Kelley v. Richardson

STATE OF MAINE SUPERIOR COURT

PENOBSCOT, ss. Docket No. RE-17-97

STEVEN KELLEY )

Plaintiff, )

)

)

v. ) Judgment

)

)

KATHRYN RICHARDSON )

Defendant. )

This matter came before the court for trial on June 4, 5, and 6, 2019. Plaintiff appeared with his

attorney, Scott Lynch. Defendant appeared with her attorney, Ezra Willey.

The Plaintiff filed his 4-count complaint on October 18, 2017. Defendant filed her I I-count

counterclaim on November 14, 2017, and m1 amended counterclaim on January 11, 2018.

General Factual Background

The pmties became involved in a romantic relationship shortly after they met in South Carolina.

They then decided to move to Maine together, the place where the Plaintiff grew up and where

his children were located. Defendant owned a home in South Carolina, and before moving to

Maine, the pmties readied that home to be rented.

Upon the parties move to Maine in early 20 I 0, they lived with the Plaintiffs twin brother and his

fiancee for a few months. Thereafter, together they moved into 738 N. Main Street in Brewer,

Maine under what they believed was a rent-to-own situation. While the arrangement did not turn

out to be a rent-to-own situation, the parties purchased 738 N. Main Street in Brewer, Maine in

June of 2011. They are joint tenants on the deed.

The parties continued to co-habit at 738 N. Main Street in Brewer, Maine until April of 2015.

Both parties worked hard and shared household expenses. Defendant handled the finances for the

couple. Defendant was careful with money and the bills were paid on time. Defendant had an

excellent credit score. In 2011-2012, Plaintiff went through bankruptcy.

After purchase of the home, the parties made many improvements to it. Most importmitly, the

roof was completely replaced. Additionally, new windows were installed, the interior walls were

refinished, new hardwood floors were installed, and new tile was installed. The parties also

removed the asbestos siding and replaced it with boards. These boards were painted with a

product which was designed to delay the need to put permanent exterior materials (siding) on the

house. Plaintiff did a great deal of the work himself, Defendant contributed to some of the work,

and the parties hired others to help with the work. The materials for the improvements were paid

I

in a general way through the earnings of both parties. While some of the work may need to be re­

done, these improvements were made.

Plaintiff was a floor installer by trade and Defendant was a waitress. They both had success in

their jobs. In fact, Plaintiff was so successful in his work that after working for another company,

he struck out on his own and did business as "Kelley Flooring." After a couple of years, his work

had increased to such a degree that he needed help with the administrative aspects of the

business. Defendant stepped into this role, and demonstrated skill with the administration.

Apparently, "Kelley Flooring" did not keep traditional books, such as a ledger of income and

expenses (Accounts/Payable and Accounts/Receivable). This failure to keep traditional books

has made it more difficult for the parties to recreate their history and makes it more difficult for

the Court to be as precise as it might like. The Comi cannot emphasize enough the difficulties

this case presents with the commingling of the monies earned by each party, the personal

expenses paid from a variety of accounts, the business expenses paid from a variety of accounts,

and the general lack of an organized bookkeeping system. It appears that neither paiiy drew a

paycheck or wages from "Kelley Flooring," nor were there identified distributions from the

business. Finally, the ownership of"Kelley Flooring" changing over the period of time in

question further complicates the analysis.

The parties wished to develop the "Kelley Flooring" business. In particular, they hoped to open a

"storefront" which would be a show room for floor coverings. In connection with this effort, on

September 19, 2013, Plaintiff sold "Kelley Flooring" to the Defendant for $1.00. Kelley Flooring

rented a building at 46 Center Street in Brewer, Maine, and began to make leasehold

improvements. The first floor, which was intended to be used for the Kelley Flooring store, was

gutted. Before December 31, 2013, $8,000 to $10,000 was spent to improve the building on

Center Street to create the "Kelley Flooring" showroom.

At some point, the parties learned the Center Street building was in foreclosure, and plans were

made to purchase the building. While purchasing the building was, at least in part, an attempt not

to lose the value of the leasehold improvements, because of his poor credit, Mr. Kelley could not

take advantage of this opportunity. On December 31, 2013, Defendant became the record owner

of the Center Street real estate. In connection with the purchase, Plaintiff became a "guarantor"

of the loan and he provided his interest in the N. Main Street home as surety for the loan.

The first floor of the Center Street building was never finished and "Kelley Flooring" never

created the show room. It does not appear that any substantial money was spent in renovating or

upkeeping the Center Street property between December 31, 2013 and April 2015.

There are three apartments at the Center Street location, two on the 2nd floor and one on the third

floor. It appears that at least the two apartments on the 2nd floor have generally been rented. In

2015, the rents were sufficient to cover the payment of the mmigage, insurance, and taxes.

However, in 2014, 2016, and 2017 the rents have not been sufficient to cover the mmigage,

insurance, and taxes.

