The Alabama Court of Civil Appeals has issued a precedent-setting ruling in a Baldwin County dispute over a $32,000 diamond engagement ring, declaring for the first time under state law that such rings are conditional gifts that must be returned if a marriage never happens.
The 23-page opinion, handed down Friday, resolved a years-long legal fight between Terrell Hattaway and Valerie Kathy Coulter, a Baldwin County couple who were living together and in a romantic relationship around Christmas 2018. According to court records, Hattaway gave Coulter a gift bag that Christmas containing an ornament and a 2.5-carat diamond ring. Hattaway testified that he dropped to one knee and proposed as Coulter opened the bag. Coulter disputed that account, testifying that Hattaway never formally proposed or told others the couple was engaged, though she said she assumed the ring was meant as an engagement ring.
Court records show Hattaway had given Coulter other expensive gifts during their relationship, including a $10,000 diamond tennis bracelet, and had not expected those items to be returned. The ring, he argued, was different because it was tied to a marriage that never took place.
Over the following months, the two disagreed on whether they had made a genuine effort to set a wedding date. Hattaway testified he tried repeatedly to settle on a date and that the couple attended counseling to work through relationship issues. Coulter testified that Hattaway was the one who refused to discuss setting a date. The relationship ended in September 2019 when Coulter moved out of the home the couple shared.
By November 2019, Hattaway had an attorney send Coulter a letter demanding the ring back. Coulter initially told Hattaway she had thrown the ring into the Intracoastal Waterway, but she later admitted at trial that she had sold it for $10,000 sometime in 2020, saying she needed money after losing her job during the COVID-19 pandemic.
Hattaway sued Coulter on claims of conversion, infliction of emotional distress and unjust enrichment. A Baldwin County judge dismissed the conversion and emotional distress claims before trial. Following a bench trial earlier this year, Presiding Circuit Judge Clark Stankoski ruled against Hattaway on the remaining unjust enrichment claim, finding the ring had been given as an unconditional gift rather than one tied to any specific condition or promise.
In his written ruling, Stankoski did not hide his discomfort with the outcome, writing that Coulter had “an outright moral obligation to return the engagement ring” and that her justification for selling it “is telling to the Court as to her moral compass.” But Stankoski said he was bound by existing Alabama precedent, which at the time did not clearly classify engagement rings as conditional gifts.
On appeal, the Alabama Court of Civil Appeals took a different view of how the law should apply. Presiding Judge William C. Thompson, writing for the court, found that an engagement ring is by its nature “a gift conditioned upon the fulfillment of marriage.” Because the marriage never happened, the court ruled, Hattaway was entitled to have the ring, or its value, returned to him.
“The evidence unequivocally establishes that, after the engagement ended, Coulter refused to return the ring or its value, which in equity and good conscience belonged to Hattaway,” Thompson wrote in the opinion.
The ruling is considered significant because Alabama previously had not directly addressed whether engagement rings should be treated as conditional or unconditional gifts under state law, an issue courts in most other states had already settled.
Hattaway was represented at trial by attorney Meggan Huggins and on appeal by attorney Tina Moon. In a joint statement issued after the ruling, the two said they were “extremely pleased with the recent ruling recognizing engagement rings as a conditional gift,” adding that Alabama is now in line with the majority of other states on the issue and that their client was relieved to see the matter resolved.
Coulter was represented by attorney Abner Powell IV. As of the ruling, no date had been set for a possible rehearing.