2018 Ohio 982
Oh. Ct. App. 4th Dist. Ross2018Background
- Joseph and Sonja Frazier obtained a $107,000 mortgage in 2001; the mortgage instrument included a lengthy metes-and-bounds legal description that, on review, described a 0.559-acre vacant parcel while other loan documents (loan application, appraisal, survey affidavit, street address and parcel numbers) pointed to a 1.02-acre residential parcel at 918 Lunbeck Rd. as the intended collateral.
- National City (later PNC) filed foreclosure after default and amended to seek reformation of the mortgage to correct the scrivener error to include the residential lot.
- The Fraziers (defendants) conceded foreclosure rights but opposed reformation, arguing the lender was inexcusably negligent. An affidavit by Mr. Frazier claimed they knew at closing the residential parcel was omitted and later quitclaimed it to their children.
- Trial court granted summary judgment to the bank on foreclosure of the vacant lot only, denied bank summary judgment on reformation, and entered summary judgment for the defendant on the reformation claim based on the bank’s alleged inexcusable negligence; the court also dismissed claims against decedent Sonja for failure to timely move for substitution under Civ.R.25(A).
- On appeal the Fourth District (Abele, J.) reversed the summary judgment for the defendant on reformation (holding genuine issues of material fact exist and the bank’s negligence was not necessarily inexcusable) and remanded; the court also remanded the Civ.R.25 substitution denial so the trial court can consider Civ.R.6(B) excusable neglect analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the mortgage should be reformed to cover the residential parcel | Mortgage and other loan documents (address, parcel number, appraisal, survey affidavit) show both parties intended the residential lot to be encumbered; mutual mistake/scrivener error warrants reformation | The metes-and-bounds attached to the mortgage describes the vacant lot; bank was negligent and inexcusable negligence bars reformation | Reversed trial court: genuine issues of material fact exist on mutual mistake; bank's negligence not shown to be inexcusable as a matter of law; remand for further proceedings |
| Whether summary judgment denying reformation was appropriate | Entitled to summary judgment because documents uniformly show intended property and mistake is clear | Bank's own negligence precludes equitable reformation; no clear mutual mistake | Summary judgment for plaintiff on reformation was not appropriate; fact issues remain, so plaintiff's summary judgment denied but defendant summary judgment reversed |
| Whether the court should allow substitution of decedent's estate after Civ.R.25(A) deadline | Court should permit substitution under Civ.R.6(B) for excusable neglect because parties engaged in settlement negotiations | Deadline under Civ.R.25(A) expired; dismissal appropriate | Trial court erred to deny consideration of Civ.R.6(B); remanded for the trial court to apply excusable-neglect analysis and exercise discretion |
| Whether mortgagors can avoid mortgage despite receiving loan benefits because of drafting errors | Bank seeks reformation to bind parties to their true intent; mortgagors received loan and acted like mortgagors | Mortgagors argue defective description voids mortgage as to residential lot | Court: equitable reformation is appropriate where documents and conduct show parties intended same property; mortgagors generally cannot escape obligations absent fraud or clear mutual mistake and inexcusable lender negligence |
Key Cases Cited
- Wagner v. National Fire Ins. Co., 132 Ohio St. 405 (reformation available for mutual mistake)
- Reilley v. Richards, 69 Ohio St.3d 352 (mutual mistake must be material; negligence can bar relief if inexcusable)
- Castle v. Daniels, 16 Ohio App.3d 209 (equities, plat/map reliance, and confusing metes-and-bounds can support reformation)
- Wells Fargo Bank v. Mowery, 187 Ohio App.3d 268 (lender's failure to discover obvious error can be inexcusable and preclude reformation)
- State, Dept. of Taxation v. Jones, 61 Ohio St.2d 99 (equitable relief denied where lender's conscious business decisions and imprudence caused the problem)