SHAREE BAILEY v. ARVA COVINGTON

S
      Third District Court of Appeal
                               State of Florida

                          Opinion filed April 7, 2021.
       Not final until disposition of timely filed motion for rehearing.

                            ________________

                              No. 3D20-156
                       Lower Tribunal No. 15-23790
                          ________________


                             Sharee Bailey,
                                  Appellant,

                                     vs.

                            Arva Covington,
                                  Appellee.



      An Appeal from the Circuit Court for Miami-Dade County, Martin
Zilber and Rodney Smith, Judges.

     Kevin Coyle Colbert, for appellant.

     Hazel Law, P.A., and Robin F. Hazel (Hollywood), for appellee.


Before SCALES, HENDON and GORDO, JJ.

     HENDON, J.
      Sharee Bailey (“Bailey”) appeals from a final order finding her liable

for civil theft, fraud, and monies had and received, and awarding Arva

Covington (“Covington”) fifty percent of the proceeds of the sale of the

property as a co-owner, and treble damages for deposit of an escrow

check. We reverse.

      Bailey and Covington’s nephew, Mr. Darnell Williams (“Williams”),

were in a domestic relationship and have two children together. When

neither of them could qualify to purchase a house, they asked Covington to

assist. In 2009, Covington agreed to use her credit to get loan approval,

and the deed was issued to Covington and Bailey as tenants in common.

Covington’s name also appears as co-mortgagor on the mortgage,

although Bailey made the down-payment, paid all closing costs, insurance

premiums, taxes, monthly mortgage payments, and house maintenance

expenses over the years. Covington made no payments towards the

property and never resided in the property.

      Bailey and Williams lived in the property with their two children until

the relationship deteriorated. By mutual agreement, the townhouse was

sold on August 15, 2015; both Bailey and Covington were present at the

closing.   When all obligations had been paid off, the remainder of

$84,382.79 was paid into a bank account that was owned by Bailey, who



                                     2
added Covington’s name to her account a few days prior to the closing in

order for the title company to transfer the money to an account owned by

the two persons shown on the deed, Covington and Bailey. According to

the complaint, the day after the sale closed, on August 16, 2015, Covington

accompanied Bailey to the bank to have Covington’s name removed from

the joint account.

      There was conflicting testimony regarding the motivation for

Covington to remove her name from the joint account: Covington testified

that she only agreed to have her name removed from the account because

Bailey promised she would split the house proceeds with Covington’s

nephew, Williams.    Bailey testified that Covington never articulated any

desire for the money until days after the sale; at that time, Bailey

understood that Williams was demanding Covington get the money from

Bailey for himself. Bailey testified that she would not split the proceeds

with Williams because he had been physically abusing her, never

contributed to the house, and because Covington never expressed any

desire for the proceeds.

      On August 20, 2015, the bank sent a second check for $3,679.76

issued to Bailey and Covington for the remaining balance of the mortgage

escrow account. Bailey endorsed the back of the check with her name



                                    3
and, without Covington’s knowledge or permission, printed Covington’s

name below hers and deposited the check into the bank account, now

solely owned by Bailey. 1

        Covington filed suit against Bailey alleging that as co-owner of the

property she is entitled to fifty percent of the proceeds from the sale.

Covington asserted three counts: Count I, civil theft of the proceeds of the

sale pursuant to section 812.0145(2)(b), Florida Statutes,2 seeking treble

damages pursuant to section 771.11(1); 3 Count II, fraud, for inducing


1
  Bailey asserts that because the Wells Fargo escrow check is a two-payee
check that does not contain the words “and” or “or”, the nature of the payee
is ambiguous and thus is presumed to be alternative payees requiring only
one signature for endorsement. The bank representative confirmed this
conclusion at the bench trial.
2
  Section 812.0145(2)(b), Theft from persons 65 years of age or older,
provides, in part:

     (2) Whenever a person is charged with committing theft from a person
     65 years of age or older, when he or she knows or has reason to believe
     that the victim was 65 years of age or older, the offense for which the
     person is charged shall be reclassified as follows:

***
        ....
       (b) If the funds, assets, or property involved in the theft from a person
       65 years of age or older is valued at $10,000 or more, but less than
       $50,000, the offender commits a felony of the second degree,
       punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
3
    Section 772.11(1), Florida Statutes (2020) provides, in part:


                                        4
Covington to remove her name from the joint account with a false promise;

Count III, monies had and received. Covington later filed an amended

complaint to incorporate the allegedly fraudulent escrow check deposit.

