Bank of Am., N.A. v. Darkadakis, 76 N.E.3d 577

Background

In 2004 Elizabeth executed a $207,000 note and mortgage in favor of Countrywide (later Bank of America); Elizabeth signed the note and mortgage and both spouses initialed each page, but William did not sign the mortgage signature page. The deed to the property listed William alone at the time.
Proceeds from the 2004 loans paid off a 2003 mortgage that had been signed by both William and Elizabeth; a simultaneous Fifth Third loan (signed by both spouses) also closed the same day.
The Bank sued in 2012 to foreclose the 2004 mortgage; by then the Bank held the note and mortgage and the note was in default. William and Elizabeth later divorced and the divorce decree kept title in William’s name.
The Bank sought summary judgment and reformation of the mortgage (arguing a mutual mistake left William off the signature page) and asserted unjust enrichment as an alternative theory to bind William’s interest.
The trial court granted summary judgment for the Bank and entered a decree of foreclosure; the appellate court reversed, holding genuine factual disputes exist about whether William intentionally omitted his signature and therefore whether reformation was appropriate.

Issues

Issue	Plaintiff's Argument (Bank)	Defendant's Argument (William)	Held
Whether the statute of frauds bars reformation of the mortgage	Mutual mistake can remove the contract from the statute of frauds so reformation is allowed	Elizabeth could not bind William by mortgaging his property; absent his signature the statute of frauds bars foreclosure on his interest	Mutual mistake can take the case outside the statute of frauds, but a genuine issue of material fact exists whether there was a mutual mistake (summary judgment improper)
Whether unjust enrichment and reformation were new claims beyond the complaint	Complaint (and attachments) put William on notice that reformation/unjust enrichment were necessary to foreclose because only Elizabeth signed; summary judgment provided notice and opportunity to respond	These were new claims first raised at summary judgment, depriving William of notice and discovery	Complaint implicitly raised reformation/unjust enrichment; summary judgment practice gave William notice and he could have sought Civ.R. 56(F); no error in considering the claims
Whether the Bank had standing to foreclose	Bank was holder of the note and mortgage when it filed suit and thus had standing	Bank lacked an interest at origination and therefore lacks standing to foreclose on William	Bank had standing; attached note and mortgage showed it held the instruments at filing
Whether the unjust-enrichment claim is barred by the statute of limitations	Accrual did not occur until 2012 when foreclosure was filed or when payments ceased; claim is timely	Claim accrued in 2004 when the payoff benefit was conferred and is barred	Court adopted accrual at or near default/filing (2012) so unjust-enrichment claim was not time-barred
Whether parol evidence may be used to prove intent/mistake	Parol evidence is admissible to show mutual mistake and support reformation when the written instrument does not reflect actual agreement	Parol evidence is barred by the parol evidence rule/statute of frauds to add parties or terms	Parol evidence may be considered if mutual mistake is shown by clear and convincing evidence; but existence of mutual mistake is disputed here
Whether summary judgment was proper on reformation/unjust enrichment	Facts (initials on each page, payoff of prior loan, payments made) support reformation and unjust enrichment as a matter of law	Conflicting affidavits and lack of William’s signature create genuine issues of material fact precluding summary judgment	Because William’s affidavit plus documentary gaps (no signature on HUD sheet, notary acknowledgment of only Elizabeth) create a genuine factual dispute about intent, summary judgment was improper; trial court’s grant reversed

Key Cases Cited

Comer v. Risko, 106 Ohio St.3d 185 (standard of appellate review for summary judgment)
FirstMerit Bank, N.A. v. Inks, 138 Ohio St.3d 384 (mortgage is a conveyance governed by statute of frauds)
Federal Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13 (party must hold interest in note/mortgage at suit filing to have standing)
Wells Fargo Bank, N.A. v. Horn, 142 Ohio St.3d 416 (standing defined as right to make legal claim; real interest required)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard for whether reasonable jurors could find for the nonmoving party)
Hambleton v. R.G. Barry Corp., 12 Ohio St.3d 179 (elements of unjust enrichment)
Davenport v. Sovil's Heirs, 6 Ohio St. 459 (mutual mistake can take a real-estate instrument out of the statute of frauds and permit reformation)