On April 14, 2014, the paiiies signed a Partnership Agreement. The Agreement was drafted by

the Defendant, after finding an example on-line. The Paiinership Agreement was to be known as

"Kelley Flooring". There appears to have been no change in the operation of Kelley Flooring

2

from when Defendant began keeping the books through the time the Plaintiff left the relationship

in April of 2015. Thus, before the business was sold by the Plaintiff to the Defendant on

September 19, 2013, between September 19, 2013 and April 14, 2014 when the Partnership

Agreement was signed, and between April 14, 2014 and April of 2015, things remained the

same: Plaintiff continued to do installation work along with his crews and Defendant continued

to perform the administrative work.

In late March, 2015, Plaintiff was admitted to a short-term substance abuse rehabilitation

program 1• In early April, 2015, the romantic relationship ended when Plaintiff left the N. Main

Street home. Between April, 2015 and June, 2015, "Kelley Flooring" operated in a confusing

manner. Plaintiff did some installations and Defendant did some administrative work, but it was

not coordinated. "Kelley Flooring" effectively ended on June 25, 2015.

On March 16, 2016, Mr. Kelley filed a Complaint for Recovery of Personal Property. On April

14, 2016, Ms. Richardson filed a Complaint from Protection from Abuse. Ultimately these cases

were resolved through the issuance of a Protection from Abuse Order by agreement and without

findings, but with an order that ce1iain personal property of Mr. Kelley be given to him and that

other personal property of Mr. Kelley would remain with Ms. Richardson "for the time being."

The Complaint for Return of Personal Prope1iy was dismissed in connection with the Amended

PFA Order.

Eric Clifford and Timothy Kelley picked up some of Plaintiffs personal property from the

Defendant, but they did not retrieve the larger items. In April, 2016, Defendant filed a document

with the Court stating that she had made Mr. Kelley's personal property available for pick-up,

but that Mr. Kelley's agents only retrieved a few personal items.

Analysis

The Court will analyze each claim in turn.

Complaint Count I - Partition

A. 738 N. Main Street - this property is owned by the parties jointly, and the parties

agree the property should be sold. Therefore, it is ordered that the property be sold in

a commercially reasonable manner. The parties, through their attorneys, shall agree

upon a broker to list the property. If the parties cannot agree, Mike Rair, Esq., ifhe is

willing, shall select a broker. The parties shall follow the advice of that broker as to

listing price, any price reductions, and the selling price.

The parties do not agree about the distribution of the proceeds. The main disputes

relate to: (i) the down payment, (ii) each party's contributions to the house, and (iii)

1 The Court took the admission of Defendant's Exhibit #65 under advisement, and has decided to admit the exhibit.

Plaintiff shared this medical record with the Defendant, and Plaintiff left it behind when he left the parties'

residence.

3

Defendant's payment of the mortgage, taxes, insurance, and utilities for the home

after Plaintiffs departure in April of 2015.

(i) One party's funds used for the down payment for the home is not a proper

item to be considered in this partition. See Libby v. Lorraine, 430 A.2d 37

(Me. 1981); Boulette v. Boulette, 627 A.2d 1017, 1018 (Me. 1993)

("Contributions of the parties to the property prior to the joint tenancy,

however, are not equities growing out of the joint tenancy relationship. To

allow the consideration of contributions preceding the joint tenancy would

defeat joint ownership.");

(ii) The Court finds that Plaintiff contributed more of the labor than did the

Defendant in the improvements made to the home. In particular, Plaintiff

replaced the roof, fixed interior walls, installed windows, installed

flooring, and worked on the exterior walls. Defendant contributed to some

of this work, but her labor was far less than the Plaintiffs;

(iii) During the relationship, both parties contributed to the expenses related to

738 N. Main Street on a basis that satisfied them both at the time; and

(iv) The Court finds that the Defendant has kept the mortgage, taxes,

insurance, and utilities paid for the home since Plaintiffs departure and

has spent some minor amount of money on improvements. On the other

hand, Defendant has had exclusive use and possession of the home since

that time. Additionally, Defendant has shared the residence with a third­

party for close to the last two years, and this third-party has contributed to

the household expenses.

After considering the factors above and balancing all the equities, the Court

orders that upon sale of738 N. Main Street, after payment of the mortgage and

costs of the sale, the proceeds will be divided equally by the parties.

Between now and the sale, Defendant shall continue to have exclusive possession

of the home and shall keep the regular mmigage payments, insurance, taxes and

utilities paid.

B. Center Stree!

The Center Street property presents the most difficult issue in this case.

Plaintiff claims that he has an ownership interest in the Center Street property, and

Defendant claims that she is the sole owner of the Center Street property. Plaintiff

claims he made substantial improvements to the prope1iy, and that the April 14, 2014

Partnership Agreement was an attempt to memorialize the pminership's acquisition of

the building.

Plaintiff has suggested, among other things, that his being a "guarantor" and putting

his \/2 interest in the N. Main Street home at risk to secure the mmigage on the Center

Street property, that his contribution of labor to renovations, that his agreement that

Defendant's son should be re-paid for the down payment he loaned for the purchase

4

of the building, and Defendant's taking a photograph of Plaintiff putting a key in the

door of the building are all factors the Court should consider in determining that he

has an ownership interest in the property.