        After hearing testimony and taking evidence, the court awarded

judgment in favor of Covington on Count 1 for civil theft, treble damages for

half of the escrow check for $3,679.76, or $1839.88 (x 3), and on Counts II

and III as to fraud and monies had in the amount of $42,191.39, and found

Covington is entitled to attorney’s fees.     4




        (1) Any person who proves by clear and convincing evidence
        that he or she has been injured in any fashion by reason of any
        violation of ss. 812.012-812.037 or s. 825.103(1) has a cause
        of action for threefold the actual damages sustained and, in any
        such action, is entitled to minimum damages in the amount of
        $200, and reasonable attorney's fees and court costs in the trial
        and appellate courts. Before filing an action for damages under
        this section, the person claiming injury must make a written
        demand for $200 or the treble damage amount of the person
        liable for damages under this section.
4
    At the hearing, the trial court opined,

         . . . [w]hat's at issue is whether or not Ms. Covington is entitled
        to the proceeds from the sale of the property. Now, what she
        did do? She put her name up, in terms of getting credit for it,
        and had this case resulted in default Ms. Covington would have
        been fully and jointly liable for this property if it had been
        defaulted. So from the onset she definitely is entitled to the
        proceeds, because had it defaulted Wells Fargo would have a
        response. They could not say whether or not she lived there, it's
        not in dispute. So as to the counts, the Court finds that by
        greater weight of the evidence, that the plaintiff proved their

                                          5
case. Here's why. You have a check that was written as an
easy account first (sic.) The second draft, over $3,679.76.
Clearly the defendant testified that she wrote her [Covington’s]
name on the check without her permission which is fraud. She
was not authorized to do so. If she needed -- if she didn't need
her name she wouldn't have to put her name on it, so that's
clearly -- she committed fraud and also civil theft but putting the
plaintiff's name on the check, having to pass through an ATM in
order to gain access to the funds.
       With respect to the other $42,000 that was demanded by
the plaintiff, within five days conveniently the defendant decides
to transfer the money to her mother. Five days. Having full
knowledge that she was entitled to it. Had the relationship
would have been, you know, intact and not irretrievably broken
down we wouldn't be having this lawsuit before this Court.
       You can't use that relationship to punish Ms. Covington
for the fact that she chose she wants to dispose some of the
money how she saw fit. She wants to take the money, buy a
new car with it, so be it. But let's be clear, Darnel is not entitled
to this money legally. If Ms. Covington wants to give it to
Darnel, or give it back to Ms. Bailey, or burn it, or buy a new car
she can do any and everything she wants to do those funds. It's
her right to do so.
       Emotionally. I think the defendant's emotion got in the
way, and clouded her judgment, and made an ill-advised
decision to withhold the money after being told to turn it over.
She chose not to do so.          Therefore, the Court believes that
by greater weight of the evidence, the plaintiff has proven this
case, and that she's entitled to half of the proceeds, the 40 -- I
wrote down it down, I took copious notes here -- $42,191.37.
       Also, I looked at the amended complaint and also the
answers. It's the defendant's position they're entitled to
equitable setoff. I didn't see anything plead that they were
entitled to improvements made to the property, or any rents that
were paid at all. They never plead it. There was nothing
alleging that they were entitled -- seeking a setoff should this
Court award any funds to the plaintiff.
       Therefore, the Court will find judgment for the plaintiff
amount of $42,191.37, plus the $3,679.76.

                                 6
Standard of Review

        The appellate court reviews the record for substantial, competent

evidence to support the trial court's findings of fact, and the standard of

review for the trial court’s conclusions of law is de novo. MetroPCS

Commc'ns, Inc. v. Porter, 

273 So. 3d 1025

, 1027 (Fla. 3d DCA 2018).

Discussion

Count I - Civil theft of the additional escrow check.

