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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 369 September Term, 2009

SEAN PORTER v. DONNA ZUROMSKI

Zarnoch, Wright, Moylan, Charles E., Jr. (Retired, Specially Assigned) JJ.

Opinion by Zarnoch, J.

Filed: October 3, 2010

Is this, as appellant contends, "nothing more than a palimony case," or is it, as appellee argues, unjust enrichment of one partner in an unmarried relationship at the expense of the other,justifying the imposition of an implied trust? After a February 2009 bench trial, Anne Arundel County Circuit Judge Michele Jaklitsch sided with appellee/plaintiff Donna Zuromski, and against appellant/defendant, Sean Porter. This appeal of the circuit court's decision calls upon us to address, for the first time, property rights issues oft-litigated in other jurisdictions. See Annot., Property Rights Arising From Relationships of Couples Cohabitating Without Marriage, 69 A.L.R. 5th 219 (1999, 2010 Supp.) ("Cohabitation Property Rights"). For reasons set forth below, we affirm the judgment of the circuit court. FACTS AND PROCEEDINGS This is a dispute over real property located on Washington Avenue in Shady Side, Maryland. In her March 31, 2007 Memorandum Opinion, the trial judge summarized the relevant facts in this case: The parties were romantically involved from 1993 though June 2007. They became engaged to be married in 1995, but postponed their wedding after Plaintiff's brother was injured in an accident in 1996. The parties lived with Plaintiff's mother in Fort Washington, Maryland, for approximately three years, during which time Defendant assisted around the house and in caring for Plaintiff's brother, and Plaintiff paid the rent of $600 each month to allow Defendant to save money for the parties. Defendant deposited his savings into a joint checking account held in both parties' names. In 1997, the parties decided to purchase a home together. Defendant found a house, and in February 1998, the parties applied for a mortgage loan together at Severn Savings Bank to finance the purchase. Because of Plaintiff's credit score and 1

impending bankruptcy filing (filed in May 1999), the parties were unable to qualify for a loan jointly. The parties then agreed that Defendant would apply for a mortgage loan again, this time in his name only. Defendant paid a down payment of $4500 from the parties' joint checking account, and Plaintiff paid Defendant $3700 for her contribution toward the down payment. The parties agreed that although Plaintiff could not qualify for a mortgage, the parties would act as joint owners of the property and Plaintiff would pay Defendant one half the mortgage expenses, and one half of all other property expenses each month.[1] The parties never had an agreement that Plaintiff would be a tenant; rather, they agreed that she was to be a joint owner. The parties agreed that Defendant's name would appear on the deed, but he would hold the property for both parties.[2] Defendant promised Plaintiff that in the future he would put Plaintiff's name on the deed and that the property would be held in joint tenancy. The parties made significant improvements to the house, with each of them working extensively to the best of their capabilities, and with the help of friends of both parties. Plaintiff's mother's friend, Allen Keller, installed the HVAC system with the understanding that the house was to be jointly owned by both Plaintiff and Defendant. Defendant's friends installed drywall and other improvements. Plaintiff paid one half of all mortgage, construction loan, utility, and other expense payments on the property until the parties' relationship deteriorated in mid-2007.[3] In January 2007, the parties ended their engagement, but the parties stayed together as a couple and Plaintiff continued making mortgage and home expense payments to Defendant. In May 2007, Defendant moved out of the parties' shared bedroom in the house. In July 2007, on the termination of their romantic relationship,
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This agreement was never reduced to writing. Zuromski testified that in 2003 Porter again said he would put her name on the deed.