The Court finds that the purpose of looking into the Center Street property was to find

a showroom for "Kelley Flooring." All of the above considerations suggested by the

Plaintiff are consistent with Plaintiff wishing to do what he could, particularly given

his poor credit, to make the showroom a reality. Even the photograph is consistent

with Plaintiff being proud to be advancing the "Kelley Flooring" business, a business

that still contained his name (even though he no longer owned it).

On December 31, 2013 when the building was purchased, title to the property was

taken by Kathryn Richardson, and remains in that form. Impmiantly, title is not in the

name of"Kelley Flooring", or even Kathryn Richardson, d/b/a "Kelley Flooring."

On April 14, 2014, the date of the Pminership Agreement, "Kelley Flooring" did not

have a store at the Center Street property and the storefront was far from complete.

The Partnership Agreement itselflisted the "Kelley Flooring" business address as 738

N. Main Street in Brewer, Maine.

Finally, during his testimony when asked about his concern that the Center Street

property was not in his name, Mr. Kelley stated, among other things that "I wanted it

back. 2" This suggests Mr. Kelley wanted back what he owned in September of 2013

when he sold Kelley Flooring to Ms. Richardson. When Mr. Kelley sold his interest

in "Kelley Flooring" in September of 2013, the Center Street building was not owned

by "Kelley Flooring" or Mr. Kelley (or Ms. Richardson).

On the other hand, a careful review of Ms. Richardson's tax returns reflects that the

"Kelley Flooring" business was reported on her Schedule C for years 2013 through

2015. The Center Street property was reported on Schedule E, beginning in 2014. The

2014 and 2015 Schedule C's for "Kelley Flooring" show that 'h of the mortgage, 'h of

the taxes, 'h of the insurance and perhaps some utility payments for the Center Street

property were listed as expenses for "Kelley Flooring. 3" The Court has carefully

considered whether this tax return information accurately evidences ownership by

"Kelley Flooring" of the Center Street real estate, and has concluded that it does not.

Simply by reporting something on a tax return does not make it so.

2 Kelley: "I signed over the company and all of this. But with the company and everything, I wanted it back. You

know, because things were going sour and I asked several times to give it back. Let's just go to the bank and she said

no."

3 The Court made this determination by comparing the Schedules to Ms. Richardson's 2014, 2015, and 2016 tax

returns. Beginning in 2016, Ms. Richardson no longer included a schedule for "Kelley Flooring"' and the expenses

on the Schedule E for the Center Street property approximately doubled. For example, the m01tgage expense for

"Kelley Flooring" in 2014 was $3,404.00, and the m01tgage expense for Center Street on the Schedule E was

$3,404.00. In 2016, when "Kelley Flooring" was no longer pa1t of Ms. Richardson's tax return, the mortgage

expense for the Center Street property was listed as $6,421.00

5

The Court does not find that Mr. Kelley made substantial improvements to the Center

Street property in reliance on a promise that the property would be conveyed to him:

the substantial improvements were made before the Defendant owned the Center

Street property and the court does not find that Defendant promised to convey any

interest in the Center Street property to the Plaintiff or that Plaintiff performed any

work on the property in reliance on any such promise. See Tozier v. Tozier, 437 A. 2d

645 (Me. 1981) (promisee made substantial improvements to land in reliance on

promise that the land would be conveyed to him). The Cami does not find that, by her

actions, Ms. Richardson impliedly promised to convey the Center Street prope1iy to

Mr. Kelley. And, despite other evidence, while the Court finds that the April 14, 2014

Pminership Agreement conveyed 49% of the interest of "Kelley Flooring" to the

Plaintiff, the Court is not satisfied that "Kelley Flooring" owned the Center Street

property or that the Pminership Agreement conveyed or intended to convey the

Center Street prope1iy to the Pminership (or to Mr. Kelley).

Plaintiff has the burden to establish an ownership interest in the Center Street

property, and the Court finds that he has not met his burden. Therefore, the Center

Street property is not subject to partition.

Count II - the Breach of Contract

This claim was withdrawn by the Plaintiff.

Count III - Unjust Enrichment

In his Complaint, Plaintiff alleged: "(d]uring the period of the parties' cohabitation,

Plaintiff made payments, incurred expenses and spent monies in fmihererance of the

parties' joint enterprise/businesses as detailed above, from which Defendant

knowingly benefited to the detriment of the Plaintiff, with respect to which Defendant

has failed or refused to repay or to confer any return benefit to Plaintiff despite due

demand therefor, as to which the Defendant's retention of such benefits would be

inequitable and unjust."

A claim for unjust enrichment requires that the plaintiff establish: (a) that he

conferred a benefit on the defendant; (b) that the defendant had appreciation or

knowledge of the benefit; and (c) the defendant accepted or retained the benefit under

circU111stances that make it inequitable for the defendant to retain the benefit without

payment of its value Maine Eye Car Assoc. v. Gorman, 2008 ME 36, if! 7,942 A.2d

707.

