During my practice, a party may occasionally express a desire to cohabitate with a future partner rather than pursue marriage. Frequently, the justification focuses on the desire to keep finances separated should the relationship end. Yet, a recent decision from the Minnesota Supreme Court has demonstrated an alternative method to dividing property that does not rely on marital bonds.
The Minnesota Supreme Court affirmed the decisions of the lower courts in the case of David Carl Hepfl vs. Jodine Patrice Meadowcroft, resolving that Hepfl is entitled to compensation for the construction and furnishing of a cabin on Meadowcroft’s land based on the principle of unjust enrichment.
Why This Case is Significant
The case background reveals that Hepfl and Meadowcroft had a lengthy and complex history, including two marriages, two divorces, and multiple reconciliations. Yet, after their second divorce but during a later reconciliation, the couple decided to construct a cabin on Meadowcroft’s nonmarital property, awarded to her during their first divorce. Hepfl financed the cabin and associated amenities, including furnishings, a dock, and an outhouse. Hepfl filed a civil lawsuit demanding compensation on the grounds of unjust enrichment. The district court ruled in favor of Hepfl, ordering Meadowcroft to pay him $56,633 for the cabin’s construction and additional values for returning or compensating for the personal property, dock system, and outhouse. The district court determined that Meadowcroft would be unjustly enriched if allowed to retain the cabin and its fixtures without compensating Hepfl, crediting his testimony that the expenditures were not intended as gifts.
Clarification on Unjust Enrichment
The Minnesota Supreme Court clarified that the district court’s legal basis was sound even though it erroneously focused partially on Meadowcroft’s conduct. The Minnesota Supreme Court underlined that the fundamental element of unjust enrichment in this context does not require proof of morally wrongful conduct by the defendant. Rather, the critical issue is whether retention of the benefit by the property owner would be inequitable.
The evidence established that Hepfl paid for the cabin and related fixtures with the understanding that these would be for mutual use during their relationship and without intending for Meadowcroft to retain them unconditionally.
Ultimately, the Minnesota Supreme Court affirmed the district court’s decision that Meadowcroft’s retention of the constructed cabin and its fixtures without compensating Hepfl constitutes unjust enrichment, supporting Hepfl’s claim and entitling him to equitable relief.
Concerns with Commingling Money
The takeaway from this case is simple: commingling money with a significant other, regardless of the marital relationship, can have consequences, and in some cases, those consequences may be unintended. Parties contemplating cohabitation and any shared expenses should consider a Cohabitation Agreement. Such agreements allow the parties to address terms regarding property and financial matters should the relationship terminate. An equally important takeaway is the importance of antenuptial (prenuptial) agreements for couples contemplating marriage, especially in cases where the parties have pre-marital assets.
For more information on this important decision, contact Andrew T. Hunstad at ahunstad@lommen.com or at 612-336-9303.