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Zuromski also testified that when Porter received his income tax refund, the money went back into the house or they split the tax benefits from the house "50-50". 2

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Defendant ordered Plaintiff to vacate the property. Defendant refused the Plaintiff's request to divide the equity in the home, and he instituted a refinancing on the property which stripped a substantial portion of the equity out of the property.4 On October 18, 2007, Zuromski filed a six-count complaint in the circuit court, asserting that Porter's actions: 1) warranted imposition of a constructive trust; 2) required the establishment of a resulting trust; 3) unjustly enriched Porter; 4) constituted a promissory estoppel; 5) required entry of a declaratory judgment declaring that Zuromski was entitled to one-half ownership of the property; and 6) mandated injunctive relief.5 Porter answered and denied liability. In February 2009, a two-day trial was held. The following month, the trial judge issued a memorandum opinion and order. The court found that Zuromski had "established the existence of a constructive trust as an equitable remedy for unjust enrichment." It emphasized that in cases where only one party holds title, a constructive trust should be imposed, not only where fraud or misrepresentation exists, but also "when the circumstances render it inequitable for the party holding the title to retain it." The court said that this

Porter takes issue with some of the trial court's factual findings. He points to his testimony that he told Zuromski he would "put [her] on the home," but he said that just "to stop her from crying"; that, when he moved in with appellee's mother, it was just to help his injured friend; and that when appellee filed for bankruptcy in 1999, she claimed no interest in the property. The court obviously discounted Porter's account with respect to the first two points. The third point was specifically addressed by the trial judge, who noted that appellee's name was not on the title when she filed for bankruptcy. Some of the counts sought monetary relief. However, the two trust counts sought identical relief: issuance of an order directing Porter to convey one-half interest in the property to Zuromski and the appointment of a trustee to convey that interest. 3
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standard was satisfied in this case.6 The circuit court also found an additional basis for imposing a constructive trust. Porter, as holder of legal title to the property, was the dominant party in a confidential relationship.7

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In her opinion, the trial judge said: The testimony at trial in this case establishes the existence of a constructive trust based on equitable principles. Plaintiff conferred a benefit upon Defendant as she paid for one half of the expenses of the home they shared. The parties had been seeking to purchase a home for some time and had established a joint bank account to fund the down payment. Defendant used the funds in the joint account to purchase the property in his name only. Both parties intended to share equally the home in which they lived. At the time of the settlement, the parties agreed that Defendant would place Plaintiff's name on the deed in the future. Based on the assumption that she would be a title holder, Plaintiff spent numerous hours working to make improvements upon what she believed was their joint residence. She spent money on furniture and other items for the home based on an understanding that she was an owner of the home. She reimbursed Defendant for one half of each month's mortgage payment and one half of all other expenses. Defendant willingly accepted these benefits.

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Specifically, the court found: The parties' testimony indicates that Plaintiff and Defendant were engaged in an intimate romantic relationship and were planning marriage. Defendant purported to act in Plaintiff's best interests when he discussed placing her name on the deed in the future. The parties' sexual relationship was not the sole consideration for this agreement. Plaintiff had no reason to believe that Defendant may be motivated by anything other than his feelings for her and interest in a financially secure future (continued...) 4

Finally, the court said that, even absent a confidential relationship between the parties, it would find a constructive trust on the basis of unjust enrichment. As a result, the court declared that the parties each had an "undivided one half interest in the subject property as tenants in common." It denied any specific monetary award, an injunction, and other claimed relief, but did not expressly address the resulting trust claim.8 The court declared that each party had an undivided interest in the property and appointed a trustee to transfer title and to cause a new deed to be prepared reflecting joint ownership. This appeal followed.9 QUESTIONS PRESENTED Porter has raised a single issue in this appeal: On the facts of this case, did the trial judge commit reversible error by imposing a constructive trust on real property owned by Appellant and appointing a Trustee to transfer title to the same? Zuromski has raised an alternative ground for upholding the judgment in the circuit court, which we have phrased as the following question: Was there sufficient evidence before the trial court to support