Unjust enrichment describes recovery for the value of the benefit retained when there

is no contractual relationship, but when, on the grounds of fairness and justice, the

law compels performance of a legal and moral duty to pay." Aladdin Elec. Assoc. v.

Town ofOOB, 645 A.2d 1142, 1145 (Me. 1994).

During the parties' relationship, the bulk of the funds to improve the Center Street

property were spent in the fall of 2013, before Defendant acquired the Center Street

property and at a time when Defendant owned 100% of"Kelley Flooring." The

materials for renovations were primarily purchased with a Lowe's credit card. Ms.

6

Richardson's son paid the credit card balance to enable his mother to secure a loan for

the Center Street property (and Ms. Richardson owes her son $30,000 for his efforts

to help her be in a position to purchase the building). Because the materials were

primarily paid in this way, and Ms. Richardson owes the money to her son, the Court

does not find that Mr. Kelley personally contributed in any significant way to the

purchase of the materials.

The labor for the work to create a showroom for "Kelley Flooring" was perfo1med by

"Kelley Flooring" workers, including the Plaintiff. Yet, Mr. Kelley was working for

"Kelley Flooring" and at the time "Kelley Flooring was owned 100% by Ms.

Richardson. Thus, Mr. Kelley's work on the building was part of his "contractual

relationship" with "Kelley Flooring."

However, the Court is satisfied that Mr. Kelley's work for "Kelley Flooring"

generated income for the Kelley-Richardson household and that income, along with

Ms. Richardson's wages4, was used to pay all the bills (personal and business­

related). Sometimes the rents collected for the Center Street property were sufficient

to cover the expenses for Center Street and sometimes they were not. Given the

insufficiency of the rental income, the Court finds that Mr. Kelley directly or

indirectly contributed toward payments (mortgage, tax, insurance, and utility

payments) on the Center Street property. Thus, the Court finds it equitable that Ms.

Richardson pay Mr. Kelley $6,000.00 on this unjust emichment claim.

Judgment is entered for Mr. Kelley in the amount of $6,000.00 on Count III of the

Complaint.

Count IV - Return of Personal Property

The District Court has exclusive jurisdiction over an action to recover personal property.

See 14 M.R.S. § 7071. This case was filed in the Superior Court. Thus, this Court has no

jurisdiction over this claim at this time. The attorneys may arrange for Ms. Richardson's

agreement to turn over the property to Mr. Kelley to be effectuated.

Judgment is entered for Ms. Richardson on Count IV of the Complaint.

Counterclaim Count I - Promissory Estoppel

The Law Court has adopted the definition of promissory estoppel as set forth in the

Restatement (Second) of Contracts § 90 (1981 ):

A promise which the promisor should reasonably expect to induce action

or forbearance on the pmi of the promisee or a third person and which

does induce such action or forbearance is binding if injustice can be

avoided only by enforcement of the promise. The remedy granted for

breach may be limited as justice requires.

4 During 2014, Ms. Richardson earned $34,934.00 gross from the Coach House Restaurant. These funds were also

contributed to the Kelley-Richardson household.

7

Bracale v. Gibbs, 2007 ME 7, ,r 14, 914 A.2d 1112 (quoting Restatement (Second) of

Contracts § 90); see also Chapman v. Bomann, 381 A.2d 1123, 1127 (Me. 1978)

(adopting § 90 of the Restatement (Second) as the law of Maine). A "promise" is "a

manifestation of intention to act or refrain from acting in a specified way, so made as to

justify a promisee in understanding that a commitment has been made." Harvey v. Dow,

2008 ME 192, ,r 18,962 A.2d 322 (quoting Restatement (Second) of Contracts§ 2(1)).

In her Counterclaim, Ms. Richardson alleged that Mr. Kelley promised: "repayment of

funds improperly taken from the parties' business, as well as repayment of debts and lost

profits incurred as a result of his addiction fueled actions." Ms. Richardson also testified

that when he left, Mr. Kelley promised to pay his Yz of the debt. Finally, Ms. Richardson

testified that Mr. Kelley promised to repay her for loans she made to him to buy a van (in

2010), for legal fees for his divorce and bankrnptcy, and moving costs.

Taking the last claims first, these claims were not alleged in count I of the counterclaim.

The van, legal fees, and moving costs are not related to "funds improperly taken from the

parties' business." For that reason alone, the Court would not make an award based on

these items. Moreover, Ms. Richardson has not established that Mr. Kelley made any

promises to repay Ms. Richardson for the van, moving costs 5, or legal fees. Unlike other

agreements between the parties, no writings memorialize these alleged promises.

Moreover, at the times these expenses were incuned, the parties were living together and

were attempting to build a life together. Given that Mr. Kelley owned "Kelley Flooring" at

the time the legal fees were incurred, the Court finds that the proceeds from "Kelley

Flooring" contributed toward these payments - either directly or indirectly.

