Opinion
No. A04-237.
Filed November 16, 2004.
Appeal from the District Court, Dodge County, File No. P5-02-823.
William L. Lucas, William L. Lucas, P.A., (for appellants David Michael Dreier and Marcia Bennerotte)
Daniel L. Ziebell, Gullickson, Peterson Ziebell, P.L.L.P., (for respondent Bruce A. Dreier)
Considered and decided by Halbrooks, Presiding Judge, Toussaint, Judge, and Schumacher, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellants challenge an order denying their petition for allowance of claims not previously allowed, arguing that (1) sufficient evidence was presented to overcome a presumption of gratuity; (2) there is an implied contract requiring the decedent's estate to reimburse appellant David Dreier for amounts he paid for his parents' care and expenses; (3) there is an express oral contract requiring the estate to reimburse Dreier for these expenses; and (4) there is an implied contract requiring the estate to reimburse appellant Marcia Bennerotte for personal care that she provided for her parents. Because the district court did not err in finding insufficient evidence to overcome a presumption of gratuity or in failing to find either implied or express oral contracts, we affirm.
FACTS
Terry R. Dreier (decedent) died on October 2, 2002. She is survived by six children. Bruce A. Dreier and appellant David M. Dreier, sons of the decedent, were named co-personal representatives of the estate.
Appellant Marcia Bennerotte is one of decedent's daughters. Bennerotte provided care to decedent beginning in "the mid-90s," after one of decedent's feet was partially amputated. Initially, Bennerotte drove 10 to 12 miles round trip from her home in Wasioja to decedent's home in Kasson four times a day to change the dressings on decedent's foot and perform various household chores. Bennerotte estimated that she was providing eight hours of daily care. Eventually, decedent and her husband moved to Wasioja. Soon thereafter, decedent's husband broke his hip and experienced other health problems. At this point, Bennerotte began to provide "around the clock" care. She testified that she was in her parents' home to care for them seven days a week, approximately 20 hours a day.
By this time, decedent's condition had improved somewhat, so much of this care was for decedent's husband.
Decedent's husband died in December 2000. Immediately after decedent's husband's death, the time Bennerotte spent caring for decedent decreased to approximately five hours per day. In 2001, however, decedent's health began to worsen and she moved in with Bennerotte. Bennerotte testified that at this point decedent
needed 24-7 care. I mean I had a baby monitor. We had to buy a baby monitor to keep on me at all times, because she could not lift herself out of a chair. She couldn't go five feet by herself. And that's the way it was until the day she passed away.
The record indicates that Bennerotte provided the vast majority of home care for decedent. Diane Wise, another of decedent's daughters, testified that she provided care "on occasions." But Wise also conceded that the percent of care she provided was "probably small." Additionally, Bruce Dreier testified that he agreed with the amount of time that Bennerotte was involved with in-home care for decedent.
Appellant David Dreier is the sole shareholder of John Earnest Enterprises, Inc. (JEE). Midwest Independent Living Services, Inc. (MILS), a home-care agency, is a wholly owned subsidiary of JEE. The capital to start JEE was raised by selling stock to family members, including decedent and her husband. Decedent and her husband owned approximately one-third of JEE, until they were bought out by David Dreier. All but $1,500 of the sale amount was paid through an annuity. The remaining amount was forgiven on decedent's death.
From 1999 until 2002, MILS made the following payments to Bennerotte for the care she gave her parents:
a. 1997 $1,840 b. 1998 $4,350 c. 1999 $7,238 d. 2000 $12,134 e. 2001 $9,678 f. 2002 $10,316 g. $50 per week for cleaning services
David Dreier testified that, from his experience, the normal cost of home care of the type provided by Bennerotte would be "[r]oughly about twice as much as what she was reimbursed."
The parties dispute the extent to which Bennerotte received additional compensation from decedent. Bennerotte testified that decedent paid her $50 per week to do household chores, such as cleaning and laundry, when decedent lived in Kasson. She claims that she never received any money from decedent after decedent moved to Wasioja. But Bruce Dreier testified that he "believe[d] [decedent] paid [Bennerotte] all along for what [decedent] felt her cares were worth." Additionally, Wise testified that decedent told her that decedent paid Bennerotte.
Bennerotte admits that she received personal checks from decedent, but testified that these checks were simply to provide cash for decedent, who did not have an ATM card. "[Decedent] would write me a check if she wanted cash and did not want to go to Rochester to cash her check. She banked in Rochester. So she would write me a check. I would take it to my bank and cash it and bring her the money back."
In addition to the funds paid to Bennerotte by MILS, David Dreier, through JEE, paid the following:
a. $13,219.00 to Wilkins Dodge for the lease of a 1994 Dodge van that was used by decedent and her husband as their personal family vehicle.
b. $29,460.00 to Chrysler Financial Company LLC for the lease of a 1999 Dodge van that was used by decedent and her husband as their family vehicle.
