BANK OF AMERICA, N.A. v. CUNEO Et Al.
332 Ga. App. 73
Ga. Ct. App.2015Background
- In 2003 Mark Cuneo alone executed two security deeds and promissory notes refinancing the couple’s home, although title to the property was held by Mark and Traceylynn Cuneo as joint tenants with rights of survivorship.
- The 2003 loan application and lender title report identified title as held jointly, but the loan documents and security deeds were signed only by Mark.
- Bank of America (successor to the 2003 lenders) sued in 2012 seeking equitable reformation of the 2003 security deeds to add Mrs. Cuneo as a grantee so the loans would be fully secured by the property.
- Mrs. Cuneo denied intending to be liable and submitted an affidavit saying she did not agree to the loans; the Cuneos also had filed Chapter 7 bankruptcy in 2010 and made representations in their schedules and a later loan-modification application treating the debt as joint.
- The trial court denied BOA’s summary-judgment motion and sua sponte granted summary judgment to the Cuneos; the Court of Appeals reversed.
Issues
| Issue | Plaintiff's Argument (Bank of America) | Defendant's Argument (Cuneo) | Held |
|---|---|---|---|
| Whether the bank’s security interest is incomplete because only Mark signed the deeds | Deed to secure debt signed only by Mark did not convey whole interest; bank’s security is incomplete and needs reformation | Deeds as executed reflect actual consent; Mrs. Cuneo not liable | Court: Security interest is incomplete as to Mrs. Cuneo; reformation claim viable |
| Whether equitable reformation is available (mutual mistake) | The loan application, title report, payoff of joint debts, bankruptcy schedules, and later modification app. show parties intended a joint-secured loan; mutual mistake supports reformation | Mrs. Cuneo’s affidavit says she did not intend to borrow; therefore mistake not mutual and reformation improper | Court: Fact issues exist — evidence sufficiently shows a sufficiently mutual mistake to preclude summary judgment for defendants; reformation claim survives |
| Whether Mrs. Cuneo is judicially estopped from denying the debt encumbered her interest due to bankruptcy positions | Bank: Cuneos’ bankruptcy schedules and representations that debt was joint succeeded and benefited them; they cannot now deny that position | Cuneos: Bankruptcy statements were equivocal and do not clearly assert the contrary position | Court: Trial court abused discretion by not applying judicial estoppel; Mrs. Cuneo is estopped from denying the joint obligation |
| Whether collateral estoppel bars bank’s reformation claim because bankruptcy could have decided the issue | Bank: No collateral estoppel because the bankruptcy court did not actually decide the specific issue of joint liability for the mortgage | Cuneos: Bank had opportunity in bankruptcy; issue should be foreclosed | Court: No collateral estoppel; record does not show the bankruptcy court actually decided that issue |
Key Cases Cited
- Cartersville Ranch, LLC v. Dellinger, 295 Ga. 195 (de novo review on grant of summary judgment) (2014)
- Biggers v. Crook, 283 Ga. 50 (execution of deed to secure debt by joint tenant does not sever joint tenancy) (2008)
- Wallace v. Commercial Bank, 159 Ga. 388 (bankruptcy discharge does not destroy power in a deed to secure debt) (1924)
- Potts v. McElroy, 209 Ga. 244 (bankruptcy discharge and deed consequences) (1952)
- Thomas v. Stedham, 208 Ga. 603 (bankruptcy/discharge and secured interest) (1952)
- Smith v. Farmers Bank of Glenwood, 165 Ga. 470 (deed and secured interests) (1928)
- Mickel v. Pickett, 241 Ga. 528 (discharge does not cancel title under deed to secure debt) (1978)
- Vibert v. Bank of America, N.A., 327 Ga. App. 782 (statute OCGA § 23-2-25 applies to security deeds; reformation principles) (2014)
- DeGolyer v. Bank, 291 Ga. App. 447 (reformation may be appropriate when lender and borrower intended security despite differing factual mistakes) (2008)
- Cheatham v. Palmer, 191 Ga. 617 (equity may reform instruments to reflect true intent) (1941)
- Roberts v. State, 278 Ga. 610 (judicial estoppel doctrine) (2004)
- Period Homes v. Wallick, 275 Ga. 486 (judicial estoppel in bankruptcy context) (2002)
- IBF Participating Income Fund v. Dillard-Winecoff, LLC, 275 Ga. 765 (judicial estoppel factors) (2002)
- Klardie v. Klardie, 287 Ga. 499 (review of judicial estoppel application) (2010)
- Harper v. GMAC Mortgage Corp., 245 Ga. App. 729 (collateral estoppel requires the issue be actually decided) (2000)