While Mr. Kelley may have made some promises to repay funds to the business, including

the Credit Union loan, the Comi is not satisfied that Ms. Richardson has established that

any such promise induced any action or forbearance on her pmi. Ms. Richardson did not

articulate any action or forbearance on her part. To recover under a theory of promissory

estoppel not only must the promises be established, but the party seeking relief must also

establish her reliance on the promises to her detriment. To the extent any promises to

repay were made at the end of the relationship, the opportunity for action or forbearance

on the part of Ms. Richardson had passed. The promises m·e uncertain, the inducement of

action or forbearance is unce1iain; and even if the first two elements were proven, Ms.

Richardson has not met her burden of proof regarding damages 6 .

Finally, with respect to Mr. Kelley's late March 2015 agreement to work with Ms.

Richardson in the business, Ms. Richardson has not established any action or forbearance

on her pati. While Ms. Richardson continued to try to make a "go" of the business, it was

not possible once the personal relationship between Ms. Richardson and Mr. Kelley

ended.

Therefore, Judgment is entered for Mr. Kelley on Count I of the Counterclaim.

5 As an aside, it appears that Mr. Kelley moved very little from South Carolina to Maine.

6 The Court is not satisfied that Ms. Richardson has proven by a preponderance of the evidence that Mr. Kelley

spent$ 32,000.00 (Plaintiffs estimate) from "Kelley Flooring" on illegal drugs. There is no forensic accounting and

the Court just does not find the estimate sufficiently reliable to base a judgment on it.

8

Counterclaim Count II - Negligent Infliction of Emotional Distress

In her Counterclaim, Ms. Richardson alleged, among other things, that Mr. Kelley

"negligently acted against Plaintiff, . . . and failed to use the standard of care that a

business partner should have followed under those circumstances ... " The Counterclaim

continues: "Defendant violated the appropriate standards of care when dealing and

interacting with, his domestic partner, Plaintiff... "

With respect to the NIED claim, the plaintiff must establish that:

I) the defendant( s) owed a duty to the plaintiff;

2) the defendant(s) breached that duty;

3) the plaintiff was harmed (severe emotional distress); and

4) the breach caused the plaintiffs harm.

Curtis v. Porter, 2001 ME 158, ,r,r 18-20, 784 A.2d 18. In Curtis, the court noted that

plaintiffs face significant hurdles in establishing the requisite duty, "in great part because

the determination of duty in these circumstances is not generated by traditional concepts

of foreseeability. Although each person has a duty to act reasonably to avoid causing

physical harm to others, there is no analogous general duty to avoid negligently causing

emotional harm to others." Id.

The Law Court has recognized a duty to avoid causing others emotional harm only in

"very limited circumstances" where either there is a bystander liability claim, or "in

circumstances in which a special relationship exists between the actor and the person

emotionally harmed." Curtis, 2001 ME 158, ,r,r 19, 784 A.2d 18 (a NIED claim may also

lie where the actor has committed another tort, but the NIED claim based on another tort

is subsumed within the other tort).

Plaintiff has not provided the Court with any citation for the proposition that "domestic

partners" or "business partners" have the type of special relationship that would impose a

duty on one to avoid emotional harm to the other. Moreover, this Court has not found any

Maine case supporting the proposition that "domestic partners" or "business partners"

owe a tott duty to the other "domestic paitner" or "business partner" to avoid emotional

harm. 7

7 The only types of relationships that the Law Cou1t has found to satisfy the duty element of NIED are: a

physician-patient relationship; a hospital's relationship to the family of a deceased; a psychotherapist­

patient relationship; and a relationship between a custodial parent and her child. See B1yan v. Watchtower

Bible & Tract Soc'y ofN.Y., Inc., 1999 ME 144,, 31, 738 A.2d 839; Steadman v. Pagels, 2015 ME 122,

, 27, 125 A.3d 713. The Law Comt has declined to recognize a "special relationship" for purposes of

NIED in the following circumstances: the relationship between churches and its members; the fiduciary

relationship of a foreclosing mmtgagee, personal representative, or sole owner of real estate; and the

relationship between a customer and pizza delivery person. See Watchtower Bible, 1999 ME 144, , 31,

738 A.2d 839; Oceanic Inn, Inc. v. Sloan's Cove, 2016 ME 34, ~ 24, 133 A.3d 1021; Curtis, 2001 ME

158,121, 784A.2d 18.

9

The Court enters Judgment for Mr. Kelley on Count II of the Counterclaim.

Counterclaim Count III - Fraud

This Count was withdrawn by the Defendant/Counterclaim Plaintiff.

Counterclaim Count IV - Fraudulent Misrepresentation

This Count withdrawn by the Defendant/Counterclaim Plaintiff.

