NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

______ No. 10-4417

______ BARBARA HOUSTON, Appellant

v. JOHN R. HOUSTON, III; WEST AND FEINBERG P.C.; W HITNEY HOUSTON

_______ Appeal f rom the United States District Court f or the District of

New Jersey (No. 2:08-cv-5530 (PGS)) District Judge: Honorable Peter G. Sheridan

_______ Subm itted under Third Circuit LAR 34.1(a)

Novem ber 18, 2011

_______ Bef ore: FUENTES and CHAGARES, Circuit Judges

and POGUE, Judge

* (Opinion Filed: Decem

ber 1, 2011 )

_______ OPINION

_______

Hon. Donald C. Pog ue, Chief Judge , United States Court of International Trade , sitti ng * by desig nation.POGUE, Judge,

Appellant Barbara Houston appeals the District Court’s grant of sum m ary judgm ent in a suit arising out of a f am ily dispute over an alleged contract f or pay m ent of proceeds of

a lif e insurance policy

to satisf y a m ortgage debt on Appellant’s New Jersey residence (“residence”). The two questions at issue are whethe r the Statute of Frauds applies to the alleged contract, and if so, whether there is suf

f icient evidence to support the inf erence that the parties had an oral agreement. For the reasons discussed below, we af f irm the District Court’s decision. I. BACKGROUND Because we write primarily f or the benef

it of the parties, we recount only the critical f acts. Appellant is the step-m other of Appellee, Whi tney

Houston, and the widow of John R. Houston Jr. (“John Houston”), who is the Appellee’s late f ather. The
m ortgage debt was created when, in 1990, Appellee loaned John Houston the f unds to purchase the residence. The mortgage note was for a principal a m ount of $723,800.00. Jam es P. Cinque, f

orm erly an attorney

f or the Appellee, prepared the mortgage. John Houston was to m ake installm ent pay m ents on the m ortgage, and the m ortgage contract provided f

or def ault pay m ents and penalties. By

the tim e of

his death in February

2003, John Houston was in def

ault on these pay

m ents. Appellee (in the f

orm of Nippy , Inc. ) also purchased an insurance policy , in the

1
Appellee was the sole sha reholde r in Nippy , I nc. 1 2am ount of

$1,000,000, on her f

ather’s lif e. Various docum ents relating to the insurance policy were draf

ted, but none of

them were ever signed during the many y ears between the purchase of

the policy

and John Houston’s death. At his death, John Houston bequeathed all of

his assets to Appellant, and Appellee received the insurance proceeds. Appellee did not, however, apply the insurance proceeds to the mortgage. In addition, 2 when John Houston’s estate was probated Appellee did not object, in probate, to the transf er of the residence to the Appellant. The mortgage debt at the tim e of John Houston’s death was approximately $1.15 m illion, and at the tim e of Appellant’s f

iling this action it had increased to $1.4 m illion. Appellant f

iled a com

plaint in state court on May 9, 2008, alleging that Appellee illegally kept insurance proceeds f rom a policy she created f

or her f ather and that she f ailed to honor an agreement with her father to apply those proceeds to the m ortgage debt on the residence that Appellant received f rom John Houston’s estate. Appellee removed the action to f

ederal court on November 11, 2008. The District Court granted sum m ary judgm ent in Appellee’s f avor on October 20, 2010. II. JURISDICTION & STANDARD OF REVIEW W e have appellate jurisdiction over the matter under 28 U.S.C. § 1291 and review de novo whether the District Court’s grant of sum m ary judgm ent was appropriate. Kopec
After J ohn Houston’s death, the $1,000,000 life insuranc e policy was “ inexpl icably” 2 cre dited ag ainst the mortg ag e debt. At de position, t he ac countant re called that those were Appellee ’s instructions, but he neve r re called he aringof an a g ree ment. The c ourt infer s, from the fac t that there is a dispute in this case , that Appellee ultimately rec eived this money
. 3v. Tate, 361 F.3d 772, 775 (3d Cir. 2004). Construing the f acts in the light m ost f avorable to the Appellant, we consider whether there is a genuine dispute regar ding any
m aterial f act. Id.; Anderson v. Liberty Lobby , Inc., 477 U.S. 242, 248, 255 (1986). III. ANALYSIS A. Statute of Frauds Under the Statute of

