The trial court properly ruled that the plaintiff did not have an interest in 1) a home purchased by the defendant during the parties’ relationship and 2) the defendant’s inheritance that had been deposited into the parties’ joint bank account, the Michigan Court of Appeals has ruled.

The plaintiff and the defendant in Deschane v Klug (Docket No. 360677) began dating in 2008, had children together and lived together in a house owned by the defendant. In April 2020, the defendant used an $80,000 inheritance to purchase a second home and titled it in her name only. The defendant’s inheritance had been wired into the parties’ joint bank account. When the defendant ended the relationship, she asked the plaintiff to leave the home.

The plaintiff then filed this fraud, quantum meruit and unjust enrichment suit against the defendant in the Marquette County Circuit Court. He alleged the defendant had defrauded him and that he was entitled to a share of the two homes, as well as the parties’ joint bank account. The trial court dismissed the plaintiff’s claims.

The Court of Appeals affirmed.

“We conclude that the trial court correctly refused to recognize any interest of plaintiff in either home or any right to a share of the inherited money that passed through the parties’ joint bank account … ,” Judge Christopher P. Yates wrote.

Judge Douglas B. Shapiro and Judge Stephen L. Borrello joined the published opinion.

Background

The plaintiff’s complaint asserted the defendant had repeatedly assured him that he was a co-owner of both homes and that she would add his name to the legal documents defining ownership of the homes. The plaintiff contended the defendant was liable to him for the money, time and improvements he had put into the homes.

The defendant denied that she had any such representations to the defendant. She filed a motion for summary disposition under MCR 2.116(C)(10), alleging that 1) any statements she made about adding the plaintiff’s name to the title documents were mere future promises, 2) the plaintiff could not prove the defendant knew any representations were false when she made them and 3) the plaintiff had not relied upon the representations. The defendant also claimed the parties’ meretricious relationship barred the plaintiff’s quantum meruit and unjust enrichment claims.

The plaintiff responded by referencing the parties’ joint bank account, which was used to purchase the second home after her inheritance was wired into it. He claimed that he was entitled to one-half of the money withdrawn to pay for the home.

The trial court granted summary disposition to the defendant. On the plaintiff’s fraud claim, the trial court held that any representations the defendant made had been mere future promises and the plaintiff had not demonstrated that he relied on the representations. On the plaintiff’s quantum meruit and unjust enrichment claims, the trial court found there was no evidence of any contract separate from the parties’ relationship.

The trial court subsequently denied the plaintiff’s motion to amend his complaint, finding that he could not recover on any of his theories. The trial court did not address the plaintiff’s claim to the joint bank account.

The plaintiff appealed.

No Fraud Or Unjust Enrichment

In its decision, the Court of Appeals first addressed the plaintiff’s fraudulent misrepresentation and silent fraud claims.

“Here, any alleged representations constituted future promises to make plaintiff a co-owner of the houses,” the Court of Appeals wrote. “[E]ven assuming defendant made representations to plaintiff about the homes, those representations constituted, at most, broken promises, and ‘[a] mere broken promise does not constitute fraud, nor is it evidence of fraud.’ … Accordingly, plaintiff’s fraudulent-misrepresentation claim fails for that reason. Beyond that, plaintiff has failed to show any reliance upon the representations. The record contains no evidence that plaintiff put money or time into the homes in exchange for co-ownership. … In other words, plaintiff’s acts were gratuitous in that he acted as he did simply because of his relationship with defendant. Thus, we agree with the trial court that the record contains no evidence of reliance sufficient to support a claim for fraudulent misrepresentation.”

According to the Court of Appeals, the plaintiff’s silent fraud claims failed for the same reasons. “Even if defendant at some point had considered it a matter of affection or moral obligation to make plaintiff a co-owner of the homes, defendant had no legal or equitable duty of disclosure that required her to inform plaintiff that she had changed her mind or that she never had any sense of obligation in the first place. Consequently, we must affirm the trial court’s award of summary disposition on the silent-fraud claim.”

