Schram v. Brown
3:18-cv-00055
D. Nev.Apr 16, 2018Background
- In 2012 Melissa Brown purchased real property in Dayton, Nevada for $110,000 using an $88,000 loan; Nicholas and Sandra Schram paid the down payment/closing costs, moved in, and allege they made Brown’s monthly mortgage payments for ~5 years while occupying the home.
- The Schrams claim an oral agreement: Brown would buy the Property, the Schrams would fund purchase costs and pay the mortgage, and when they could obtain financing they would pay off Brown’s mortgage and Brown would transfer title to them.
- Brown denies any promise to transfer title; she says she permitted the Schrams to occupy the house so long as they paid her mortgage.
- The Schrams sued to quiet title and asserted breach of fiduciary duty and unjust enrichment. Brown moved to dismiss under Rule 12(b)(6).
- The district court found the quiet-title claim inadequately pleaded (insufficient allegations about consideration, material contract terms, and details of partial performance/statute-of-frauds avoidance) and dismissed it with leave to amend.
- The court allowed the breach of fiduciary duty and unjust enrichment claims to proceed, finding plausible allegations of an agency/confidential relationship and that the Schrams conferred significant benefits on Brown.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of quiet-title claim (contract basis) | Schrams: oral contract required Brown to transfer title after Schrams paid off mortgage; they performed (payments, improvements) | Brown: No agreement to transfer title; complaint fails to plead contract formation and consideration | Dismissed w/ leave to amend; complaint must allege material contract terms, consideration or substitute (detrimental reliance), and specifics of partial performance |
| Statute of Frauds / partial performance defense | Schrams: partial performance (down payment, closing costs, mortgage payments, improvements) avoids statute of frauds | Brown: Agreement to transfer real property must be written under NRS 111.205 | Court: Statute-of-frauds defense is affirmative; partial-performance avoidance may apply but Schrams must plead detailed facts of amounts, improvements, and reliance; left to amend |
| Breach of fiduciary duty | Schrams: Brown acted as their agent in acquiring the Property, creating a fiduciary/confidential relationship | Brown: Familial relationship alone does not create fiduciary duty; no special facts pleaded | Claim permitted to proceed; allegations of agency/agreement make a fiduciary relationship plausible and is a factual question |
| Unjust enrichment | Schrams: If no contract, they conferred benefits (down payment, closing costs, mortgage payments, improvements) that Brown unjustly retained | Brown: (Implicit) Benefits were part of arrangement granting her ownership/entitlement | Claim permitted to proceed; Complaint sufficiently alleges benefit conferred, retention by Brown, and inequity if she keeps benefits without payment |
Key Cases Cited
- Conley v. Gibson, 355 U.S. 41 (1957) (notice pleading standard historically articulated)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of Twombly plausibility framework)
- Chapman v. Deutsche Bank Nat’l Trust Co., 302 P.3d 1103 (Nev. 2013) (quiet-title depends on superiority of title)
- Breliant v. Preferred Equities Corp., 918 P.2d 314 (Nev. 1996) (plaintiff bears burden to prove good title)
- Stalk v. Mushkin, 199 P.3d 838 (Nev. 2009) (elements and nature of fiduciary/confidential relationships)
- Leasepartners Corp. v. Robert L. Brooks Tr. Dated Nov. 12, 1975, 942 P.2d 182 (Nev. 1997) (elements of unjust enrichment)