BLACK Et Al. v. NATIONSTAR MORTGAGE, LLC Et Al. ( 2018 )

FIRST DIVISION
BARNES, P. J.,
MCMILLIAN and MERCIER, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
January 10, 2018
In the Court of Appeals of Georgia
A17A1587. BLACK et al. v. NATIONSTAR MORTGAGE LLC. et
al.
BARNES, Presiding Judge.
The trial court granted appellees’, Nationstar Mortgage LLC and Federal Home
Loan Mortgage Corporation, motion for summary judgment on their complaint for
declaratory judgment and equitable reformation, in which they had sought to reverse
a foreclosure, void the related deed under power and special warranty deed, and
reinstate the modified security deed to a first priority position. The appellants, Lee
Angel Black, formerly known as, Lee Angel White, and Stacy M. Black appeal from
that order. Following our review, and discerning no reversible error, we affirm the
trial court’s judgment.
On May 23, 2007, the appellants obtained a loan from Advanced Financial
Services, Inc. (“Advanced”) in the amount of $17l,000. On the same date, they
executed and delivered a security deed conveying certain property to Mortgage
Electronic Registration Systems, Inc. (“MERS”) as nominee for Advanced to secure
repayment of the loan. The subject property is commonly known as 3284 Price Mill
Road, Bishop, Georgia 30621. The property consists of two parcels: Parcel 04A/3284
(“Parcel l”), valued at $187,230, and Parcel 04B (“Parcel II”), valued at $12,000.
Parcel 1 is a four-acre lot with a house, and Parcel II is an adjacent, undeveloped
one-acre lot.
The security deed was recorded on July 2, 2007, and referenced that the
property conveyed was 3284 Price Mill Road, but the legal description of the property
attached to the deed only referenced Parcel II, the undeveloped one-acre lot. In
December of 2012, MERS, assigned the security deed to Nationstar. Appellants and
Nationstar executed a modification of the security deed to include both Parcel I and
Parcel II in the legal description, which was filed with the clerk of superior court on
May 15, 2013. The modification, in pertinent part, provided, that “the legal
description of the real property attached an incorporated in the Security Deed at the
time of its execution. . . does not describe the entire Five Acre Tract as intended by
the [appellants].” And that:
by executing and delivering to [Nationstar] this Modification,
[appellants] wish to establish, state, clarify, and restate their intention to
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grant and convey the Five Acre Tract to [Nationstar] as security for the
Loan and to provide that the Five Acre Tract is encumbered by, made
part of, and incorporated into the Security Deed for all purposes set forth
therein, as fully as if the description of the Five Acre Tract were
attached to the Security Deed as and when the Security Deed was
executed by [appellants], delivered to [MERS], and recorded in the . . .
real property records.
Appellants subsequently defaulted on the loan, and after they failed to
cure the default payments on the loan, Nationstar conducted a non-judicial
foreclosure sale of the subject property on November 5, 2013, and purchased the
property for $100,000. However, the foreclosure notice described only Parcel II of the
property. On November 5, 2013, Nationstar, as attorney-in-fact of appellants,
prepared, executed, and delivered a “Deed Under Power” to Nationstar. The Deed
Under Power specifically cross-indexed to the security deed and was recorded on
December 5, 2013. Nationstar also prepared a “Special Warranty Deed” The legal
description of the subject property set forth in both the Deed Under Power and the
Special Warranty Deed referred only to Parcel II rather than the entirety of the
property. Neither Nationstar nor Federal Home reported the sale within thirty days of
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the foreclosure sale to the superior court for confirmation and approval pursuant to
OCGA § 44-14-161 (a).1
Thereafter, on September 4, 2015, the appellees filed a Complaint For
Declaratory Judgment and Equitable Reformation seeking to (1) reverse the
foreclosure, (2) void the Deed Under Power and Special Warranty Deed, and (3)
reinstate the modified security deed to the first priority position that it occupied
before the foreclosure.
Following cross motions for summary judgment, the trial court entered an order
granting appellees’ motion and denying appellants’ motion, finding that:
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When any real estate is sold on foreclosure, without legal
process, and under powers contained in security deeds,
mortgages, or other lien contracts and at the sale the real
estate does not bring the amount of the debt secured by the
deed, mortgage, or contract, no action may be taken to
obtain a deficiency judgment unless the person instituting
the foreclosure proceedings shall, within 30 days after the
sale, report the sale to the judge of the superior court of the
county in which the land is located for confirmation and
approval and shall obtain an order of confirmation and
approval thereon.
OCGA § 44-14-161 (a).
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[appellees] intended to take a security interest in the entirety of the
property comprised of both Parcel I and Parcel II. Indeed, after
discovering the mistaken legal description in the original Security Deed,
Plaintiff Nationstar and both Defendants executed the Modification to
amend the description to include both Parcels, as intended by the parties.
Only after foreclosure did [appellees] realize that the mistaken property
description had carried over to the Deed Under Power and the Special
Warranty Deed. The evidence conclusively establishes a mutual mistake
relievable in equity.... OCGA § 23-2-21 (a). The evidence further shows
that omission of Parcel II from the description in the Deed Under Power
and the Special Warranty Deed was contrary to the parties’ intention.
The trial court further found that appellants had not demonstrated that they would be
prejudiced by the reformation of the security deed, and that the reformation related
back to date of the security’s deed execution and thus the deed was reinstated to first
priority lien position.
Summary judgment is proper if the pleadings and evidence “show that there is
no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” OCGA § 9-11-56 (c). On appeal from the grant of
summary judgment, we “conduct a de novo review, construing all reasonable
inferences in the light most favorable to the nonmoving party.” Bank of North Ga. v.