(...continued) together. Under the circumstances, Plaintiff was "justified in assuming" that Defendant would act in her best interest and that a written agreement establishing the joint tenancy was not required. . . . As such, this Court finds that a confidential relationship did exist between Defendant and Plaintiff. Of course, the court was under no obligation to address the issue in light of the fact that the constructive trust count sought the identical relief pursued under the resulting trust theory. See n.4, supra.
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Initially, Zuromski cross-appealed, but later, in this Court, withdrew her appeal. 5

the imposition of a resulting trust?10 DISCUSSION 1. Constructive Trust A constructive trust is a remedy that converts the holder of legal title to property into a trustee for one who in good conscience should reap the benefits of the property. Wimmer v. Wimmer, 287 Md. 663, 668 (1980). Its purpose is to prevent the unjust enrichment of the holder of the property. Id. This remedy applies "where a property has been acquired by fraud, misrepresentation, or other improper method, or where the circumstances render it inequitable for the party holding the title to retain it."11 Id. Ordinarily, such factors must be shown by clear and convincing evidence. Id. However, this rule changes, "[o]nce a confidential relationship is shown. Id.12 Then, a presumption arises that confidence was placed in the dominant party and that the transaction complained of resulted from fraud or undue influence and superiority or abuse of the confidential relationship by which the dominant party profited." Id. at 669. This presumption shifts the burden to the defendant A constructive trust and a resulting trust are both implied trusts. Jahniger v. Smith, 143 Md. App. 547, 557-58 (2002). In Hartstock v. Strong, 21 Md. App. 110, 118 (1974), we observed: "It is enough that the `conscience' of a court of equity would be traumatized if the legal title holder were allowed to deprive the beneficial owner of that which in good conscience belongs to the beneficial owner." A confidential relationship exists "where one party is under the domination of another or where, under the circumstances, such party is justified in assuming that the other will not act in a manner inconsistent with his or her welfare." Bass v. Smith, 189 Md. 461, 469 (1948). 6
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to show the fairness and reasonableness of the transaction. Id. Of course, our review of whether the trial judge's findings of fact on these points are supported in the record is governed by the clearly erroneous rule. See Md. Rule 8-131(c) (Appellate court "will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses."). A. Fraud

At the outset, Porter challenges some of these principles that guided the circuit court's decision. He particularly takes aim at the trial court's reliance on Hartstock v. Strong, supra, 21 Md. App. at 116, for the proposition that a constructive trust may arise from some equitable principle independent of fraud. He suggests that Hartstock may have been weakened by our decision in Jahnigen v. Smith, 143 Md. App. 547 (2002), where, at one point in our opinion, we noted: "[T]he facts as presented do not support an action for constructive trust because there has been no allegation of misrepresentation, fraud, or other improper methods of obtaining title." Id. at 557. However, Jahnigen flatly states that, in addition to fraud and these other grounds, a constructive trust may be found "where the circumstances render it inequitable for the party holding title to retain it." Id. at 556. Moreover, just six months after Jahnigen was decided, we once again restated the principles governing imposition of a constructive trust, noting that the remedy could be invoked for inequitable circumstances independent of fraud. Turner v. Turner, 147 Md. App. 350, 421-

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22 (2002).13 Porter also contends that Wimmer undercuts the circuit court decision here. In Wimmer, the Court of Appeals overturned the imposition of a constructive trust upon a onehalf interest in a marital home purchased with the husband's funds and titled in his name. In rejecting the wife's claim, the Court emphasized that the wife parted with no money or labor with respect to the property and thus, the title holder was not unjustly enriched. Wimmer, 287 Md. at 672. The very facts found missing in Wimmer are present here. To be sure, the Wimmer court also noted that the husband made no misrepresentations as to the title to the property. Id. at 671. But Wimmer is clearly not a case of absence-of-fraud equals noclaim. It is one "where the circumstances [did not] render it inequitable for the party holding the title to retain it," id. at 668, because he was not unjustly enriched at the expense of the plaintiff. Thus, nothing in Wimmer suggests that Zuromski would have to make a showing of fraud in order to prevail here. B. Palimony

Porter denigrates Zuromski's constructive trust claim as a palimony action not recognized in this State. This argument is misplaced here. The appellee was not seeking

Leading authorities also fail to support Porter's contention. See Dobbs, Law of Remedies (1993) at

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