Saturday, February 24, 2007

Living Together in Indiana - And then breaking up

What to do if you are living with someone, the relationship ends and there is property to divide? With married people, the answer lies in the dissolution of marriage statutes. Without a written agreement, Indiana has nothing comparable for those unmarried persons living together. Indiana stopped recognizing common law marriages over forty years ago. Palimony does not exist in Indiana. Few will enter into a cohabitation agreement. However, case law does offer some protection for unmarried persons who have not entered into a cohabitation agreement.

Indiana case law consists of three cases: Bright v. Kuehl, Turner v. Freed, and Fowler v. Perry. To get back money used by one side of the unmarried relationship, the Indiana Court of Appeals held that unmarried couples may sue one another under the theories of implied contract and/or unjust enrichment.

For an implied contract case, the plaintiff must prove "...that the defendant impliedly or expressly requested the benefits conferred.." For unjust enrichment, "...a plaintiff must establish that a measurable benefit has been conferred on the defendant under such circumstances that the defendant's retention of the benefit without payment would be unjust."

Put simply, the person who is being sued for an unjust enrichment claim must have gotten more of an economic benefit from the relationship than the other person. For a successful implied contract suit, the person suing must have given notice that they expected repayment.

All three cases involved the commingling of funds and the acquiring of property. In two cases, the boyfriends sought repayment of money commingled with the girlfriend. They did not win. In the third case, the girlfriend sued and won. All three cases share two common factual patterns: 1) the boyfriend kept the majority of the property or received a substantial economic benefit from the relationship, and 2) the female had the lesser of the economic/financial resources in the relationship.

I will be posting a checklist for cohabitation litigation but that checklist is built upon these three cases. I do not want to suggest that these cases will be easy to try. Both Bright and Fowler were originally judgments for the plaintiff which were reversed by the Court of Appeals. Nor should I be taken as suggesting that these cases dictate a judgment for the female. I do think the following points need to be taken into consideration when considering a cohabitation suit (and they are listed without consideration of ranking):

  • It will be extremely difficult to win on an unjust enrichment theory when the defendant has a lower paying job or fewer assets than the plaintiff.
  • When the plaintiff has more economic/financial resources than the defendant, it looks like bullying and therefore inequitable.
  • These are equity actions and the parties' motivations do count.
  • If one party did not intend to benefit the other unconditionally, where is the evidence of that intent?
  • How much money about here? Is it a substantial sum for the parties?
If one looks at the cases, the amounts involved were probably quite substantial to the parties - above $9,000.00. Essentially these were not small claims cases. While we might not like talking about the economics behind cases, they certainly need considering in these cases. Without any statutory provision for attorney fees, these will be either hourly or contingency fee cases paid by our client or by our success. I do not think that I am understating matters when I say unjust enrichment and implied contracts are types of lawsuits requiring subtlety and skill. They will probably not be undertaken often and certainly ought not be undertaken lightly. However, we do need to be aware that more people are living together who have substantial property and incomes. When those relationships end in a bad way, we need to know the remedies available for our clients.

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