Dawn Gilronan v. Joe Birmingham

IN THE COURT OF COMMON PLEAS FOR THE STATE OF
DELAWARE IN AND FOR NEW CASTLE COUNTY

Dawn Gilronan, )
)
Appellant, )
)
Vv. ) Case No. CPU4-18-005618
)
Joe Birmingham, )
)
Appellee. )
Submitted: September 18, 2019
Decided: January 17, 2020
Donald L. Gouge Jr., Esq. William D. Sullivan Esq.
800 N. King Street, Suite 303 901 N. Market Street, Suite 1300
Wilmington, DE 19801 Wilmington, DE 19801
Attorney for Birmingham/Appellee Attorney for Gilronan/Appellant

DECISION AFTER TRIAL

SMALLS, C.J.
FACTUAL AND PROCEDURAL HISTORY

This is a de novo appeal from the Justice of the Peace Court pursuant to Court
of Common Pleas Civil Rule 72.3 which involves a dispute regarding the sum of
Thirteen Thousand dollars ($13,000.00). Plaintiff below/Appellee, Joe Birmingham,
(“Birmingham”), alleges the sum represents a loan for which repayment is required.
Defendant below/Appellant, Dawn Gilronan, (‘“Gilronan”), alleges the funds in
dispute was a gift with no anticipation of repayment.

On September 18, 2019, a bench trial was held. During trial, Birmingham, and
several other witnesses, testified in support of his position. Additionally,
Birmingham submitted multiple exhibits including bank statements, evidencing the
transfer of the funds, and emails where he sought repayment from Gilronan that went
unanswered. Gilronan testified but did not present any additional witnesses, she
denied the allegation that there were any discussions regarding repayment of the
$13,000. Gilronan submitted exhibits regarding her mortgage payments and
satisfaction and texts messages from Birmingham to a third person who did not
testify at trial. Based upon the testimony and exhibits, I find the relevant facts as set
forth below.

Prior to the dispute, Birmingham and Gilronan were in a relationship for
approximately 1 4 years starting in 2013 and ending in July of 2015. In December

of 2013, Birmingham and Gilronan had discussions regarding Gilronan moving out
of her current home and buying a house in North Wilmington. Birmingham
suggested that Gilronan reduce her debt in order to enhance her possibility of
qualifying for a mortgage. According to Birmingham, during these discussions he
agreed to help Gilronan pay down her credit card debt, as long as she paid him back
when she was in the house and “settled”. Thereafter, Birmingham provided Gilronan
with his bank account information, which Gilronan subsequently used to pay
$13,000 in credit card debt in two installment on two different credit cards.
Birmingham stated that although there was no exact repayment date, he expected to
be paid back within one year. Further, Birmingham testified he did not claim this
transfer as a gift on his income taxes.

In November 2014, Gilronan purchased a house in North Wilmington,
Delaware for $249,000. In July 2015, the relationship ended between Birmingham
and Gilronan. Thereafter, on February 16, 2016, Birmingham testified he made his
first request for repayment when he sent Gilronan an email to her personal email
account, to which Gilronan did not respond. On February 24, 2016, Birmingham
testified he made a second request for repayment in the same manner by sending an
email to Gilronan’s personal account. On March 2, 2016, Birmingham sent a third
request seeking repayment, but this time the request was sent to Gilronan’s work
email. Birmingham testified he then sent several additional emails seeking

repayment, to Gilronan’s work email on March 7, 11, and 15, 2016. Gilronan did
not respond to any of these requests. However, she testified that she does not
remember seeing the emails sent to her personal account but does remember seeing
the emails sent to her work account.

During trial, several witnesses called by Birmingham testified as to their
individual conversations with Birmingham regarding the $13,000 exchange between
Birmingham and Gilronan. Mark Levere, Karynne Henry, and Joe Slank all stated
that they had a conversation with Birmingham sometime before or shortly after
Gilronan moved into the North Wilmington house, in which he stated he loaned
Gilronan money,

Gilronan testified as to her recollection of the events surrounding her receipt
of the $13,000 and indicated there were no conversations regarding repayment.
Gilronan did not call any additional witnesses to testify on her behalf to support her
position. At trial, Gilronan stated that she believed the $13,000 was a gift, however,
when questioned on cross examination, she indicated that she did testify to this fact
when the matter was before the Justice of the Peace Court but never said this prior
to the initial trial. After making several renovations, she sold the North Wilmington

house for $349,000 on August 11, 2017, $100,000 more than the purchase price.
PARTIES’ CONTENTIONS

Birmingham asserts that a contract was formed when he loaned Gilronan the
money, which was subsequently used to pay off her debt. Further, it is Birmingham’s
position that the Statute of Frauds does not apply because there was a possibility of
the loan being repaid within one year. Lastly, Birmingham argues that Gilronan’s
failure to raise the Statute of Limitations, which is an affirmative defense, in her
Answer and at the Justice of the Peace Court constitutes a waiver of such defense.