Counterclaim Count V - Unjust Enrichment

In her Counterclaim, Ms. Richardson alleged that: "[D]efendant, through his actions,

encouraged Plaintiff to take ce1iain actions and provide ce1iain monies, that benefitted the

Defendant through increased income to him, but decease in funds for the operation of the

business, including lost profits and incurring debts; Plaintiff relied on the promises of the

Defendant." The Counterclaim continues: "The Defendant took certain tools and

equipment of the business as well as personal tools of the Plaintiff, without

permission... "

As noted above, a claim for unjust enrichment requires that the plaintiff establish: (a)

that she confell'ed a benefit on the defendant; (b) that the defendant had appreciation or

knowledge of the benefit; and (c) the defendant accepted or retained the benefit under

circumstances that make it inequitable for the defendant to retain the benefit without

payment of its value. Maine Eye Car Assoc. v. Gorman, 2008 ME 36. Further unjust

enrichment is a theory of recovery only when there is no contract or quasi-contractual

relationship. Aladdin Elec. Assoc. v. Town ofOOB, 1994 Me Lexis 172.

One of Ms. Richardson's arguments that runs through many of the counts of the

Counterclaim is that Mr. Kelley used money from "Kelley Flooring" to buy illegal drugs.

The Court accepts Ms. Richardson's testimony that Mr. Kelley struggled with a substance

abuse issue. The Comi finds that the substance abuse issue became progressively worse

over time. The Court further accepts Ms. Richardson's testimony that Mr. Kelley's

substance abuse issues kept him from contributing the same amount of labor and

expertise to the "Kelley Flooring" business toward the end of the relationship that he had

earlier. Mr. Kelley's contributions may also have decreased due to physical issues (back

and knee), which appear to have contributed to the substance abuse issues. However,

given Sonny Shaw's testimony and the gross income of"Kelley Flooring" in 2015 8, the

Cami does not accept Ms. Richardson's testimony with respect to the extent of the

impact that substances had on Mr. Kelley's work or the length of time over which the

impact occurred.

While the Court is satisfied that Mr. Kelley may have used some money generated by

"Kelley Flooring" (which appears to have been his only source of funds for personal

8 The Court's review of the tax records indicates gross receipts of $142,880 for the 12 months of 2014

($11,905/month) and gross receipts of $78,284 for the first 4 months of2015 ($19,571/month). While this is only

the Court's review, unassisted by a forensic expet1, there does not appear to be a drop in the work being

done/proceeds being brought in. Additionally, the wages in 2014 were $43,344 and line 37 was $$7,000. The wages

in 2015 were $2878 and line 37 was 0.

10

expenses) for substances, this finding does not establish a claim for unjust emichment

with respect to the business funds or tools. Unjust emichment is a claim where there is no

contractual or quasi-contractual relationship. Pafjhausen v. Balano, 1998 ME 47, ,i 6.

With respect to the decrease in business funds or the taking of business tools, the Cami

does not find that Ms. Richardson "conferred" a benefit on Mr. Kelley outside the

contractual relationship.

With respect to her personal tools, even if it could be said that Ms. Richardson

"conferred" a benefit on Mr. Kelley when Mr. Kelley took Ms. Richardson's personal

tools, damages must be based on the "value of what was inequitably retained." Id. ,i 7.

Ms. Richardson claimed that the "replacement value" of the personal tools was $945.50.

While damages need not be proven to a mathematical ce1iainty, neither may they be

based on guesswork or speculation. Morissette v. Somes, 2001 ME 152 ,i 11, Carter v.

Williams, 2002 ME 50 ,i ,i 9-11. There is no evidence in the record of the "value" of the

"inequitably retained" tools, and thus Ms. Richardson has not met her burden of proof on

this claim.

Thus, Court enters Judgment for Mr. Kelley on Count V of the Counterclaim.

Counterclaim Count VI- Negligent Interference with Contractual Obligation

In her Counterclaim, Ms. Richardson alleged that: "[d]ue to the Defendant's actions,

Plaintiff was required to close the business and dissolve the paiinership, which resulted in

lost profits, loss of good will, as well as business expansion and growth."

To establish a case for t01iious inte1ference with existing and prospective advantageous

economic relations ("tortious interference"), the plaintiff must show:

1. that a valid contract or prospective economic advantage existed;

2. that defendant interfered with that contract or advantage through fraud or

intimidation; and

3. that such interference proximately caused dainages.

Currie v. Indus. Sec., Inc., 2007 ME 12, ,i 31,915 A.2d 400.

During closing argument, Ms. Richardson argued that this count related to the taking of

business tools. The Court is not satisfied that the taking of tools constitutes the negligent

interference with a contractual obligation. Moreover, while Ms. Richardson has

established that "Kelley Flooring" had contracts with various entities, she has not

established that Mr. Kelley interfered with such contract(s) through fraud or intimidation.

At best, Mr. Kelley simply ceased working for "Kelley Flooring" and the business could

not continue without him. The Cami enters Judgment for Mr. Kelley on this count.

Counterclaim Count VII ~ Negligence

In this Count of her Counterclaim, Ms. Richardson alleged that "Defendant negligently

violated the standards of care in his duties, obligations and conduct to Plaintiff, as a

business partner and or domestic partner."