Addressing the plaintiff’s quantum meruit and unjust enrichment claims, the Court of Appeals pointed out these two theories “rarely have a role to play in disputes between unmarried couples.” In this case, the plaintiff and the defendant “were involved in a meretricious relationship that did not result in marriage, so we will only ‘enforce an agreement made during the relationship upon proof of additional independent consideration.’ … Indeed, the ‘services rendered during a meretricious relationship are presumably gratuitous’ … so plaintiff must bear the burden of rebutting that presumption. … To do so, ‘plaintiff must show that [he] expected compensation from defendant at the time [he] rendered services for defendant and that defendant expected to pay for them.’ … The record unmistakably reveals that plaintiff cannot meet that burden.”

Further, the plaintiff cited In re Lewis Estate, 168 Mich App 70 (1988), to argue a contract theory of recovery: that he and the defendant had an implied-in-fact agreement. “As In re Lewis explains, a ‘contract implied in fact arises “when services are performed by one who at the time expects compensation from another who expects at the time to pay therefor,”’” the Court of Appeals wrote. “In this case, plaintiff furnished money and work on the two homes when he and defendant were in a meretricious relationship, yet he made no request for compensation until after defendant ended the relationship. The timing of plaintiff’s demand speaks volumes about whether the parties entered into a contract implied in fact. … Here, the circumstances attending the transaction leave no doubt that the parties did not intend to enter into any contract. And, in any event, formation of such a contract would require ‘additional independent consideration[,]’ … which simply cannot be found under Michigan law in this case.”

The record “is bereft of evidence of an express agreement that was supported by ‘additional independent consideration,’” the Court of Appeals observed. “Thus, the trial court correctly granted summary disposition … to defendant on plaintiff’s claims for quantum meruit and unjust enrichment. 

Inherited Funds

Next, the Court of Appeals examined the plaintiff’s claim that the trial court should have granted him partial summary disposition regarding the defendant’s liability for using commingled funds in the joint bank account to buy the second home.

“The record reveals that defendant inherited approximately $80,000 when her grandfather died in 2020,” the Court of Appeals said. “Defendant informed plaintiff that she had received the inheritance money, that the money had been transferred by wire into the couple’s joint bank account, and that she planned to use the money for a down payment on the home …. Plaintiff had no role in the purchase of the home, which was titled solely in defendant’s name …. Without question, defendant’s $80,000 inheritance passed through the parties’ joint account on its way to serve as the initial payment for the home. As a result, plaintiff argues that he is entitled to half of that inherited amount, i.e., $40,000, and he cites Lewis Estate … as authority for his claim.”

However, the “realities of ownership” in this case and in In re Lewis Estate “fall on opposite ends of the spectrum,” the Court of Appeals said. “In Lewis Estate, Rosebrook entirely drained three joint bank accounts, taking the money for her own purposes. … Here, defendant simply had $80,000 in her inheritance from her grandfather transferred by wire into the joint account and then she used those funds to make a payment on the home that she bought on a land contract. In Lewis Estate, the ‘three joint accounts were funded primarily, if not exclusively, by Lewis[,]’ not Rosebrook. … Here, the $80,000 withdrawn from the joint account by defendant to buy the house came from her own inheritance. In Lewis Estate, Rosebrook surreptitiously withdrew the money from the joint bank accounts. … Here, defendant informed plaintiff of her plan to use her inheritance before she made a withdrawal from the joint bank account. In Lewis Estate, Rosebrook withdrew all of the money from the joint bank accounts strictly for her own benefit. … Here, defendant withdrew the money to buy a home that she chose to share with plaintiff. Finally, in Lewis Estate, the parties had ended their relationship before Rosebrook withdrew the money from the joint bank accounts. Here, defendant withdrew the money from the joint bank account while she and plaintiff were still in a romantic relationship.”

In conclusion, the Court of Appeals said this case was “nearly the exact opposite” of In re Lewis Estate. “Accordingly, plaintiff cannot rely upon Lewis Estate to support his claim to a share of defendant’s inheritance even though the money passed through the parties’ joint bank account. Therefore, defendant is entitled to summary disposition … on plaintiff’s claim to one-half of defendant’s $80,000 inheritance. Moreover, the trial court properly refused to permit plaintiff to amend his complaint … because any amendment would have been ‘futile.’”