        To establish a claim for civil theft, a party must prove 1) that a

conversion has taken place and 2) that the accused party acted with

criminal intent. See Heldenmuth v. Groll, 

128 So. 3d 895

, 896 (Fla. 4th

DCA 2013) (citation omitted). Such intent must be proven by clear and

convincing evidence. § 772.11(1), Fla. Stat. (2020); Transcapital Bank v.

Shadowbrook at Vero, LLC, 

226 So. 3d 856

, 864 (Fla. 4th DCA 2017);

Westinghouse Elec. Corp. v. Shuler Bros., Inc., 

590 So. 2d 986

, 988 (Fla.

4th DCA 1991). The trial court based its conclusion that Bailey committed

civil theft of the escrow check by applying a lesser, “greater weight of the

evidence” standard of proof. The statute, however, requires proof by “clear

and convincing evidence.”5




5
    Section 772.11 (1), Florida Statutes (2020), provides, in part;

                                         7
      Keeping this more rigorous standard of proof in mind, the trial court

failed to determine whether there was clear and convincing evidence that

1) a conversion took place; 2) whether the check required both parties’

endorsements or could be signed by one party; and 3) whether there was

any criminal intent on Bailey’s part, for purposes of determining whether

the elements of civil theft had been proven. 6

Count II – Fraud

      The elements of a fraud claim include (1) a false statement

concerning a specific material fact; (2) the maker's knowledge that the

representation is false; (3) an intention that the representation induces

    (1) Any person who proves by clear and convincing evidence
    that he or she has been injured in any fashion by reason of any
    violation of ss. 812.012-812.037 or s. 825.103(1) has a cause
    of action for threefold the actual damages sustained and, in any
    such action, is entitled to minimum damages in the amount of
    $200, and reasonable attorney's fees and court costs in the trial
    and appellate courts. Before filing an action for damages under
    this section, the person claiming injury must make a written
    demand for $200 or the treble damage amount of the person
    liable for damages under this section.
(Emphasis added).
6
  Bailey also argues that Covington did not make a pre-suit written demand
for the escrow money, and thus cannot sustain a cause of action under
section 772.11(1) (see FN4). We decline to address this issue because
Covington did file a pre-suit demand letter for the sale proceeds, and the
escrow amount can be considered part of the sale proceeds regardless
that the amount requested in the demand letter did not account for the
remaining escrow amount.


                                      8
another's reliance; and (4) consequent injury by the other party acting in

reliance on the representation. Lopez-Infante v. Union Cent. Life Ins. Co.,

809 So. 2d 13

, 15 (Fla. 3d DCA 2002).

     Covington asserts that she was defrauded when she relied on

Bailey’s assurance that Bailey would give Covington a fifty percent share of

the sale proceeds if Covington removed her name from the joint bank

account. There is evidence in the record that Covington voluntarily

relinquished her rights to the proceeds by taking her name off the joint

account the day after the closing, regardless of any oral promise made or

not made. The evidence suggests that Bailey only added Covington’s

name to her bank account right before the closing and only for closing

purposes.   Covington apparently had the opportunity at the closing to

request a separate check for proceeds, and again at the bank the next day.

There is also evidence in the record that Covington made no demand for

the money until several days later, and only after her nephew pressed her

for the proceeds.

     Further, the court did not determine whether Bailey made a false

statement to Covington concerning a specific material fact. “A false

statement of fact, to be a ground for fraud, must be of a past or existing

fact, not a promise to do something in the future." Vance v. Indian



                                     9
Hammock Hunt & Riding Club, Ltd., 

403 So. 2d 1367

, 1371 (Fla. 4th DCA

1981) (citing 27 Fla. Jur. 2d, Fraud and Deceit, § 24). An exception to this

general rule is that "where the promise to perform a material matter in the

future is made without any intention of performing or made with the positive

intention not to perform" a cause of action for fraud may proceed to a jury.

Id. at 1372

(citing Home Seekers' Realty Co. v. Menear, 

102 Fla. 7

, 

135

So. 402

(1931)). Here, the record does not support the conclusion that

Bailey intended to perpetrate a fraud, and the trial court did not make any

findings of fact to support the elements of fraud.