Frauds (“SOF”), “a transf er of real estate” must be in writing. 3 N.J. STAT. ANN. § 25: 1-13 (W est 2011); see also id. at § 1-10. There is, however, an 4

3 a. A tra

nsaction intended to tra

nsfer an intere st in real estate shall not be eff ective to tra

nsfer owner ship of the intere st unless: (1) a descr iption of the rea l estate suff icient to identify

it, the nature of

the interest, the f

act of the transf

er a nd the identity

of the tra nsfer or and the transfe ree are established in a wr iting sig ned by or on beha lf of the transfe ror; or (2) the tr ansfe ror ha s place d the transf ere e in possession of the re al estate as a r esult of the tra

nsaction and the transfe ree has paid a ll or part of the consideration for the tra

nsfer or has r easona

bly relied on the eff

ectivene ss of the tra nsfer to the transfe ree ' s detriment. b. A transa ction which does not satisfy the re quirements of this sec tion shall not be enfor cea

ble except as a

n agree ment to transfe r an inter est in rea l estate unde r sec tion 4 of this act. c. This sec tion shall not apply to leases. d. This section shall not apply to the cre ation of ea sements by presc ription or implication. N.J . STAT. ANN. § 25:1-11 ( internal c itations omi tted). 4 “Intere st in real estate” mea ns any rig ht, titl e or e state in rea l estate, a nd shall include a le ase of

rea l estate, a

lien on rea l estate, a

profit, an ease ment, an intere st in a trust in real estate and a share in a coope rative 4exception to the “in writing” requirement if the terms of an oral agreement can be proven

by “clear and convincing evidence.” Id. at § 1-13(b). 5 Appellant argues that the SOF does not apply here because John Houston and Appellee’s agents had an oral agreement to use the insurance proceeds to reduce the balance of

the m ortgage on the residence rather than to transf er an interest in the real estate itself

. To the Appellant, under the SOF, only a discharge of

the m ortgage is required to be in writing. In other words, Appellant contends that the transf er of f unds at issue is not covered by

the SOF. Appellant calls this transaction a “reduction” of the balance on a mortgage, which does not “extinguish” the lien on the property and is thus not a transf

er of real estate under the SOF. As the District Court correctly concluded, however, the SOF applies to a transf er

apar tment. “Tra nsfer of an inter est in rea l estate” means the sa le, g ift, cre ation or exti nguishment of an intere st in real estate. N.J. STAT. ANN. § 25: 1-10.

5 [W ]hen an ag ree ment has not bee n reduc ed to writing , a “hig h standard of proof ” must be met to establish that intent. Specifica lly , “the e x istence of an [oral] ag ree ment betwee n the par ties as well as its essential ter ms must be proved by

clea r and c onvincing evidenc e.” T he Commissi on stated that, “[t] he cir cumstance s surroundinga tra nsaction, the nature of the transa ction, the re lationship between the parties, [and] their contempora

neous statements a

nd prior dea lings, if a

ny , all are rele vant to a dete rmination of whethe r the pa rties made a

n ag ree ment by

which they intend to be bound.” Morton v. 4 Or char d L and Trust, 849 A.2d 164, 168 (N.J. 2004) (internal c itations omi tted). 5of

real estate; including, but not lim ited to, an extinguishm ent. An extinguishm ent of a 6 lien is a lien’s discharge by legal operation. Black’s Law Dictionary 664 (9th ed. 2009). As the District Court noted, the alleged agreement to pay of f the m ortgage with the insurance proceeds is akin to an extinguishment of Appellee’s mortgage, and thus is subject to the SOF. Absent evidence or language suggesting otherwise, the alleged agreem ent to use the insurance proceeds to pay of f the m ortgage would have extinguished Appellee’s m ortgage. 7 The parties agree that while there is evidence of draf ts of agreem ents, em ails and other docum ents which were produced during discovery , there is no evidence of a signed agreem ent between John Houston and Appellee stipulating that the lif e insurance proceeds be used to reduce the mortgage. Therefore, bec ause the SOF requires that, unless there is “clear and convincing evidence” of an oral agreement, an instrum ent m ust be signed and in writing in order to create a binding promise or agreem ent, it f ollows that
we m ust determ ine whether there is evidence suf f icient to create an issue of m aterial f

act of the existence of

an oral agreement.