Gilronan admits using Birmingham’s bank information to pay off two of her
credit card accounts in the amount of $6,500 each. However, Gilronan avers that she
never promised to pay the money back, and she understood the $13,000 to be a gift.
Gilronan states that Birmingham is only seeking repayment because their
relationship ended. Further, Gilronan asserts that Birmingham’s claim is barred from
suit by both the Statute of Frauds and the Statute of Limitations.

Discussion

As trier of fact, the Court is to assess the credibility of the witnesses and,
where there is a conflict in the testimony, to reconcile these conflicts, “if reasonably
possible[,] so as to make one harmonious story.”!' In doing so, the Court takes into

consideration the demeanor of the witnesses, their apparent fairness in giving their

' Nat’! Grange Mut. Ins. Co. v. Davis et. al., 2000 WL 33275030, at *4 (Del. Com. P1.).
4
testimony, their opportunities in hearing and knowing the facts about which they
testified, and any bias or interest they may have concerning the nature of the case.’

In civil cases, “a Plaintiff has the burden of proving the elements of their case
by a preponderance of the evidence.? Proof by a preponderance of the evidence
means proof that something is more likely than not.”* “The side on which the greater
weight of the evidence is found is the side on which the preponderance of the
evidence exists,””

The Court finds that an enforceable contract was formed between the parties
and that said contract was breached when Gilronan failed to make repayment and
subsequently repudiated the contract. Further, the Court finds that Gilronan’s
failure to assert the defense in her pleadings constitutes waiver of her Statute of
limitations defense® and the Statute of Frauds is not applicable.

I. Breach of Contract
To succeed on a breach of contract claim, the Plaintiff must show: “(1) a

contractual obligation; (2) a breach of the obligation imposed by the contract; and

(3) resulting damages.”’ Because the existence of a contractual obligation is an

* See State v. Westfall, 2008 WL 2855030, at *3 (Del. Com. PI.).

* Narayan v. Sutherland Global Holdings Inc., 2016 WL 3682617, at *8 (Del. Ch.) (internal citations omitted).
4 fd.

> Trumbo v, LST Investments, 2015 WL 8200712, at *3 (Del. Com. PI.) (internal citations omitted).

® CCP Civ. R. 8.

1 SARN Energy LLC y. Tatra Def. Vehicle a.s., 2018 WL 5733385, at *3 (Del. Super.).

5
element to a breach of contract action, the Court must first analyze whether a contract
was established between the two parties.
A. A Contractual Obligation Existed
Matters concerning the formation of a contract are questions of fact.’ A valid
contract exists if: “(1) the parties intended that the contract would bind them; (2) the
terms of the contract are sufficiently definite; and (3) the parties exchange legal

9

consideration.”” Unless the Statute of Frauds apply, “an oral agreement is perfectly

enforceable so long as these elements are proven by a preponderance of the
evidence.”!”

In determining whether the parties intended to be bound by an oral agreement,
the Court should look to “objective manifestations of assent” and the “surrounding
circumstances” that evidences the parties’ intentions.'' Therefore, overt
manifestations and not a party’s subjective intent determines whether a contract has
been formed,'? Birmingham stated that when he provided Gilronan with his bank

account information, he told Gilronan that he wanted to be paid back once she was

in the house and settled. Although Gilronan claims she didn’t promise to pay the

® Sheets v. Quality Assured, Inc., 2014 WL 4941983, at *2 (Del. Super.).

° Osborn ex rel, Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010).

0 Sheets, 2014 WL 4941983, at *2.

"! Stone Creek Custom Kitchens & Design v. Vincent, 2016 WL 7048784, at *3 (Del. Super.).