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The first element of a negligence claim is the existence of a duty. There is no recognized

tort duty under Maine law to treat a "domestic pminer" in any particular way. While

those in a personal relationship with another may maintain an action of assault and

battery or another tort, there is no general cause of action for negligence. Nor, is there

any recognized tort duty under Maine law to treat a business pminer in a pmiicular way.

Remedies between business partners are rooted in contract law. Thus, Court enters

Judgment for Mr. Kelley on this count.

Counterclaim Count VIII - Conversion

In her Counterclaim, Ms. Richardson alleged that: "Defendant enticed and induced

Plaintiff to give him funds from the business which he knew he had no legal right or

interest in, and made those funds his own." The Counterclaim continued: "Defendant

took certain tools and, or other equipment belonging to the business, as well as taking

personal tools and, or equipment from the Plaintiff."

The Law Court has explained:

To establish a claim for conversion, the plaintiff must show an

invasion of the plaintiff's possession or right to possession by

demonstrating "(I) a prope1iy interest in the goods; (2) the right to

their possession at the time of the alleged conversion; and (3) when

the holder has acquired possession rightfully, a demand by the

person entitled to possession and a refusal by the holder to

smTender.

Mitchell v. Allstate Ins. Co., 2011 ME 133. See also Withers v. Hackett 1998 ME 164 (as

to the third element, a plaintiff may alternatively establish that, under the circumstances,

a demand would have been useless.)

Before September 2013, Plaintiff was 100% owner of"Kelley Flooring." On September

19, 2013, Defendant became the 100% owner of"Kelley Flooring." On April 14, 2014,

Plaintiff became a 49% owner of "Kelley Flooring" and Defendant became a 51 % owner

of "Kelley Flooring."

Ms. Richardson alleges that Mr. Kelley took money from the business to support a drug

habit, that he took business tools in c01mection with the parties April 2015 breakup, and

that he took her personal tools.

With respect to money taken by Mr. Kelley from "Kelley Flooring," the Court is satisfied

that Mr. Kelley took some money from "Kelley Flooring" to supp01i his habit. This

finding, of course, is complicated by the fact "Kelley Flooring" was Plaintiffs sole

source of funds for personal expenses, and was treated as such by the parties. Ms.

Richardson estimated that the amount of money taken was $32,000.00 to support his

substance abuse issue. The Court simply is not satisfied with the reliability of this

estimate. The Court does not accept the method by which Ms. Richardson came to this

estimate. Ms. Richardson did not present any persuasive testimony to support her

estimate, nor did she present any forensic analysis. Mr. Kelley and his crew(s) traveled

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for work, and the business was run rather loosely. The Court will not speculate on the

amount of money taken from the business for this purpose.

The Court is satisfied that on one occasion Mr. Kelley took money from the business that

was designated to cover payroll. He then was able to take a personal loan to cover this

amount. The principal amount of the loan increased over time, but this is a debt of the

Defendant for which he is/was responsible. The parties' paid the payments on this

University Credit Union loan for some period ohime, but the amount of the payments

and the period of time over which the pmiies' made the payments as part of their joint

expenses is unknown.

The Comi is satisfied that Mr. Kelley kept some business tools owned by "Kelley

Flooring" when he left Ms. Richardson in April of 2015. Ms. Richardson estimated that

Mr. Kelley kept $25,000.00 in business tools. The Court is not satisfied with the

reliability of this estimate, nor is it known whether this figure is based on fair market

value in 2015 or replacement value. Among other things, the Court has reflected on the

Schedule Cs with respect to "Kelley Flooring" tools when "Kelley Flooring" was

reported on Ms. Richardson's tax returns. (Moreover, while not directly on point to 2015,

it should be noted that in 2010, Mr. Kelley was depreciating tools that had been

purchased as far back as 1996.) It is also unclear if Ms. Richardson made the requisite

demand for a conversion claim. The Court does not find that Ms. Richardson has proven

the damages element of her claim.

The Court is satisfied that Mr. Kelley took some of Ms. Richardson's personal tools when

he left the relationship. Ms. Richardson claimed that the "replacement value" of the

personal tools was $945.50. However, the proper measure of damages in a conversion

action is the value of the prope1iy at the time of conversion. See Doughty v. Sullivan,

1995 Me. Lexis 147. There is no evidence of the "value" of the tools when taken. It is

also unclear if Ms. Richardson made the requisite demand. Thus, Ms. Richardson has not

met her burden of proof on this claim.

Mr. Kelley continued to install flooring after the pmiies' breakup in April of 2015. It

appears that at least some of this work was in connection with "Kelley Flooring," then

owned 51% by Ms. Richm·dson and 49% by Mr. Kelley. It appears that most of the

income from these jobs was paid to "Kelley Flooring," and the payments were received

by Ms. Richardson. Ms. Richardson then paid the crews and paid for certain of Mr.