It is unclear how much decedent actually benefited from this lease. David Dreier testified that decedent had not been able to drive since 1991 or 1992, so decedent's husband "used the vans exclusively." But Bennerotte testified that at some point prior to his death in December 2000, decedent's husband suffered a stroke and his license was taken away. Thus, some time prior to December 2000, decedent and her husband would appear to have ceased using the van.
c. Approximately $1,681.22 for insurance on the vans.
d. Advances of income to Frank C. Dreier, decedent's husband:
i. 1995 $17,425.12 ii. 1996 $12,711.00 iii. 1997 $15,822.92 iv. 1998 $14,170.00 v. 1999 $14,170.00 vi. 2000 $14,170.00
e. Advances of income to decedent:
i. 2001 $14,170.00 ii. 2002 $10,900.00
Both decedent and her husband were claimed as employees for tax purposes, but neither actually worked for JEE or MILS. The car leases were also claimed as business deductions. There is disagreement regarding whether Medicare reimbursed MILS for any of decedent's care, but at least some of these expenses appear to have been reimbursed.
The record indicates that $4,508 was paid to MILS on behalf of decedent.
David Dreier testified that the money he advanced to decedent and her husband was the only income that they had other than social security. He also testified that providing vehicles for decedent and her husband was "just another way of assisting them living with what I had available."
According to David Dreier, the income was "advanced" pursuant to an agreement that it would be reimbursed on decedent's death. He testified that decedent "said for the longest time that when she dies, us kids are supposed to go and get whatever we gave them over the years. We're entitled to have that back." Bennerotte also testified that decedent said, "You guys take . . . whatever you have given us over the years, take it." No one else testified that such an agreement existed. Bruce Dreier testified that he was never informed of any intent by decedent to pay back either Bennerotte or David Dreier for any of the care she received.
At the time of her death, decedent held a life estate in her home; the remainder interest was held by David Dreier. This was not always the case. Until "[a]bout six [to] eight months prior to her death," decedent held title to the home. David Dreier testified that decedent granted him the remainder interest in the life estate in exchange for deeding a house that he owned to Bennerotte. Before this, Bennerotte had been renting this home. When asked how the life estate came about, David Dreier stated:
[Decedent] just . . . you know, over the years [decedent] knows that I was giving her quite a bit of money, and she was worried that the property, if it went into, we'll say, all the heirs, she didn't want the property all split up or subdivided. . . . [T]he fact that she gave me the house . . . another reason was to . . . was basically a trade-off as to the house that [Bennerotte] had rented that [decedent's husband] and I had owned. [Decedent] wanted to make sure [Bennerotte] had a place to live. So [decedent] gave me the life estate in [decedent's] property if I would just sell the house that I owned to [Bennerotte].
This house was initially owned by David Dreier and decedent's husband as joint tenants. Each paid half of the $40,000 purchase price.
David Dreier further testified that he did not actually sell the house to Bennerotte, but "gave it to her." According to David Dreier, he and decedent "basically traded houses. [Decedent] gave me her house if I'd give [Bennerotte] mine." David Dreier testified that the house he gave Bennerotte was assessed at $80,000. He estimated that, at the time of decedent's death, decedent's house was worth "somewhere around $55,000.00, $60,000.00."
Bennerotte and David Dreier submitted claims to the decedent's estate for compensation for services and payments provided to decedent. Bennerotte's claim was for $45,000 for in-home care; David Dreier's claim was for $210,650. Bennerotte's claim was disallowed, and David Dreier's claim was partially disallowed by Bruce Dreier. David Dreier did not sign the notices of disallowance.
This claim included $400 for grave site expenses; $5,650 for funeral home expenses; $36,000 for in-home care from 1999 until 2002; $28,600 for automobile expenses from 1996 until 2002; and $140,000 for income advanced to decedent and decedent's husband from 1988 until 2002.
$6,050 of David Dreier's claim — $400 for grave site expenses and $5,650 for funeral home expenses — was allowed and paid.
Decedent's will was initially informally probated, but after appellants' claims were disallowed, a petition for formal probate of will previously probated informally was filed and an order of formal probate subsequently issued. Following a hearing, the district court denied appellants' claims. This appeal follows.
DECISION I.
Appellants argue that they have presented evidence sufficient to overcome the normal presumption of gratuity that applies when family members render services to one another. Inferences drawn from evidence are for the trier of fact, and decisions based thereon should be overturned only when there is "clear evidence . . . that convinces the appellate court with a definite and firm conviction that a mistake has been made." In re Estate of Beecham, 378 N.W.2d 800, 804 n. 3 (Minn. 1985). "If there is reasonable evidence to support the district court's findings, we will not disturb them." Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999).