" Sheets, 2014 WL 4941983, at *2; Ripsom v. Beaver Blacktop, Inc., 1988 WL 32071, at *10 (Del. Super.), affd,
567 A.2d 418 (Del. 1989) (“the law is concerned with the external manifestations of the parties rather than their
undisclosed mental state, and it is enough that one party manifests an intention to induce the other's response and to
be induced by it, and that the other responds in accordance with the inducement.”).

6
money back, Gilronan did subsequently use Birmingham’s bank account funds to
pay down her credit debt. Based on the following factors, i.e. the fact that the parties
were in a new relationship, the fact that the funds were used to facilitate the
acquisition of property in her name, and Gilronan’s use of Birmingham’s bank
account information after he told her his terms of its use, I find these support a
conclusion that there exist an anticipation of repayment.

Next, Gilronan argues that because the agreement was to repay the loan once
Gilronan was “settled in the house”, such terms are not sufficiently definite to form
a contract. The Court will deny the existence of a contract only if the terms “are so
vague that a Court cannot determine the existence of a breach.”'? “Delaware adheres
to the ‘objective’ theory of contracts, i.e. a contract's construction should be that
which would be understood by an objective, reasonable third party.”'* When
construing the meaning of an oral contract, a Court must look to surrounding
circumstances and the parties' course of dealing in order to ascertain their intent.'°

Because of their ongoing relationship, when Birmingham loaned Gilronan the
money, he was acutely aware of her overall financial situation. She was in debt and
was being forced out of her home by her ex-husband. Based on the circumstances

surrounding the loan I find that the term “in the house and settled” means that

'3 Bryant v. Way, 2011 WL 2163606, at 4 (Del. Super.); Cont’l Ins, Co. v. Rutledge & Co., Inc., 750 A.2d 1219,
1230 (Del. Ch. 2004),

'4 Osborn ex rel., 991 A,2d at 1159 (Del, 2010)

'S Sheets, 2014 WL 4941983, at *2,
Gilronan was to repay the loan when she moved into a new house and was in a better
position to manage her finances.

Further, even if the parties did not reach an agreement as to the time of
repayment, and the Court was not able to determine the meaning of the term, it would
not be fatal to the Birmingham’s claim. Specifying the time for payment is not
material to contract formation.'® As the Superior Court has stated:

“Without an express term providing for the timing of payment, it

falls to the Court to supply an appropriate term. When the parties to a

bargain sufficiently defined to be a contract have not agreed with

respect to a term which is essential to a determination of their rights and
duties, a term which is reasonable in the circumstances is supplied by

the court. [W]here there is in fact no agreement [to a particular term],

the court should supply a term which comports with community

standards of fairness and policy rather than analyze a hypothetical

model of the bargaining process. If no time for performance is fixed,

the court will imply a reasonable time ....”!”

In the absence of a repayment term, I find based upon the testimony that repayment
of the $13,000 was to be made within a reasonable time after Gilronan purchased a
new house and was settled. In this instance, the purchase and the sale of the house
has occurred, thus it is only reasonable that payment is presently due.

Lastly, I find that the parties exchanged legal consideration. Consideration for

a contract must be “bargained for” between the parties and can be either a “benefit

to the promisor or a detriment to the promisee.”'® Further, a return promise is

'© Stone Creek, 2016 WL 7048784, at *4.
'? fd. at *4 (finding that repayment should be made in a reasonable time)(internal quotations omitted),
'§ Bryant, 2011 WL 2163606, at *5.
considered “bargained for if it is “sought by the promisor in exchange for [their]
promise and is given by the promisee in exchange for that promise.”'? “Where a
contract is executory, the promises of each party to perform the contract supply the
consideration necessary to support the contract.”*° The Court limits its inquiry into
consideration to its existence and not whether it was fair or adequate or sufficient.”!
In this case, both parties exchanged promises. Birmingham promised to lend
Gilronan $13,000 so she could pay off her debt, in exchange for Gilronan’s return
promise that she would repay the money. I find that this is sufficient consideration
to establish the formation of a contract between the parties.

In sum, the testimony and exhibits prove that a valid contract existed between
Birmingham and Gilronan. Gilronan’s use of Birmingham’s bank information
constitutes an overt manifestation of assent. The terms of the contract, when viewed
objectively in light of the surrounding circumstances are sufficiently definite. Lastly,
the parties’ exchange of promises constitutes legal consideration.

B. A Breach
A breach of contract occurs by a party's non-performance, repudiation, or

both.”* Further, a contract is also breached when a party “fails to make payment by

'° Ripsom, 1988 WL 32071, at *10 (Del. Super.), aff'd, 567 A.2d 418 (Del. 1989).

