Porter v. Zuromski
195 Md. App. 361, 6 A.3d 372 (2010)
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Rule of Law:
A constructive trust may be imposed on real property, even without fraud, when circumstances render it inequitable for the legal title holder to retain it, particularly where one cohabitant in a confidential relationship has made substantial financial and labor contributions to the property based on an agreement of joint ownership.
Facts:
- Sean Porter and Donna Zuromski were romantically involved from 1993 through June 2007 and became engaged to be married in 1995, though the wedding was postponed.
- For approximately three years, the couple lived with Zuromski's mother, where Zuromski paid the rent while Porter saved money, which he deposited into a joint checking account.
- In 1997, they decided to purchase a home together; in February 1998, they applied for a mortgage jointly but were unable to qualify due to Zuromski's credit score and impending bankruptcy.
- The parties agreed that Porter would apply for the mortgage in his name only, but they would act as joint owners, with Porter paying a $4,500 down payment from their joint account and Zuromski contributing $3,700 to Porter for her share.
- Porter promised Zuromski that he would put her name on the deed in the future and that he would hold the property for both parties.
- The parties made significant improvements to the house, with both Zuromski and Porter working extensively and receiving help from friends, with the understanding that the house was jointly owned.
- Zuromski paid one-half of all mortgage, construction loan, utility, and other property expenses until their relationship deteriorated in mid-2007.
- After their romantic relationship terminated in July 2007, Porter ordered Zuromski to vacate the property, refused her request to divide the home's equity, and subsequently refinanced the property, stripping a substantial portion of its equity.
Procedural Posture:
- On October 18, 2007, Donna Zuromski filed a six-count complaint against Sean Porter in the Anne Arundel County Circuit Court (trial court/court of first instance), asserting claims including imposition of a constructive trust, a resulting trust, unjust enrichment, and promissory estoppel.
- Porter answered, denying liability.
- In February 2009, a two-day bench trial was held before Circuit Judge Michele Jaklitsch.
- In March 2009, the circuit court issued a memorandum opinion and order, finding that Zuromski had established a constructive trust as an equitable remedy for unjust enrichment and also due to a confidential relationship, declaring that both parties had an "undivided one-half interest in the subject property as tenants in common."
- The circuit court denied monetary awards, an injunction, and other relief, and appointed a trustee to transfer title to reflect joint ownership.
- Sean Porter appealed the circuit court's decision to the Court of Special Appeals of Maryland.
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Issue:
Did the trial court commit reversible error by imposing a constructive trust on real property solely titled in Appellant Sean Porter's name and appointing a trustee to transfer title, given the financial and labor contributions of Appellee Donna Zuromski and the parties' confidential relationship?
Opinions:
Majority - Zarnoch, J.
Yes, the trial court did not commit reversible error in imposing a constructive trust because the circumstances rendered it inequitable for Porter to retain sole title, given Zuromski's significant contributions and the existence of a confidential relationship. The court affirmed that a constructive trust is an equitable remedy designed to prevent unjust enrichment, applying "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" (citing Wimmer v. Wimmer). The court clarified that fraud is not a prerequisite for imposing a constructive trust, rejecting Porter's argument that Jahnigen v. Smith and Wimmer required it. It emphasized that Wimmer actually supported Zuromski's claim because, unlike the wife in Wimmer, Zuromski had parted with money and labor, preventing unjust enrichment. The court found that Zuromski's financial contributions (half the mortgage, utilities, other expenses, and part of the down payment, alongside rent payments that allowed Porter to save) and non-monetary investments (labor on improvements), made in reliance on Porter's promise of joint ownership, made it inequitable for him to retain exclusive title. Furthermore, the court determined that a confidential relationship existed between the engaged couple, where Porter, as the sole title holder, was the dominant party. His representation that he would place Zuromski on the deed, combined with her justified assumption that he would act in her welfare, established this relationship. Porter's attempt to solely retain title and strip equity abused this confidential relationship, shifting the burden to him to prove the fairness of his actions, which he failed to do. The court explicitly stated that Zuromski's claim was not a "palimony" action but arose from her financial contributions and unjust enrichment.
Analysis:
This case significantly broadens the application of constructive trusts in Maryland, particularly for unmarried cohabitants, by affirming that fraud is not a necessary element and that "inequitable circumstances" combined with significant contributions and a confidential relationship are sufficient. It provides a clear avenue for individuals in non-marital relationships to protect their property interests when they have made substantial contributions based on mutual understandings, preventing unjust enrichment. This decision offers important guidance for future cases involving property disputes between unmarried partners, moving beyond traditional contractual or fraudulent conveyance requirements.
