Sued for Breach of Contract

[sampaul]

What is the name of your state (only U.S. law)? CA

I recently learned that my ex-wife is suing me for breach of contract (I have not been served yet).

She claims that shortly before we got married that she lent me almost $40,000. She didn’t. The amount was around 1/5th of that.

My questions are how important are the following factors?

1. There was no written contract. Or at least there was never an agreement that I signed. Originally there was going to be an agreement but I refused to sign it because she didn’t do her part.

2. There is no copy of a check or receipt for money received. The amount that she did give me was in cash.


3. She claims she gave me $40,000 but according to her tax returns she has never made more $15,000 a year. Our rent alone was more than her income. She simply does not have the means to come up with that kind of money.

I am eager to be served so that I can reply to this. Based on what I have written above, does it seem like this would be the kind of case that would go anywhere?

 

[swalsh411]

Not without a written repayment agreement.

 

[latigo]

What is the name of your state (only U.S. law)? CA

I recently learned that my ex-wife is suing me for breach of contract (I have not been served yet).

She claims that shortly before we got married that she lent me almost $40,000. She didn’t. The amount was around 1/5th of that.

My questions are how important are the following factors?

1. There was no written contract. Or at least there was never an agreement that I signed. Originally there was going to be an agreement but I refused to sign it because she didn’t do her part.

2. There is no copy of a check or receipt for money received. The amount that she did give me was in cash.


3. She claims she gave me $40,000 but according to her tax returns she has never made more $15,000 a year. Our rent alone was more than her income. She simply does not have the means to come up with that kind of money.

I am eager to be served so that I can reply to this. Based on what I have written above, does it seem like this would be the kind of case that would go anywhere?

It would be a mistake on your part to assume that the previous poster is correct in saying that the subject agreement is unenforceable because it was not reduced to writing and signed by you.

There is nothing in California’s statute of frauds California Civil Code Section 1624 requiring that in order for such an agreement to be valid it must be evidenced by a written memorandum and subscribed to by you.

Also, because it was not conditioned upon the marriage, nor to become effective only upon marriage, it would not qualify as a “premarital agreement” under California Family Code Sections1610, which agreements must be in writing and signed by both parties. Family Code Section 611.

There is a scenario from what you could possibly benefit. It's fairly remote though, but I will mention it anyway.

That is, if you had filed the divorce action and she had responded by answering the complaint, it could be argued that her claim for breach of contract was a compulsory cross claim. And her failure to assert it at that time resulted in the claim being waived.
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Just don’t be lulled into a sense of false security thinking that the nature of this alleged contract is such that it is unenforceable simply because you didn’t commit to it in writing.

I realized there is a material question as to the actual amount loaned. And that it is her burden of proof. But the down side from your perspective is that you admit that some money was loaned and you tendered periodic payments to her.

Plus the statute of limitations – should it be a factor - would have begun to run anew with each of those partial payments.

 

[swalsh411]

I stand by my earlier advice. She will need actual evidence of the 40k loan.

Have you paid back what she did by your own admission loan you?

 

[sampaul]

Latigo,

Thank you for your response. I was lead to believe that in California that any amount over $1,000 required a written contract. When it comes to oral contracts what does it come down in a court of law, would it be a he-said, she-said?

There is no record of my ever depositing $40,000. She has no cancelled checks and no receipt. It seems crazy that someone can sue when there is no proof.

Also, this is not part of our divorce. She took this as a separate action. I briefly talked to her divorce attorney and he had no knowledge of it.

I am in the investment business. I put together real estate partnerships for investors. Which means at some point in time I have to sign a document saying that there are no legal actions against me or if there is I have to list the details of the suit. A friend of mine suggested this morning that this could be her way of shaking me down for money. In the past she has threatened to "ruin" me if I did not give her money. I had to file a police report a few months ago for stalking and harassment.

 

[Zigner]

How long ago did this alleged loan occur?

 

[sampaul]

How long ago did this alleged loan occur?

One year ago.

 

[sampaul]

I stand by my earlier advice. She will need actual evidence of the 40k loan.

Have you paid back what she did by your own admission loan you?

I have given her quite a bit more. During our separation I gave her quite a bit of money, paid bills for her, etc.

 

[Zigner]

You are not going to be sued for $40k on a verbal contract. Yes, I've seen the crystal ball.

 

[latigo]

I stand by my earlier advice. She will need actual evidence of the 40k loan. . . .

Stand by which? You’re already equivocating.

