Smith/Hodge Relationship Ends With Dispute of $50,000 Claim

Appeals Court Reviews Conflicting  Versions of Facts

Keisha Smith sued to recover $50,000 from Holly Dodge. The evidence adduced at a nonjury trial showed that the parties were in a relationship for a year and at half, had lived together, and were once engaged. In January 2021, Smith provided Hodge with $50,000 for a laundromat which Hodge claimed she was planning to open. Nothing was ever put into writing regarding the venture, and Hodge testified that the venture subsequently “fell through.” And Hodge also testified that Smith was not entitled to the return of $50,000 since Hodge had used the money to renovate Smith’s house, which included a pool, and numerous repairs and upgrades to the house, had purchased furniture and appliances for the house, and had purchased other miscellaneous items on Smith’s behalf. Hodge provided credit card and bank statements and receipts in support of her claims. Smith testified that furniture was purchased for her house and that she gave Hodge cash to use for household needs which included the renovation of her house.

Following the trial,  Civil Court found that Smith had loaned Dodge $50,000.00 that was not used for its intended purpose. The court also found that Hodge used  a large portion of that loan to the sole and exclusive benefit of Smith by paying for costs relative to her home, including furnishing and repair. such that awarding full judgment to Smith would result in a windfall.

The court awarded Smith $10,000, thereby implicitly crediting Hodge with $40,000. Although the court acknowledged that “not all [of Hodge’s] highlighted expenditures carry a sufficient or supported explanation,” the written decision after trial did not detail how the court calculated those sums. Smith appealed.

On appeal, Smith contended that Civil Court erroneously determined that she had “loaned” Hodge $50,000 rather than that she had given the money to Hodge as an investment in a business venture; Hodge failed to return the $50,000 to her; and Civil Court erred by not finding that Hodge had fraudulently induced her to invest $50,000.

To establish her fraudulent inducement claim, Smith had to establish that Hodge made a misrepresentation or a material omission of fact which was false and known to be false by Hodge, made for the purpose of inducing her to rely upon it,  and her justifiable reliance on Hodge’s misrepresentation or material omission, and injury. But Smith failed to do. And whether the $50,000 was loaned to Hodge so that she could open a laundromat, or was given to Hodge as an investment in the laundromat was of no import since it was uncontroverted that the laundromat was never opened, the $50,000 was not used for the laundromat, and the $50,000 remained in Hodge’s personal checking account.

Upon a review of the record, the appellate court found that Hodge failed to establish various claimed expenses. For example, the numerous written notations on Hodge’s bank statements indicating that purchases at Home Depot and Lowes, transfers to workers, and cash withdrawals from her personal checking were made to purchase supplies, or pay workers on Smith’s behalf, without more, were insufficient to establish that those payments or purchases were in fact made on Smith’s behalf as a form of repayment of the $50,000. Hodge’s testimony regarding how she spent the cash was conclusory—she did not specify what workers she gave the cash to or what work it was for, and she did not provide receipts for any supplies she claimed to have purchased. Also, even though Hodge’s statements showed that payments were made to Home Depot and Lowes, no testimony was provided as to what was specifically purchased at those stores. Due to those deficiencies, it was unclear how  Civil Court arrived at many of the credits to Hodge, let alone credits totaling $40,000. Consequently, the $10,000 judgment in favor of Smith was not supported by the evidence.

The judgment in favor of Smith and against Dodge was reversed and the matter was remitted to Civil Court for a new trial limited to the issue of damages.

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