°° Id,

*! Osborn ex rel., 991 A.2d at 1159.

22 Preferred Fin. Servs., Inc. v. Bus, Builders for Entrepreneurs, LLC, 2016 WL 4537759, at *3 (Del. Com. P1.).

9
the date required under the agreement between the parties.”*? A breach occurs when
a party abandons their duties under the contract or fails to complete the contract in a
reasonable time. 74 As discussed above, because there was no exact repayment date
for the loan, Gilronan was supposed to make repayment on the loan within a
reasonable time. Over five years has elapsed since the Birmingham originally loan
Gilronan $13,000. I concludes that Gilronan has failed to make repayment within a
reasonable time.
C. Resulting Damages.

‘SA party harmed by a breach of contract is entitled to compensation that will
place that party in the same position that the party would have been in if the other
party had performed under the contract.”*? Had Gilronan repaid the money,
Birmingham would have received the $13,000. Because of Gilronan’s refusal to pay,
Birmingham is now without the $13,000 that he loaned Gilronan. I conclude that
Gilronan’s breach has resulted in damages to the Birmingham.

II. Gilronan’s Affirmative Defenses
A. Statute of Limitations
Under 10 Del. C. §8106, there is a three year statute of limitations for claims

arising out of an alleged breach of contract.” The statute begins to run when the

3 Id. at *3,

4 Lee-Scott vy. Shute, 2017 WL 1201158, at* 6 (Del. Com. PIl.).

*8 Optical Air Data Sys., LLC v, L-3 Commc'ns Corp., 2019 WL 328429, at *4 (Del, Super.).
°° 10 Del. C. §8106.

10
contract has been breached.”’ For a loan agreement that fails to set a payment date,

the “statute of limitations begins to run a reasonable time after the loan is made.””®

“This general rule is consistent with the principle in contract law that “where no time

for performance is fixed, the Court will imply a reasonable time for performance.”””?

Birmingham argues that because Gilronan has failed to raise the Statute of
Limitations defense prior to trial, it is deemed waived. The Statute of Limitations is
an affirmative defense which must be raised in the responsive pleading.°*° A party’s
“failure to timely assert an affirmative defense generally constitutes a waiver of the
right to do so.”3! However, Courts have been lenient with litigants who fail to raise
the defense in their initial answer by allowing parties to subsequently assert the
defense at a later time. The Superior Court has held:

“The purpose of requiring the Defendant to plead a limitations defense
in the answer “is to avoid surprise and undue prejudice by providing
the Plaintiff with notice and the opportunity” to rebut the defense.
However, because the rules reject the approach that pleading is a game
of skill in which one misstep by counsel may be decisive to the outcome
and accept the principle that the purpose of pleading is to facilitate a
proper decision on the merits, rigid adherence to the requirement of
pleading a limitations defense in the answer is not always necessary.
That is, a limitations defense does not necessarily have to be raised in
the answer. Rather, [c]onsistent with the purpose of Rule &(c), courts

*? Petroleum v, Magellan Terminals Holdings, L.P., 2015 WL 3885947, at 10 (Del. Super.).

°8 Alonso v. Maldonado, 2015 WL 7068206, at 2 (Del. Super.).

2° Id.

*° Lee v. Linmere Homes, Inc., 2008 WL 4444552, at 2 (Del. Super.); See CCP Civ. R. 8(c) (“In pleading to a
preceding pleading, a party shall set forth affirmatively... statute of limitations.’”’); CCP Civ. R. 12(b) (‘Every
defense, in law or fact, to a claim for relief in any pleading... shall be asserted in the responsive pleading thereto if
one is required.”).

3! 395 Assocs., LLC v. New Castle Cty., 2006 WL 2021623, at *9 (Del. Super.) (“The Court agrees that the statute of
limitations as an affirmative defense can be waived.”).

