Robert L. Larson, Personal Representative of the Estate of Marion Levine, Respondent,
Rebecca Caron, et al., Appellants.
Hennepin County District Court File No. 27-CV-12-1241
Michael L. Perlman, Perlman Law Office, Minnetonka, Minnesota (for respondent)
David L. Shulman, Craig Buske, David L. Shulman Law Office, Minneapolis, Minnesota (for appellants)
Considered and decided by Hooten, Presiding Judge; Cleary, Judge; and Chutich, Judge.
Appellant challenges the district court's grant of summary judgment to respondent, arguing that the district court erred by concluding that forgiveness of debt must be in writing to be enforceable as a gift, and rejecting other evidence that the decedent forgave the debt. Respondent cross-appealed, arguing that the district court erred by barring the recovery of the interest accrued on the debt on the basis of the doctrine of laches. We reverse and remand.
Appellants Bradley and Rebecca Caron are a married couple and Rebecca Caron is the step-granddaughter of the decedent, Marion Levine, who died on January 22, 2009. Respondent Robert Larson is the personal representative of Marion Levine's estate. On October 5, 2000, appellants borrowed $100, 000 from decedent and Levine Investments, an investment company owned and controlled by Marion Levine as sole proprietor. In exchange for the loan, appellants signed a "due on demand" promissory note which provided that interest would accrue at a rate of 6.5% per annum payable annually.
Between 2000 and 2005, appellants made a total of six payments of principal and interest. Appellants made four annual interest-only payments for the years 2001 through 2004, paying $6, 500 on September 19, 2001, $4, 015.75 on September 18, 2002, $3, 025 on December 16, 2003, and $3, 025 on September 23, 2004. Additionally, appellants' made principal payments of $45, 000 on October 5, 2001 and $27, 500 on April 20, 2005. According to appellants, as of the last payment, they had paid a total of $89, 065.75 on the note and owed only $27, 500.00 in principal. But, according to respondent, appellants owed $30, 087.67 in outstanding principal and $15, 815.98 in interest through December 31, 2011, for a total of $45, 903.65.
Appellants claim that they called decedent on May 1, 2005, to tell her to expect a check in the mail for final payment on the note. Appellants averred that, during this conversation, decedent forgave the remaining principal balance on the note. Appellants further stated that they sent a letter thanking decedent for the forgiveness of the debt. Appellants made no principal or interest payments on the promissory note after the conversation, and decedent made no demands, requests, or inquiries on the promissory note for nearly four years between the conversation and her death in January 2009. However, decedent's gift tax returns from 2005 to 2007 did not reflect a forgiveness of appellants' debt, though she recorded numerous cash gifts to other friends and relatives. Additionally, Levine Investments balance sheets after the conversation reflected the promissory note to appellants as a loan receivable.
In 2009, respondent, acting as the personal representative of decedent's estate, telephoned appellants and asked for information regarding the promissory note. During this conversation, appellants informed respondent that the decedent had forgiven the balance due on the promissory note. At that time, respondent did not dispute appellants' claims that the balance of the note had been forgiven, and acknowledged that while appellants had made sizable payments, those payments stopped in 2005.
Between May 1, 2005 and November 1, 2011, neither decedent nor anyone acting on her behalf made any formal request for payments from appellants on the promissory note. It was not until November 1, 2011—over two years after the 2009 inquiry—that respondent demanded appellants pay the balance due on the note. In a letter dated November 29, 2011, appellants responded to the demand for payment, stating that decedent "forgave the remaining balance due on the note shortly after the April 20th, 2005 principal payment." In January 2012, respondent filed suit against appellants for $45, 903.65, including $30, 087.67 in principal and $15, 815.98 in interest.
Respondent moved for summary judgment, arguing that there was no documentation of the forgiveness in any of the decedent's business or personal records and no indication that she paid gift taxes relative to the debt forgiveness. Appellants argued that the debt had been forgiven by the decedent and that no attempts were made by decedent or her estate to collect the debt for more than six years after their last payment, even though ...