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Property contract with no-cheating clause enforceable

January 3, 2017

A Jefferson County woman must convey her assets in a property she shared with her ex-boyfriend after she became pregnant by another man in breach of a contract she signed with the ex-boyfriend, the Indiana Court of Appeals found Friday.

In Tina L. Hemingway v. John P. Scott, 39A04-1604-PL-957, John Scott inherited a 10-acre parcel of land from his father in 2001. After moving in together, Tina Hemingway and Scott each signed a contract in 2012 in which Scott promised to convey the property to himself and Hemingway and also included a list of conditions that would constitute a breach, including “cheating.” Additionally, a remedies clause held that any breach by Hemingway would require her to convey her interest in the property to Scott via a quitclaim deed.

About two months later, Hemingway became pregnant by another man and moved out in June 2013, when she ceased any financial or other contributions to the property. On June 17, Scott sent Hemingway a notice that she was in breach of the contract and was required to convey her interest back to him pursuant to the contract.

In September 2015, Hemingway filed a petition for partition of the property and Scott filed a counterclaim for breach of contract and replevin. In April 2016, the Jefferson Circuit Court issued an order concluding that Hemingway had breached the contract and requiring her to convey her interests back to Scott by quitclaim deed.

Hemingway appealed, arguing that the contract merged into the deed conveying the property to Scott and Hemingway as joint tenants and, thus, was extinguished by the express terms of the deed.  But Indiana Court of Appeals Judge Terry Crone wrote that the language of the contract held that it should “be attached to the property deed,” indicating the intent of the parties for the contract to survive the deed.

Further, Crone wrote that the contractual obligations to fidelity and to shared expenses and labor were not necessary to the completion of the conveyance, but instead were “prospective in nature and addressed conduct that would trigger the operation of the remedies clause, specifically here, a reconveyance to Scott.”  Thus, the doctrine of merger did not apply, he wrote.

Hemingway further argued that the contract was unenforceable based on public policy that prohibits contract in consideration of meretricious sexual services, but Crone wrote that the appellate court also disagreed with that argument. He likened the contract to a prenuptial agreement and pointed out that Scott and Hemingway had previously lived together and then separated, so the contract was written with the intent that they would get back together and conduct themselves as a unit with respect to the property.

Further, Crone wrote that the forfeiture suffered by Scott if the contract were not enforced would be “serious and grievous.” Additionally, Hemingway breached not only the no-cheating clause, but also a clause requiring her to contribute to the property’s expenses when she moved out in June 2013. Thus, the appellate court found that Hemingway must reconvey her interest to Scott by a quitclaim deed.
 

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