that she and Robert no longer had a legal interest in the property. Indeed, in her verified complaint for divorce, Elizabeth represented to the court that “[t]he parties do not jointly own any real estate.” And it is well established that a party may “make admissions in judicio in their pleadings, motions, and briefs,”14 and “[w]hat a party admits to be true in its pleadings may not subsequently be denied.”15 Because Elizabeth admittedly owned no joint real estate with Robert at the time of the divorce, the divorce decree and settlement agreement were not invalid because they failed to provide for the disposition of the property. Thus, Robert's subsequent actions with respect to the property did not “fraudulently conceal” Elizabeth and Dorothy's cause of action to set aside or modify the divorce decree on that basis.

In sum, to constitute concealment of a cause of action so as to prevent the running of the limitation period, “some trick or artifice must be employed to prevent inquiry or elude investigation, or to mislead and hinder the party who has the cause of action from obtaining information, and the acts relied on must be of an affirmative character and fraudulent.16 And here, Elizabeth and Dorothy simply have not identified any affirmative fraudulent conduct on the part of Robert that concealed their action to set aside or modify the 2008 divorce decree or the incorporated settlement agreement. Thus, while Elizabeth and Dorothy assert that Robert's silence regarding his intent to acquire the property after the divorce somehow concealed their cause of action, mere silence is insufficient to show fraudulent concealment.17

2. Next, Elizabeth and Dorothy argue that the trial court erred in denying their claims for equitable relief because an implied trust resulted from the Robertsons' 2002 conveyance of the property to Collins and her subsequent conveyance to Robert in 2008. They further argue that the court erred by applying a “mechanical” seven-year statute of limitation. We agree that, as to Elizabeth only, there is a genuine issue of material fact regarding whether she is entitled to enforcement of an implied trust against Robert and that her action is not barred by the applicable statute of limitation.

As an initial matter, it is undisputed that, at the time of the 2002 and 2008 conveyances, Dorothy had no legal or beneficial interest in the property, and she did not begin living there until 2009. Moreover, Elizabeth and Dorothy do not identify at what time and under what circumstances an implied trust was created for Dorothy's benefit. Instead, evidence shows that Dorothy was merely a tenant of the property because, for the entire time she lived there, she made monthly payments to the owner, Robert, for rent and utilities.18 Thus, Dorothy, as a tenant, has an adequate remedy at law (i.e., contesting the dispossessory action), and she is not entitled to equitable relief.19 And to the extent that Elizabeth and Dorothy contend that Dorothy obtained equitable interest in the property when, as conceded by Robert, she invested approximately $10,000 to make improvements to her living quarters, we note that a tenant does not obtain equitable interest in property merely by voluntarily spending money to make improvements to the landlord's property.20 Accordingly, Dorothy is not entitled to equitable relief, and we consider this enumeration of error with respect to Elizabeth only.21

Robert contends that Elizabeth's action to enforce an implied trust is barred by the statute of limitation because her complaint was filed more than seven years after the 2002 deed to Collins was executed. In this regard, the Supreme Court of Georgia has held that implied trusts are “subject to statutes of limitation, and an action to impose or enforce such a trust regarding real property must generally be brought within seven years from the time the cause of action accrues.”22 And the statute of limitation begins to run against the party asserting title under an implied trust when “there has been notice of an adverse claim by the alleged trustee or such change of circumstances as would put a reasonably prudent person on notice that any trust relationship has ceased.”23

As noted by Robert, more than seven years elapsed between the 2002 conveyance to Collins and when Elizabeth and Dorothy filed this action in 2013. However, Collins, the purported trustee as of the 2002 conveyance, is not a defendant in this action and no longer has an interest in the property. Regardless, Robert has identified no “adverse claim” by Collins that would have notified Elizabeth that the trust relationship had ceased prior to when Collins executed the 2008 deed. Here, Elizabeth seeks to enforce an implied trust against Robert, who could not have become a trustee of the property until he regained legal interest in the property in August 2008. Because Elizabeth filed this action less than seven years after the 2008 conveyance, her action is not barred by the statute of limitation.24