Count III – Monies had and received7

      Covington’s count for “monies had and received” alleges that Bailey

“surreptitiously gained possession of money rightfully due Plaintiff

(Covington);   possesses     Plaintiff’s    (Covington’s)    assets,   specifically

$42,191.39, which in equity and good conscience Defendant (Bailey) ought

to repay, together with interest, to Covington.”            This cause of action

7
  "Money had and received" was developed at common law as one of the
common counts in general assumpsit to cover a case in which a person
receives money that in equity and good conscience belongs to another. An
action for "money had and received," or the more modern action for "unjust
enrichment," is said to be a remedy equitable in nature, requiring proof that
the money has been paid due to fraud, misrepresentation, imposition,
duress, undue influence, mistake, or as the result of some other grounds
appropriate for intervention by a court of equity. 66 Am. Jur. 2d Restitution
and Implied Contracts § 156 (citations omitted).


                                       10
requires proof that Bailey fraudulently withheld the sale proceeds and that it

would be inequitable for Bailey to retain the entire sale proceeds. The trial

court made no findings to support this count.

      What is clear from the record on appeal is that Covington’s sole

contribution to the house purchase was her credit for loan approval. Bailey

paid for the property. There is no agreement in the record, or suggestion in

the   pleadings,     that   Covington   had   any   expectation   of   financial

remuneration for lending her credit. She was, however, a legal co-owner of

the property and co-mortgagee, with all the legal obligations and potential

liability that entails. As a tenant-in-common, Covington bore “equal

responsibility in making all payments necessary to maintain their ownership

of the property.” Kelly v. Kelly, 

583 So. 2d 667

, 668 (Fla. 1991). Indeed,

each co-tenant is ultimately liable for his or her proportionate share of the

“taxes, mortgage payments, insurance and maintenance and repair.”

McCarthy v. McCarthy, 

922 So. 2d 223

, 226 (Fla. 3d DCA 2005).

      Accordingly,      upon    partition,    a   co-tenant   shouldering     a

disproportionate responsibility for those obligations “is entitled to credit

from the proceeds of the sale for the other co-tenant's proportionate share

of those expenses.”

Id. (citation omitted). Martinez-Noda

v. Pascual, 

305

So. 3d 321

, 323 (Fla. 3d DCA 2020); see also Burnett v. Burnett, 

742 So.

11

2d 859, 861 (Fla. 2d DCA 1999) (holding a tenant who pays his cotenant's

proportional share of expenses such as mortgage payments, taxes, and

necessary repairs is entitled to credit for those payments against sale

proceeds).

      Generally, if one co-tenant pays all the mortgage payments, that

party is entitled to credit for payment of the other party's share when the

house is sold. Green v. Green, 

16 So. 3d 298

, 300 (Fla. 1st DCA 2009)

(citations omitted). As previously noted, the record shows that Bailey made

the down-payment, paid all closing costs, insurance premiums, taxes,

monthly mortgage payments, and house maintenance expenses over the

years. Covington made no payments towards the property and never

resided in the property.     Accordingly, the trial court erred in awarding

Covington fifty percent of the sale proceeds based solely on her status as

co-owner and on the statement that she “would have been fully and jointly

liable for this property if it had been defaulted.” The court’s conclusion fails

to take into consideration Bailey’s financial and equitable contributions to

the maintenance of the property over the years of ownership and is

insufficient to sustain the award without further findings of fact.

      The trial court failed to make sufficient findings of fact and

conclusions of law that addressed the elements of the pleaded causes of



                                       12
action.   We therefore reverse the final judgment and remand with

instruction to set the matter for an evidentiary hearing and to apply the

appropriate standards of proof in determining the pleaded causes of action.

The court is additionally instructed to determine Bailey’s entitlement to any

special equity in the property based on her contribution to the purchase,

mortgage, taxes and insurance premiums, and any other maintenance of

the property. See Schroeder v. Lawhon, 

922 So. 2d 285

, 293 (Fla. 2d DCA

2006) (holding an unequal division of the property may even be justified

where one cotenant has improved the property to be divided without

contribution   by   the   other   cotenant    or   cotenants.   Under   these

circumstances, the party who made the improvements should receive the

benefit of the enhancement he or she has made to the value of the

property if this result can be achieved equitably).

      Reversed and remanded with instructions.




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