So which of your two opinions are you going to stand by? (1) ”A written repayment agreement”, or (2) “actual evidence of a loan”?

Or does the distinction escape you?

The OP admits that he did borrow money from the woman prior to the marriage. Also, that he has made payment against that loan of money.

If you don’t believe that such evidence along with her testimony in chief will amount to a prima facie case - OR that she cannot move to amend her pleadings to conform to the evidence as to the true amount loaned and the balance due and payable - OR that as a category oral agreements are not unenforceable in a court of law, then you should be asking the questions and not trying to answer them.

 

[tranquility]

Since the loan was purportedly from separate property (before marriage), did she properly report the imputed interest on her/your tax returns for the "loan"? (Married people can give gifts without taxable consequences, fiancees, not so much.)

True, it does nothing regarding the proof of the matter. But, it does help put the amount in context. (And, give a negative consequence for suing for more than was borrowed. Odds are it was not reported properly and a tax bill could be due for ALL the interest.)

 

[latigo]

When it comes to oral contracts what does it come down in a court of law, would it be a he-said, she-said?

There is no record of my ever depositing $40,000. She has no cancelled checks and no receipt. It seems crazy that someone can sue when there is no proof.

But there is admissible proof - at least some! For one, her testimony on direct that she did in fact loan you a certain sum of money.

What documentation she may have appears to be totally a matter of speculation on your part.

Are you going to commit perjury by denying that you received money from her? How do you intend to explain away the purpose of your payments to her if not meant as repayment of a loan?

As far as the depositing business, sure if you had made such a deposit and she could document that fact, it would be strong corroborating evidence of the loan.

But your testifying that there was no such deposit, when in fact there wasn’t, would have no probative value whatsoever. It would be like defending a homicide charge on lack of proof that the accused ever bought any bullets.

. . . this is not part of our divorce. She took this as a separate action. I briefly talked to her divorce attorney and he had no knowledge of it.

Her divorce attorney discussed her business affairs with you? Mmm . . My bet is that the lawyer won’t get on the witness stand and admit that he or she spoke to you about the client!

I am in the investment business. I put together real estate partnerships for investors. Which means at some point in time I have to sign a document saying that there are no legal actions against me or if there is I have to list the details of the suit. A friend of mine suggested this morning that this could be her way of shaking me down for money. In the past she has threatened to "ruin" me if I did not give her money. I had to file a police report a few months ago for stalking and harassment.

Nothing there is going to help you in court. Not unless you can produce a competent witness who can testify hearing her threats to “shake you down for money”.
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Obviously hers is not a strong case, But I can’t see where at this point you are in a position to muster up much of defense other to deny and deny.

When and if this lawsuit is filed the best thing you can do is to hire an experienced trial attorney who can ferret out through the discovery process just what kind of case she can put on.

The worst thing you could do is to go court on the weakness of her case. A lot of attorneys have turned to honest work doing just that.

Because things never look quite the same once inside that courtroom as they did on the outside.

Another troublesome thing here is that you admit receiving money from her and admit that it was in the nature of a loan.

But as I read your posts you are not going to be able to testify accurately as to the total amount of cash your received. On the other hand she is going to state that a definitive amount was received. (And pleae note that she doesn't have to prove the source of the money, not on direct.)

If you are sitting in court saying, "Well I don't know howmuch. ” and, and she is saying. “Well, I do know how much.” – guess what?

 

[Zigner]

Again, the other party is NOT going to head in to "real" court to sue for $40k based on some nebulous maybe/maybe-not oral contract. Just not going to happen.
Now, the other party COULD sue in small claims where the rules are much "looser", but that suit would be capped at a much lower amount.

 

[sampaul]

Ok...so I have an update. I got the filing.

She is suing for almost 60K. Admits that it was an oral agreement. There are attached to the filing a couple of returned checks totaling less than $3,000.

I did my own homework today and...

My bank records indicate that I deposited a total of $8,200 from her.

My bank records also indicate that I either gave her or spent on her over 20K on her between June and December of last year.

 

[Zigner]

Ok...so I have an update. I got the filing.

She is suing for almost 60K. Admits that it was an oral agreement. There are attached to the filing a couple of returned checks totaling less than $3,000.

You received a SUMMONS? Or copies of court papers? To what court have you been summoned?

I did my own homework today and...

My bank records indicate that I deposited a total of $8,200 from her.

My bank records also indicate that I either gave her or spent on her over 20K on her between June and December of last year.

It doesn't matter what you spent on her.