Turning to the merits of Elizabeth's claim, the Supreme Court of Georgia has explained that “[a]n implied trust is defined as either a resulting trust or a constructive trust.”25 And under the Revised Georgia Trust Code of 2010, “[a] resulting trust is a trust implied for the benefit of the settlor or the settlor's successors in interest when it is determined that the settlor did not intend that the holder of the legal title to the trust property also should have the beneficial interest in the property․”26 Such an implied resulting trust can arise under three circumstances: “(1) an express or implied trust is created but fails for any reason; (2) a trust is fully performed without exhausting all the trust property; and (3) a purchase money resulting trust is established.”27 A constructive trust, however, is a trust implied whenever “the circumstances are such that the person holding legal title to property, either from fraud or otherwise, cannot enjoy the beneficial interest in the property without violating some established principle of equity.”28 Indeed, equity will not allow “one with a legal interest in a piece of property a windfall recovery when the beneficial interest should flow to another.”29 Thus, a constructive trust is “a remedy created by a court in equity to prevent unjust enrichment.”30

In the case sub judice, there is no evidence that, in 2008, the parties intended to create a trust, either express or implied, for the benefit of Elizabeth. Indeed, prior to the execution of the 2008 deed, Collins believed that she held title to her parents' property “subject to their right to live in it for a lifetime.” And all parties agreed that the property was deeded to Collins for the sole purpose of protecting the property and Collins's future inheritance from potential creditors. Both Collins and Elizabeth maintain that, in 2008, they intended for full legal title to be transferred jointly to the Robertsons. Collins averred that, when she signed the 2008 deed, she believed that her parents were still married and that she was conveying the property back to them as requested. Robert, on the other hand, testified that Collins conveyed the property solely to him because Elizabeth did not want her name on the deed and she said she “didn't want no more to do with the property.” Thus, the trial court did not err to the extent that it found that, as a matter of law, an implied resulting trust did not arise in 2008 because no evidence suggests that any party intended for Robert to hold legal title to the land in trust, either express or implied, for Elizabeth's benefit.31

Nevertheless, viewing the evidence in a light most favorable to Elizabeth, there is a genuine issue of material fact regarding whether an implied constructive trust arose at the time of the 2008 conveyance from Collins to Robert. According to Elizabeth, she continued living with Robert at the property as “man and wife” until 2012, when he “decided to leave [her] for another woman.” She also averred that Robert let her “design the house and improve the property however [she] ․ wanted,” and that he repeatedly told her that it was “[her] house” and that “[he] built it for [her].” Furthermore, it was undisputed that Elizabeth contributed jointly with Robert to the $100,000 purchase price for the property, she invested her own inheritance money to pay off the mortgage that Collins had taken out, and prior to when he left in 2012, Robert conducted himself as though he owned the property jointly with Elizabeth. Finally, Elizabeth testified that she invested approximately $90,000 to make improvements to the property during the time when she lived there “as man and wife” with Robert, and that the market value of the property had increased over that time to $296,000. Under these particular circumstances, a reasonable jury could find that allowing Robert to retain sole ownership of a property worth nearly $300,000 that the Robertsons purchased and invested in together from the 1990s until 2012 would result in an inequitable windfall recovery to him and that a constructive trust may be imposed to prevent such a result.32

3. Finally, Elizabeth and Dorothy argue that the trial court erred to the extent that it found that Elizabeth's claims were barred because she had “unclean hands.” We agree.

The unclean-hands doctrine, “which bars a complainant in equity from obtaining relief[,] has reference to an inequity which infects the cause of action so that to entertain it would be violative of conscience.”33 Here, Robert seeks to take advantage of the equitable doctrine of unclean hands34 by asserting that Elizabeth engaged in wrongdoing when she deeded the property to her daughter for the purpose of defrauding potential creditors in 2002. However, Robert fails to identify any particular creditor that was actually defrauded by the 2002 conveyance. Moreover, as explained above, Elizabeth cannot seek to enforce an implied trust arising from the 2002 conveyance because Collins is not a party to this action, and she no longer has an interest in the property. Regardless, even if the parties had fraudulent intent in making the 2002 conveyance and even if that transaction bore any relation to the potential constructive trust that arose in 2008, Robert concedes that he engaged in the exact same fraudulent conduct that he complains of. And when, as here, both parties are equally at fault, Robert cannot avail himself of the equitable defense of unclean hands.35

For all of the foregoing reasons, we affirm the trial court's grant of summary judgment to Robert as to Elizabeth and Dorothy's action to set aside or modify the Robertsons' divorce decree and as to Dorothy's action to enforce an implied trust. But we reverse the court's grant of summary judgment as to Elizabeth's claim for enforcement of an implied trust.

Judgment affirmed in part and reversed in part.

DILLARD, Judge.

ELLINGTON, P. J., and McFADDEN, J., concur.