Windermere Dev., 316 Ga. App. 33, 34 (728 SE2d 714) (2012).
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Appellants contend on appeal that the appellees were not entitled to equitable
reformation and thus the trial court erred in its grant of summary judgment. We do not
agree.
Equity may intervene and reform a conveyance when the
instrument fails to express accurately the intention of the parties. A
petition for reformation of a written contract will lie where by mistake
of the scrivener and by oversight of the parties, the writing does not
embody or fully express the real contract of the parties. The cause of the
defect is immaterial so long as the mistake is common to both parties to
the transaction. And the negligence of the complaining party will not
defeat his right to reformation if the other party has not been prejudiced.
(Footnotes and punctuation omitted.) Curry v. Curry, 267 Ga. 66, 67 (1) (473 SE2d
760) (1996).
(a) In two related enumerations of appeal, appellants contend that reformation
was not proper because the appellees had actual and/or constructive notice of the
defects in the title instruments, and could have discovered the defects in the title
instruments by reasonable due diligence. Appellants assert that it is presumed that the
purchaser of property has examined every deed and instrument affecting the title, and
is charged with notice of the facts shown in the records. They maintain that appellees
had actual or constructive notice of the defects in the title instruments and the
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foreclosure sale notice because they “unilaterally prepared, executed, and/or
delivered” the documents. Thus, any errors in the legal descriptions were either an
intentional act or unilateral mistake on the behalf of the appellees.
OCGA § 23-2-25 provides that “[i]f the form of conveyance is, by accident or
mistake, contrary to the intention of the parties in their contract, equity shall interfere
to make it conform thereto.” See Bank of America v. Cuneo, 332 Ga. App, 73, 79 (2)
(770 SE2d 48) (2015) (“The issue is whether the parties mutually intended for the
[b]ank to lend money and for the loan to be secured by the property[.]” ); Cheatham
v. Palmer, 191 Ga. 617, 625 (a) (13 SE2d 674) (1941) (“In every proper case under
this head of the law, the only inquiry is, does the instrument contain what the parties
intended it should and understood that it did? Is it their agreement? If not, then it may
be reformed by aliunde proof, so as to make it the evidence of what was the true
bargain between the parties.”). However, “[a] distinction exists between reforming
a contract and executing a contract in case of mistake. To authorize the former, the
court shall be satisfied by the evidence that the mistake was mutual; but the court may
refuse to act in the latter case if the mistake is confined to the party refusing to
execute.” OCGA § 23-2-30. To that end, “[t]he power to relieve mistakes shall be
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exercised with caution; to justify it, the evidence shall be clear, unequivocal, and
decisive as to the mistake.” OCGA § 23-2-21(c).
Pretermitting whether, as the appellants contend, the appellees had notice of
the mistake in the title instrument, we conclude that the evidence demonstrates that
the parties had earlier attempted to modify the security deed to include both parcels
in the legal description attached to the security deed and, per the stated purpose of the
modification, to “establish, state, clarify, and restate [the appellants] intention to grant
and convey” both parcels as security for the loan. OCGA § 23-2-25 allows a court of
equity to reform a conveyance, if the conveyance is, by accident or mistake, “contrary
to the intention of the parties in their contract.” In this case, it is clear that the parties
intended that both parcels be conveyed in the security deed, and although the
mistaken property description later carried over to the deed under power and the
special warranty deed, this does not contravene the original intent evinced by the
attempted joint modification that both parcels be enucumbered by the security deed.
Moreover, contrary to the appellants’ contention that the mistake was
unilateral, the evidence demonstrates that the parties were mutually mistaken that the
security deed included both parcels of land.
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A mutual mistake in an action for reformation means one in which
both parties had agreed on the terms of the contract, but by mistake . .
. the true terms of the agreement were not set forth. In other words, it is
the parties to the original instrument that must be mutually mistaken for
reformation to occur. And here, [the appellants] presented
uncontroverted evidence that the mistake was mutual as to [them] and
[the appellees].
(Citation and punctuation omitted.) Kim v. First Intercontinental Bank, 326 Ga. App.
424, 428 (2) (a) (756 SE2d 655) (2014).
As demonstrated by the evidence, the parties intended that both parcels be
encumbered by the security deed, and attempted to correct the mistake by way of the
modification, and “the negligence of the party complaining will not defeat his right
to reformation, if the other party has not been prejudiced thereby.” Aames Funding
Corp. v. Henderson, 275 Ga. App. 323, 324 (620 SE2d 503) (2005). The appellants
do not demonstrate how they would be prejudiced by the reformation, which would
only act to place the parties in the same position they occupied before the foreclosure.
(b) Appellants further assert that the appellees are attempting an equitable
reformation as an alternative means to obtain a deficiency judgment and circumvent
the statutory reporting requirements of OCGA § 44-14-161 (a) because they did not
report the sale to the superior court within 30 days. In this case, however, the
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appellees were not seeking a deficiency judgment and “as to what appellant[s] fear[]
may arise at a future date, we have no authority to render an advisory opinion.”
(Citations and punctuation omitted.) Daniels v. Price Communications Wireless, 254
Ga. App. 559, 561 (1) (562 SE2d 844) (2002). Thus, this claim presents nothing for
our review.
Accordingly, the trial court did not err in granting the appellees’ motion for
summary judgment on their complaint for declaratory judgment and equitable
reformation.
Judgment affirmed. McMillian and Mercier, JJ., concur.
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