B. Oral Agreement Clear and convincing evidence is somewhere between a preponderance of the See supra

note 4. 6 The District Court also cor rec tly sug g ests that even if

the SOF did not apply , then 7 Appellant would still have to prove by a pre pondera

nce of the evidenc e that ther e wa s a bre ach of the contra ct or pa st perfor mance on the contra ct. Howe ver, a s discussed below, none of the “ag ents” providinginformation for the rec ord re call any such ag ree ment. 6evidence and “bey ond a reasonable doubt.” e.g., Aiello v. Knoll Golf Club, 165 A.2d 531, 534 (N.J. Super. Ct. App. Div. 1960). W e agree with the District Court that the evidence in the record here would not permit a reasonable m ind to conclude (or be convinced) that the existence of

an oral argument was clear. The test is whether there was suff icient evidence of

a “m eeting of

the m inds” to f

orm an agreement. Morton, 849 A.2d at 165. Appellant argues that the record, including draf ts and letters regarding the
m ortgage, supports her claim that the insurance proceeds were intended to pay of f the balance of

the m ortgage upon John Houston’s death. Appellant submit s num erous docum ents and correspondence between various of Appellee’s empl oy ees regarding the alleged contract. According to Appellant, those letters and emails show that Appellee bought the insurance in order to pay f or the m ortgage debt, and that the parties and their agents intended to agree to a binding contract to that end. On the other hand, Appellee contends that no such agreement exists and that she never even discussed the issue with her f ather. She notes that a 1999 re-certif ication of the insurance policy

involved no m odif

ications or contingencies, and preserved her status as the sole benef

iciary . Additionally , Appellee notes that the documents in t he record conf irm that a writing was required to change the policy , and that none of the draf ts were ever signed. Notably , at the tim e of deposition, neither Appellee nor any of her agents

7could recollect an agreement. 8

The parties both f

ocus on a 1991 letter f

rom Jam es Cinque to Appellee’s f orm er accountant, Robert Ry der. The letter indicated Appellee’s agreement to apply the insurance proceeds to the mortgage balance due, but the letter was not signed. Both Cinque and Ry der testif

ied to a lack of

knowledge about that agreement. Sim ilarly , throughout the record, there was discussion regarding the policy , the m ortgage, and the potential application of

the insurance proceeds to the mortgage, but there is no actual signature by

either party

and no tangible proof

of the parties’ intent. Thus, while draf

ts of an agreement exist, there was also a period of many y ears during which the parties had ample opportunity to sign the agreem ent, but did not do so. W hile the f

ather-daughter relationship might suggest a casual relationship regarding f inances, it can also suggest that if there had been an intent to complete the agreem ent, it would have been by

a writing, as proposed by the attorney s and other agents. See Morton, 849 A.2d at 168 (noting that the “relationship between the parties” is relevant to determ ining “whether the parties made an agreem ent by which they

intend to be bound.”). Nonetheless, anticipation of a written agreement does not preclude a finding of an oral agreem ent if

the parties’ intent to be bound is clear. McBarron v. Kipling Woods L.L.C., 838 A.2d 490, 491 (N.J. Super. Ct. App. Div. 2004).
The District Court also mentioned that the “ Korf le tter” indicated that J ohn Houston 8 knew that a

n ag ree ment was ne cessa

ry , but he still never sig ned any ag ree ment during a per iod of over a deca de.
8Theref ore, the court m

ust decide whether there is suf f icient evidence of

the parties’ intent to be bound by

an oral agreement. Morton, 849 A.2d at 170-71. Both past dealings and the relationship of

the parties can dictate such an intent to agree. Morton, 849 A.2d at 168-69. Appellee denies any such intent, while Appellant suggests that the intent to agree should be inf

erred because it would be the norm for f am ily m em bers to conduct business in a less f

orm al m anner than if

they were unrelated. It remains the case, however, that there is no tangible evidence that Appellee intended to f inalize an agreem ent with her f

ather, m uch less that she cam e to an oral agreement with him to do
so. IV. CONCLUSION Accordingly , we will af

f irm the judgm ent of

the District Court.

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