Bridget M. Friedman had an article on pleading and proving a reformation case selected to be published in the Summer 2016 issue of ActionLine (Vol. XXXVII, No. 4), a publication of The Real Property Probate and Trust Law Section of the Florida Bar. In preparing a complaint to reform a mortgage or deed, certain allegations are essential.
Bridget M. Friedman had an article on pleading and proving a reformation case selected to be published in the Summer 2016 issue of ActionLine (Vol. XXXVII, No. 4), a publication of The Real Property Probate and Trust Law Section of the Florida Bar.
In preparing a complaint to reform a mortgage or deed, certain allegations are essential. First, the existence of an instrument or agreement must be pleaded. Second, there should be an allegation stating why the document does not speak the truth or is inconsistent with the intention and agreement of the parties. Third, the time and manner that the inconsistency was discovered must be alleged. Fourth, one must plead that the plaintiff has been injured. Fifth, it should be pleaded that a demand was made to the defendant to remedy the nonconformity and that the defendant refused to comply with the demand. Lastly, although not clearly required under the case law, it should be pleaded that there is an inadequate remedy at law. This last requirement is recommended because a court sitting in equity will not entertain an equitable action unless there is an inadequate remedy at law. Id.
As for proving a reformation case, a case out of the Fourth District, Losner v. HSBC Bank USA, N.A., 2016 Fla. App. LEXIS 5300 (Fla. 4th DCA 2016), is insightful. In that case, the appellate court overturned a trial court’s judgment reforming a mortgage where no legal description had been inserted into the mortgage at the time of its recordation. The reasoning was that the plaintiff had not proved by clear and convincing evidence the terms actually agreed upon by the lender and the borrower. The only evidence the lender put into the record was an assignment of mortgage, which had the legal description of the property at issue, but was recorded three years after the mortgage had been executed. The appeals court noted that the record was void of any evidence to show what the lender and borrower had intended at the time of the mortgage. The court reversed and remanded with instructions for the trial court to enter an involuntary dismissal of the reformation count and to modify the final judgment to grant the bank only a monetary judgment for the homeowner’s failure to make payments on the note. Id.
In litigating a reformation case, it is important that the practitioner make allegations and submit record evidence as to the intent of the parties at the time the mortgage was taken out. An affidavit in support of a summary judgment could be one method to provide the requisite clear and convincing evidence. Alternatively, a request for admission to the borrower(s), or deposition testimony could suffice, so long as the discovery at least focuses on the parties’ intent at the time the mortgage was executed. Otherwise, lenders could be left with only an unsecured lien to seek repayment
If you have any questions regarding reformation cases, please feel free to contact Bridget M. Friedman at (407) 830-6331 or bfriedman@ff-attorneys.com.