Kelley's expenses. The evidence suggests that Ms. Richardson received the payments for

the work done by "Kelley Flooring" and she distributed the money as she saw fit. The

parties seemed to operate in a dysfunctional way during the wind-up of the pminership,

but to the credit of Ms. Richardson, the business did wind-up. The Comi does not find

acts of invasion of Ms. Richardson's property rights by Mr. Kelley upon cessation of the

pmiies' personal relationship or the requisite notice for a conversion claim.

Thus, the Court enters Judgment for Mr. Kelley on Count VIII of the Counterclaim.

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Counterclaim Counts IX and X- Breach of Fiduciary Duty and Breach of Contract

In Count IX, Ms. Richardson alleged that "Defendant owed Plaintiff certain fiduciary

duties ...." In Count X of the Counterclaims, Mr. Richardson alleged that: "Plaintiff and

Defendant had entered into a contract named the "Partnership Agreement" to which each

party owed the other certain obligations, and which required each party to comply with

the terms set forth in the Agreement, including, but not limited to, performing according

to the roles set forth for each9 ." The Court does not discern any meaningful difference in

in Counts IX and X in this case.

Maine law provides that a partner owes the partnership and the other partners a limited

duty of loyalty and of due care as set fotih in 31 M.R.S. § 1044. The Pminership

Agreement in this case does not clarify or limit the duties in any meaningful way, other

than specifying that Mr. Kelley's responsibility was "for all installation and contractual

decisions" and Ms. Richardson's responsibility was "for the office and finacial (sic) part

of the business."

To prevail on a breach of contract claim, the plaintiff must prove: (1) a breach of a

material contract term, (2) causation, and (3) damages. Me. Energy Recovery Co. v.

United Steel Structures, Inc., 1999 ME 31, ,r 7, 724 A.2d 1248. The contract in question

is the Pminership Agreement.

As noted above, the Court is satisfied that Mr. Kelley's substance abuse issue interfered

to some extent with his work for "Kelley Flooring" for the first few months of 2015.

However, given the testimony of Sonny Shaw and the gross receipts for the business, the

Court is not satisfied that the business suffered as greatly as Ms. Richardson testified.

Again, as noted above, the Comi is fmiher satisfied that Mr. Kelley spent some money

generated by "Kelley Flooring" to purchase drugs.

Thus, the Court is satisfied that Mr. Kelley breached the Pminership Agreement and

breached his fiduciary duties to the Partnership; however, again, the Court is not satisfied

that Ms. Richardson has established damages. As noted in connection with the com1t for

conversion, the Court does not accept Ms. Richardson's $32,000 estimate for the amount

of money taken by Mr. Kelley from the Partnership in connection with his substance

abuse issues. Additionally, the Couti cannot determine from the evidence presented the

number of jobs that were affected by Mr. Kelley's substance abuse issues, the dollar

amount of the jobs that were affected, or the dollar value of the jobs that "Kelley

Flooring" may not have received due to Mr. Kelley's acts. Moreover, the parties seemed

to treat "Kelley Flooring" as an extension of themselves and used the pminership funds

and Ms. Richardson's wages to meet their needs, wants, and obligations. It does not

appear that either party respected the partnership structure. While Mr. Kelley had a

period of time where he contributed less to "Kelley Flooring" then he had before that

time, there was no reliable quantification of that reduction. As to the last several weeks of

the patinership which began in essence on the day the patiies' personal relationship

terminated, without Mr. Kelley's labor, "Kelley Flooring" was not a viable entity. While

Mr. Kelley (nor Ms. Richardson) dissolved the partnership as required by the Partnership

9 The breach of contract claim does not allege any breach of any alleged promises to repay personal debts.

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Agreement, Mr. Kelley was entitled to stop working for the Pmtnership, and once he did

so its dissolution was inevitable.

Therefore, the Court enters Judgment for the Mr. Kelley on Counts IX and X of the

Counterclaim.

Counterclaim Count XI - Partition

The Pmtition is granted with respect to 738 N. Main Street, Brewer, Maine as set forth

above.

Exhibits

It is ordered that the exhibits offered in this case be kept under seal. The exhibits contain

the parties' dates of birth, social security numbers, tax identification numbers, and bank

account numbers. The exhibits also include medical information relating to both patties.

The Clerk shall enter the following upon the docket:

A. Judgment for the Plaintiff on Count I with respect to the 748 N. Main Street, Brewer,

Maine property and Judgment for the Defendant on Count I with respect to the 46 Center

Street, Brewer, Maine property. Pmtition is ordered with respect to 748 N. Main Street,

Brewer, Maine property, the property is ordered sold, and after payment of the mortgage

balance and the expense of sale, the paities shall split the proceeds equally;

B. Count II -withdrawn by the Plaintiff;

C. Count III - Judgment for the Plaintiff in the amount of $6,000.00;

D. Count IV - Judgment for the Defendant;

E. Counterclaim Counts I through X - Judgment for the Plaintiff/Crossclaim Defendant.

F. The exhibits shall be kept under seal.

Dated: June 17, 2019

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/};~

Ann M. Murray, Justice

Maine Superior Court

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