The parties disagree about the appropriate standard of review. Respondent correctly argues that this is a question of fact to which a clearly erroneous standard applies.
Generally, when one family member provides services to another, a presumption of gratuity applies. Olson v. Tilghman ( In re Estate of Tilghman), 240 Minn. 494, 496, 61 N.W.2d 743, 745 (1953). Such a presumption "applies to immediate family [members] regardless of their residence." In re Estate of Novak, 398 N.W.2d 653, 655 (Minn.App. 1987), review denied (Minn. Feb. 18, 1987). But the presumption may be overcome when the services are so disproportionate as to demonstrate a lack of mutuality. Tilghman, 240 Minn. at 496, 61 N.W.2d at 745-46; see also Novak, 398 N.W.2d at 655 (noting that the question is the extent to which the care provided exceeds reciprocal duties and mutual benefits). As the Minnesota Supreme Court stated in Tilghman:
The presumption of gratuity is dependent on the existence of a family relation and only arises when it is shown that the services rendered were of the type which members of a family usually and ordinarily render to each other by reason of the family relation. The authorities stress the fact that the presence of those reciprocal duties within the family is essential to the creation of this presumption. . . .
The presumption of gratuity finds its foundation in the reciprocal character of family duties and services, and where the services and duties between members of a family are so disproportionate as not to be in any true sense reciprocal, the presumption of gratuity does not apply and the one who has borne the greater burden may be entitled to recover compensation.
240 Minn. at 496, 61 N.W.2d at 745-46 (emphasis added) (citation and quotation marks omitted).
A presumption of gratuity is not evidence, but its existence has the effect of evidence until and unless sufficient evidence is produced to overcome the presumption. Beecham, 378 N.W.2d at 804. If evidence sufficient to overcome the presumption of gratuity is produced, the presumption "ceases to exist in the sense of having any evidentiary value." Id. In such a case, "the claimant is in the same situation as if [the] services had been rendered by a stranger." Tilghman, 240 Minn. at 499, 61 N.W.2d at 747. If the presumption is overcome, an implied contract may be found to balance the equities. Beecham, 378 N.W.2d at 804.
The supreme court has "directed [district] courts [to] make inquiry into the facts in each case to determine whether there was a `family relationship' beyond mere kinship." Id. at 803. In doing so, the district court should consider all of the facts and circumstances surrounding the relationship, the manner in which services and support were provided, and the conditions, if any, under which mutual benefits and reciprocal duties are shown to exist or not to exist. Tilghman, 240 Minn. at 499, 61 N.W.2d at 747; accord Beecham, 378 N.W.2d at 803. Here, the district court considered the issue of mutuality.
The considerable contributions of appellants to the well-being of decedent are not disputed and are acknowledged by this court. We have cautioned, however, that the mere provision of extensive services, without additional compelling facts, is insufficient to overcome the presumption of gratuity. Novak, 398 N.W.2d at 656.
Here, Bennerotte provided substantial services for decedent over the course of a number of years. The evidence supports the contention that she performed the vast majority of hands-on care required by decedent during the last years of her life. Certainly Bennerotte made numerous sacrifices and decedent benefited from the care she provided.
There is also evidence, however, that Bennerotte benefited from the relationship. Although the amount may have been less than the "market value" of in-home care, Bennerotte was paid for her services. More importantly, she was given title to her home because decedent "wanted to make sure that [Bennerotte] had a place to live." The value of the home at the time was more than the difference between the pay Bennerotte received and the value of the services she provided. Thus, there is reasonable evidence supporting the district court's finding that Bennerotte failed to overcome the presumption of gratuity.
The home was assessed at $80,000; David Dreier testified that the unpaid value of Bennerotte's work was approximately $45,000.
David Dreier, through his companies, also provided significant resources to decedent. But as with Bennerotte, there is evidence that he benefited from the relationship. David Dreier took the cost of the vehicle leases and income advances as business deductions on his companies' taxes. Moreover, decedent and her husband bought almost one-third of the shares of JEE, thus helping provide start-up capital for the business. David Dreier was allowed to buy back these shares through an annuity, $1,500 of which was forgiven on decedent's death. Additionally, he and decedent's husband purchased a house as joint tenants. Upon the death of decedent's husband, David Dreier became the sole owner of this house.
These facts provide reasonable evidence from which the district court could find that David Dreier failed to overcome the presumption of gratuity. The court, therefore, did not clearly err in applying this presumption.
II.
