Eunice McKibben v. Jeff Hughes, b/n/f Joyce Hughes
23 N.E.3d 819
| Ind. Ct. App. | 2014Background
- Hughes conveyed a quitclaim deed of his house (the Property) to long-time acquaintance Eunice McKibben in April 2010; he received $1; later he alleged he was vulnerable from mental illness and that McKibben induced the transfer.
- McKibben and Hughes had a joint bank account into which Hughes’s Social Security benefits were deposited; by statute the account funds were treated as belonging to Hughes absent clear evidence otherwise.
- Between the deed transfer and McKibben’s removal from the joint account (Dec. 2011), checks from the account paid Property-related items: 14 "rent" checks ($400 each) and other utility/insurance payments; McKibben signed many of these checks.
- McKibben also made repairs to the residence (windows, roof), totaling $8,200; Hughes testified McKibben used cash ($17,800 he had given her for safekeeping) and other of his funds for repairs and purchases.
- Hughes sued seeking rescission of the deed (constructive fraud, unjust enrichment, incompetence) and reimbursement for funds McKibben withdrew or spent; the trial court denied rescission but awarded Hughes $14,879.55 (checks + repairs).
- On appeal the court affirmed denial of rescission, found a confidential relationship in fact existed, upheld liability for the repairs and most withdrawals, but corrected the math and remanded to enter judgment for $15,679.55.
Issues
| Issue | Plaintiff's Argument (Hughes) | Defendant's Argument (McKibben) | Held |
|---|---|---|---|
| Whether deed should be rescinded for constructive fraud (confidential/fiduciary relationship + misrepresentation) | McKibben had a confidential relationship with Hughes, told him Medicaid would take his house, induced transfer => rescission | Denies misrepresentation; asserts no fiduciary duty; disputes Medicaid motive | Court: Confidential relationship in fact existed, but no proven misrepresentation/omission in violation of duty; rescission denied |
| Whether deed should be set aside for unjust enrichment (cohabitation) | Cohabitation unjustly enriched McKibben, warranting setting aside deed | Argument not raised below; no relief should be granted | Waived on appeal; not considered |
| Whether Hughes was incompetent when he conveyed the deed | Mental illness and medication impaired his capacity to transfer property | Evidence (attorney testimony, conduct) shows he understood the transaction | Court: Conflicting evidence; may not reweigh; trial court did not clearly err — Hughes competent |
| Whether McKibben must reimburse Hughes for withdrawals/repairs and correct judgment amount | Withdrawals and repairs were taken from Hughes’s funds; seek full reimbursement | Withdrawals paid rent/Property bills as landlord; repairs paid from her truck sale, not Hughes’s funds | Court: No landlord-tenant relationship; account funds deemed Hughes’s; trial court correctly found liability for checks and repairs; appellate court adjusted rent total and remanded to enter judgment of $15,679.55 |
Key Cases Cited
- Barkwill v. Cornelia H. Barkwill Revocable Trust, 902 N.E.2d 836 (Ind. Ct. App. 2009) (distinguishing when confidential relationship arises as a matter of law versus fact)
- Mullen v. Cogdell, 643 N.E.2d 390 (Ind. Ct. App. 1994) (elements of constructive fraud)
- Kalwitz v. Estate of Kalwitz, 822 N.E.2d 274 (Ind. Ct. App. 2005) (constructive fraud and confidential relationship analysis)
- Callaway v. Callaway, 932 N.E.2d 215 (Ind. Ct. App. 2010) (confidential relationships in fact and law)
- Nichols v. Estate of Tyler, 910 N.E.2d 221 (Ind. Ct. App. 2009) (standard for mental capacity to convey real property)
- Turner v. Freed, 792 N.E.2d 947 (Ind. Ct. App. 2003) (cohabitation claims: express or equitable remedies like unjust enrichment)
- Dickes v. Felger, 981 N.E.2d 559 (Ind. Ct. App. 2012) (waiver for failure to develop argument or cite authority)
- Foster v. Bd. of Comm'rs of Warrick Cnty., 647 N.E.2d 1147 (Ind. Ct. App. 1995) (appellate courts do not reweigh evidence or judge credibility)