United States District Court, D. Arizona
Robert D. Maguire, Plaintiff,
Cathleen A. Coltrell, et al., Defendants.
David G. Campbell United States District Judge
Plaintiff Robert Maguire claims that his former fiancée, Defendant Cathleen Coltrell, breached a partnership or joint venture agreement to rent and sell two homes for their mutual benefit. Defendant Coltrell asserts various counterclaims against Plaintiff. The Court held a bench trial on October 13-14, 2015, and now finds in favor of Defendant on Plaintiff’s claims and in favor of Plaintiff on Defendant’s claims. This order will set forth the Court’s findings of fact and conclusions of law.
I. Findings of Fact - Background.
In 2005, Robert Maguire and Cathleen Coltrell began a romantic relationship, and Maguire soon moved into Coltrell’s home on Justine Road (“the Justine home”). During the 43 months the couple lived there, Maguire contributed $1, 500 a month to help pay common expenses, missing about six months of payments. Planning to eventually marry, Maguire and Coltrell signed a prenuptial agreement in February of 2008. Under this agreement, the Justine home was to remain the separate property of Coltrell.
In 2009, Maguire and Coltrell decided to purchase of a new home on Milton Lane (“the Milton home”). Although the plan was to buy the house and take out a mortgage loan jointly, credit problems surfaced for Maguire and the parties decided to have Coltrell procure the loan and purchase the home in her name alone. The purchase price was $570, 000. Maguire paid $104, 000 of the $160, 000 down payment and Coltrell paid the rest. Coltrell borrowed $417, 000 in her name. Coltrell maintained her ownership of the Justine home and rented it to tenants.
During the 43 months the couple lived together in the Milton home, Maguire made monthly contributions to living expenses that varied in amount from $1, 000 to $2, 650, again missing about six payments. The parties each worked on and paid for various improvements to the house and contributed to other household and living expenses. Each was employed and maintained separate bank accounts. There was no strict tracking of money that each contributed to the household or their relationship.
The parties lived together in the Milton home until February of 2013, when Coltrell informed Maguire that she had found someone else and asked him to move out. Coltrell later married John Carmichael and now lives with him in Colorado.
After their breakup, Maguire and Coltrell tried to wind up their financial affairs. They met on February 23, 2013 and put together a spreadsheet reflecting various contributions to the Milton home, financing and potential sales expenses, and an assumed value of $725, 000. See Ex. 106. On March 1, 2013, Coltrell gave Maguire a check for $10, 000, which he cashed and retained. Ex. 139. On March 10, 2013, Maguire sent an email to Coltrell stating: “I will accept the $25k check from you for my contributions into Milton even though I feel that I am coming up way short if you consider what I did for you over the course of our relationship. I don’t want anything for that. I just want peace and happiness for us both at this point.” Ex. 101. On March 18, 2013, Coltrell provided Maguire with a deposit of $5, 000 and a cashier’s check for $22, 000 which was labeled “Cathleen Coltrell: Final Payment.” Ex. 139. Maguire retained the deposit and cashed the check.
One of the items included in the February 23, 2013 spreadsheet was an estimate of $20, 500 that Coltrell would be required to pay in interest on a home equity line of credit (“HELOC”) she had obtained and used to pay Maguire’s past-due 2009 income taxes and his tuition for an executive MBA program. Ex. 106. Because Coltrell would incur approximately $20, 500 in interest if it took ten years to repay the HELOC, the couple credited her with this amount in the spreadsheet. When Coltrell unexpectedly received some funds in March of 2013 from the vesting of stock she had earned at work, she used some of the funds to repay the HELOC in full. Upon learning of this, Maguire sent texts and an email to Coltrell stating that he expected her to pay him another $20, 000 because she no longer would be required to pay interest on the HELOC. Coltrell disagreed, stating that she had assumed the risk of the HELOC for Maguire’s benefit and had used her own funds to eliminate that risk by retiring the debt.
On April 11, 2013, Maguire sent another email to Coltrell enclosing a revised version of the February 23 spreadsheet. Maguire had removed from the spreadsheet the $20, 500 in estimated interest on the HELOC and another $40, 250 in estimated real estate commissions and closing costs that Coltrell was likely to incur upon sale of the Milton home. Maguire demanded another $50, 987.86. Ex. 102. He threatened to disclose embarrassing personal information to Coltrell’s friends and co-workers if he was not paid, claimed that he had a “mole” within Coltrell’s associates who was feeding him embarrassing information about her, and said “I’m going to come at you real hard.” Id.
Coltrell did not pay the amounts demanded by Maguire, and Maguire filed suit against Coltrell on May 7, 2014. Doc. 1-1 at 5. Maguire claims that he and Coltrell entered into a joint venture or partnership by agreeing that the Justine and Milton homes would be held as an income-producing property and a residence, respectively, for their mutual benefit and retirement. Maguire brings claims for breach of contract, an accounting for the joint venture and partnership, breach of fiduciary duty, and unjust enrichment. Coltrell denies the existence of a partnership or joint venture and asserts counterclaims for invasion of privacy, fraud, negligent misrepresentation, breach of fiduciary duty, and other alleged wrongs.
II. Governing Legal Principles for Maguire’s Claims.
A. Partnership and Joint Venture Claims.
Under Arizona law, “the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.” A.R.S. § 29-1012(A). In the absence of a written agreement, the question of whether a partnership exists is one of fact. Bohmfalk v. Vaughan, 357 P.2d 617, 621 (Ariz. 1960). “The essential elements of a partnership may be established by demonstrating the existence of an agreement between the putative partners to work together to acquire property for their joint benefit and to divide all the profits made therefrom equally.” Jolly v. Kent Realty, Inc., 729 P.2d 310, 316 n.4 (Ariz.Ct.App. 1986) (citing Fernandez v. Garza, 354 P.2d 260 (Ariz. 1960)). “Mere shared ownership in property or profits from the property does not create a partnership.” Holeman v. Neils, 803 F.Supp. 237, 241 (D. Ariz. 1992); see also A.R.S. § 29-1012(C)(1) (stating that joint or part ownership of real property “does not by itself establish a partnership”).
“A joint venture differs from a partnership principally because it is usually limited to a single transaction. A joint venture requires an agreement, a common purpose, a community of interest, and an equal right of control.” Jolly, 729 P.2d at 316 n.4 (citations omitted). An unmarried, cohabitating couple may form a partnership or joint venture. Cook v. Cook, 691 P.2d 664, 667 (Ariz. 1984); Fernandez, 354 P.2d at 263.
B. Unjust Enrichment.
“To recover on a claim for unjust enrichment, a claimant must show (1) an enrichment, (2) an impoverishment, (3) a connection between the two, (4) the absence of justification for the enrichment and impoverishment and (5) the absence of any remedy at law.” Loiselle v. Cosas Mgmt. Grp., LLC, 228 P.3d 943, 946 (Ariz.Ct.App. 2010) (quotation and citation omitted); see also Mousa v. Saba, 218 P.3d 1038, 1045 (Ariz.Ct.App. 2009). “A person who has been unjustly enriched at the expense of ...