Appellants appear to conflate contracts that are implied in fact with quasi-contracts, also known as contracts implied in law. They use the term "quasi-contract," but base their reasoning, in part, on the intent of the parties. Unlike a contract implied in fact, a quasi-contract "[is] not based on the apparent intention of the parties to undertake the performance in question." McArdle v. Williams, 193 Minn. 433, 438, 258 N.W. 818, 820 (1935). Instead, a quasi-contract is an equitable concept "imposed by law to prevent unjust enrichment at the expense of another." Dusenka v. Dusenka, 221 Minn. 234, 238, 21 N.W.2d 528, 531 (1946). For this reason, we discuss both contracts implied in fact and quasi-contracts.
A. Contract Implied In Fact
A contract implied in fact is one inferred from the circumstances and conduct of the parties. Roberge v. Cambridge Coop. Creamery, 248 Minn. 184, 189, 79 N.W.2d 142, 146 (1956). For a contract to be implied in fact, the circumstances must "clearly and unequivocally indicate the intention of the parties to enter into a contract." Webb Bus. Promotions, Inc. v. Am. Elecs. Entm't Corp., 617 N.W.2d 67, 75 (Minn. 2000). This intention to contract must be present at the time the services are performed. In re Hirt's Estate, 213 Minn. 209, 213, 6 N.W.2d 98, 100 (1942). A contract implied in fact is in all respects a true contract requiring a meeting of the minds. Roberge, 248 Minn. at 188, 79 N.W.2d at 145-46. The plaintiff has the burden of establishing all of the essential elements of a contract. Gryc v. Lewis, 410 N.W.2d 888, 891 (Minn.App. 1987).
The existence of a contract implied in fact is a question of fact to be determined by the fact-finder. Bergstedt, Wahlberg, Berquist Assocs., Inc. v. Rothchild, 302 Minn. 476, 480, 225 N.W.2d 261, 263 (1975). Findings of fact shall not be set aside on appeal unless clearly erroneous. Minn. R. Civ. P. 52.01. "Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made." Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted).
Here, the record does not provide unambiguous evidence that the decedent intended to contract with appellants. There is evidence to support the finding of the district court that no contract existed. Contradictory testimony was presented regarding the intent of the decedent and no third-party testimony supporting the inference of an implied contract was offered. As the district court is in the best position to judge the credibility of such testimony, Lynn Beechler Realty Co. v. Warnygora, 396 N.W.2d 717, 719 (Minn.App. 1986), the denial of reimbursement to the appellants is not clearly erroneous.
B. Quasi-Contract
The elements of a quasi-contract are (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation by the defendant of such benefit; and (3) acceptance and retention of such benefit under such circumstances that it would be inequitable for him to retain the benefit without paying for its value. Acton Constr. Co. v. State, 383 N.W.2d 416, 417 (Minn.App. 1986), review denied (Minn. May 22, 1986). Here, both appellants conferred benefits on the decedent. Although decedent cannot testify to such, the evidence suggests that she appreciated and continued to accept those benefits for a number of years.
But the final element of quasi-contract has not been met by either appellant. "No recovery can be had in quasi contract against one not shown to have been wrongfully enriched at the plaintiff's expense." Marking v. Marking, 366 N.W.2d 386, 387 (Minn.App. 1985). As discussed above, both Bennerotte and David Dreier benefited from their relationship with decedent. Furthermore, there is no evidence that decedent acted wrongfully in accepting or retaining the services of appellants. Thus, decedent was not wrongfully enriched and it is not inequitable for her estate to retain the value of the benefits provided by appellants.
III.
The existence of an oral contract is a question of fact for the district court. Carlson v. Carlson, 211 Minn. 297, 303, 300 N.W. 900, 902 (1941). Accordingly, we will not set aside the holding of the district court unless clearly erroneous. Minn. R. Civ. P. 52.01.
The district court did not explicitly rule on the existence of an oral contract between decedent and David Dreier, but it implicitly held that no such contract existed by denying reimbursement. Appellants contend that it "was proven and is undisputed" that decedent entered into an oral contract for reimbursement. Bruce Dreier testified, however, that he was unaware of any such agreement. The only evidence in support of an oral contract comes from appellants. "A witness is not precluded from giving evidence of or concerning any conversations with . . . a deceased . . . person merely because the witness is a party to the action or a person interested in the event thereof." Minn. R. Evid. 617. Accordingly, testimony about the intent of the decedent is not considered inherently unreliable. In re Estate of Cole, 621 N.W.2d 816, 819 (Minn.App. 2001). But the credibility of witnesses is an issue for the district court. In re Estate of Serbus, 324 N.W.2d 381, 385 (Minn. 1982). This court "give[s] due deference to the [district] court's opportunity to judge the credibility of the witnesses and will not set aside such a finding of fact made by the trial court without a jury unless clearly erroneous." Id. Here, appellants have not shown that the district court clearly erred in finding that no oral contract existed.