Opinion ID: 2599720
Heading Depth: 3
Heading Rank: 1

Heading: Background and 1997 Agreement

Text: Allen and Vaughn were married in 1990. At the time of their marriage, Allen was a real estate broker and Vaughn was a hairdresser, but later in 1990, Vaughn became a licensed real estate agent. They divorced in 1996, and they agreed in their property settlement to divide evenly the proceeds from two parcels of real estate that they expected to sell in the near future. But the two properties  a residence in Palmer and a lot in downtown Wasilla  did not sell. In April 1997, with both properties still unsold, Allen and Vaughn met to draft a new agreement regarding these two properties. No attorneys were involved in drafting the agreement. Under the 1997 agreement, Vaughn was to receive the Palmer residence and Allen was to receive the Wasilla lot, with each buying out the other's share of equity. Because they had built more equity in the lot allocated to Allen than in the property given to Vaughn, the amounts were offset, with Allen paying the difference. The agreement, which was in Vaughn's handwriting, provided for Allen's payment of this amount within five years: 1. Barbara A. Vaughn will receive $26,740.00 . . . in exchange for her interest in the [Wasilla] property. 2. Wesley S. Allen will pay Barbara A. Vaughn $8,500 . . . from the proceeds of the sale of [a separate property] as a down payment for this property. 3. The balance of $18,040 [1] . . . is to be paid in full plus 5% interest per year on or before April 28, 2002. 4. If this note is not satisfied, Barbara A. Vaughn will maintain an interest of 50% in the above described property. Vaughn's interest in the property was transferred to Allen by quitclaim deed. [2] Vaughn and Allen both testified about the drafting of the contract. According to Vaughn, they discussed each provision in detail, and Allen helped her with the wording. Vaughn claimed that she proposed the fourth paragraph and that she explained it to Allen as follows: [Y]ou have never paid the bills, you have all of our property several times, many times, all of the time in foreclosure. There is nothing that you have done to show me that you will pay me this amount of money and so  and I'm giving you five years and if you do not pay me within that time frame, then I will just resume my interest in  my half interest in the property. Vaughn testified that her understanding of the fourth paragraph was that if the debt was not paid by the deadline, [t]he property would go half back into my name and it would be half mine. I would be the legal half owner of it. Allen acknowledged that he had promised to pay Vaughn to equalize the property distribution but maintained that there was no discussion or agreement that Vaughn would retain a fifty percent interest in the property if he failed to pay on time. Allen asserted that he understood the fourth paragraph to mean that [Vaughn] will maintain an interest in the property until what I owe her is paid. Allen claimed that if he had known that the agreement contained a forfeiture provision, he would not have signed it. In September 1997 Vaughn's attorney sent Allen a deed of trust note and escrow instructions. Although the agreement had already been recorded, Vaughn's attorney claimed that the proposed deed of trust better set [] forth the intent of the parties and [was] more in line with the sort of document title professionals . . . are accustomed to working with. Allen did not respond. After he received title to the property, Allen's only use of it was to place two railroad cars on it. Allen failed to pay the taxes on the property, and the Matanuska-Susitna Borough obtained a judgment of foreclosure in July 2001. [3] Allen testified that he was unable to pay the taxes at the time but that he believed he could redeem the property at any time during the ten years following the foreclosure. Vaughn ultimately paid to redeem the property and was issued a repurchase quitclaim deed by the City of Wasilla. Approximately a month before the deadline, Vaughn called Allen to remind him of his obligation. Allen promised to pay but did not do so. On May 11, 2002  two weeks after the due date  Allen gave Vaughn a handwritten note promising to pay her $22,000 in exchange for extend[ing] the agreement to July 1, 2002. Because of the five percent annual interest provision, this was less than the amount that had been due in April 2002. Vaughn did not respond to this offer. Further negotiations happened between the parties, culminating on June 16, 2003, when Allen offered to pay the entire amount due and to reimburse Vaughn for her tax payments on the property. This offer was also rejected by Vaughn.