1]
require that Defendants assert a limitations defense as early as

reasonably possible. That does not imply that a limitations defense can

be raised at any time but, instead, suggests that the Defendant assert the

defense in a timely manner so as to promote judicial economy and avoid

surprise and undue prejudice to the Plaintiff.”*?
In Abdi the Superior Court was required to decide whether a Defendant was
permitted to raise the Statute of Limitations as an affirmative defense after failing to
do so in his initial Answer.*? In a motion to dismiss, the Plaintiff in Abdi argued that
by not raising the Statute of Limitations as an affirmative defense, the Defendant
waived his right to do so.*4 In adhering to the purpose of pleading and deciding a
case on its merits, the Superior Court allowed the Defendant to assert a Statute of
Limitations defense reasoning that the Defendant asserted the defense “‘as early as
reasonably possible” and filed a timely Motion for Leave to Amend its Answer so
as to not surprise or prejudice the Plaintiff.*°

Unlike the Defendant in Abdi, Gilronan in this case did not amend her answer
to raise the Statute of Limitations defense, nor was it raised it in the pre-trial
scheduling order, and nor did Gilronan raise this defense at trial at the Justice of the

Peace Court. Gilronan only asserted this defense after trial during closing statements.

Raising the defense at this late time does not constitute raising it “as early as

* Abdi vy. NVR, Inc., 2007 WL 2363675, at *2 (Del. Super.), aff'd, 945 A.2d 1167 (Del. 2008) (internal citations and
quotations omitted).

8 Id.

4 Td. at 2.

33 fd.

12
reasonably possible”. Therefore, I find that Gilronan has waived her Statute of
Limitations defense.

B. Statute of Frauds

Lastly, Gilronan argues that the statute of frauds prohibits Birmingham from
bringing a claim under the alleged oral contract. Delaware’s Statute of Frauds
prohibits enforcement of an oral agreement that is “not to be performed within the
space of 1 year from the making thereof” unless the contract is reduced to writing
and signed by the party against whom enforcement is sought.*© The time begins to
run from the date the contract is entered into and not from the time performance is
to begin.*’ If there is any possibility that such contract can be performed within one
year, then the Statute of Frauds is inapplicable and the agreement need not be in
writing.°® Further, under Civil Rule 8(c), the Statute of Frauds is an affirmative
defense, which must be plead in the responsive pleadings or it is deemed waived.°?

Gilronan contends that the Statute of Frauds bars recovery, because it would
have been impossible for Gilronan to pay back the $13,000 within | year of forming
the contract due to the slow accumulation of equity in the home. Gilronan introduced
reports into evidence that showed that equity in the home was only building at a rate

of $270-$280 per month. However, during Birmingham’s testimony he stated that

*° 6 Del. C. §2714; World Class Wholesale, LLC v. Star Indus., Inc. 2018 WL 2331991, at | (Del. Super.),
37 Aurigemma v. New Castle Care LLC, 2006 WL 2441978, at 2 (Del. Super.),

38 World Class, 2018 WL 2331991, at *1 (Del. Super,).

3° CCP Civ. R. 8(c).

13
Gilronan was supposed to pay him back when she was “in the house and settled.”
The terms of contract did not mandate that money had to come from the equity in
the house. However, even if the parties agreed that repayment was to come out of
the house equity, Gilronan’s argument that the actual amount of equity accumulation
was insufficient to satisfy the loan within 1 year is irrelevant because the Court does
not look to the actual amount of equity when making its determination of whether
the contract could have been completed in a year. The Court looks to the reasonable

t.° To put

expectations of the parties at the time of the formation of the contrac
differently if the parties reasonably expected that the contract would be completed
within | year in accordance with their terms, then the Statute of Frauds is
inapplicable. From the perspective of the parties at the time of contract formation, I
conclude that it would have been reasonable for the parties to think that Gilronan
could have gotten settled in the house and repaid the $13,000 back within a year of
the contract being formed.
CONCLUSION
I find that the parties’ actions constituted a binding agreement for payment of

the $13,000 to be made in a reasonable time. Further, I find that Gilronan breached

that agreement by failing to repay the loan and repudiating the agreement. Lastly, I

“© Haveg Corp. vy. Guyer, 211 A.2d 910, 912 (1965) (“the statute [of frauds] does not extend to an agreement which
may by any possibility be performed within a year, in accordance with the understanding and intention of the parties
at the time when the agreement was entered into”).

14
find that Gilronan failed to raise the statute of limitations defense timely and the
statute of frauds does not bar recovery.

Accordingly, I find that Birmingham has proven by a preponderance of the
evidence that the $13,000.00 constituted a loan to Dawn Gilronan for which
repayment is required.

Judgment is entered for Joe Birmingham for $13,000.00, cost and post

judgment interest at the legal rate until paid.

hief Judge

IT IS SO ORDERED.

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