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Cohen v. Wachovia Mortg. Corp.

Court of Appeals of Georgia, First Division

March 26, 2015

COHEN et al.
v.
WACHOVIA MORTGAGE CORPORATION

Editorial Note:

This opinion is uncorrected and subject to revision by the court.

PHIPPS, Chief Judge. Ellington, P. J., and McMillian, J., concur.

OPINION

Phipps, Chief Judge.

On March 11, 2011, Wachovia Mortgage Corporation (hereinafter " WMC" ) filed a law suit against Richard Cohen and Vikki Cohen (husband and wife ), seeking the equitable reformation of a 2002 security deed to add Vikki Cohen as a grantor, where previously only Richard Cohen was a grantor under the deed. WMC claimed that it was through a mutual mistake of fact that Vikki Cohen had not been included as a grantor of the 2002 security deed. Discovery ensued. Thereafter, WMC moved for summary judgment, which the trial court granted. Because the statute of limitation bars WMC's suit and judicial estoppel does not apply, we reverse.

" In reviewing a trial court's order granting summary judgment, this Court views the evidence and all reasonable inferences drawn from it in the light most favorable to the party opposing summary judgment." [1]

The following is undisputed. On or about July 23, 1998, a quitclaim deed was executed conveying a certain tract or parcel of land to Richard Cohen and Vikki Cohen. That same day, both Richard and Vikki Cohen executed a promissory note and a security deed for the property in favor of Wachovia Mortgage Company in exchange for a loan from Wachovia Mortgage Company in the amount of $338,000. On or about July 24, 1998, both Richard and Vikki Cohen executed a promissory note and a deed to secure debt for the property in favor of Wachovia Bank, N. A. in exchange for a loan in the amount of $50,000. The July 24, 1998 deed to secure debt was executed " subject to" the security deed dated July 23, 1998. On or about October 31, 2002, Richard Cohen obtained from WMC a " refinance loan" in the amount of $450,000. At the loan closing in 2002, Richard Cohen executed a security deed for the property in favor of Mortgage Electronic Registration Systems, Inc., as nominee for WMC, to secure the 2002 loan.

In its complaint (filed in 2011), WMC alleged that Richard Cohen had defaulted on the payments due on the 2002 loan, and that when WMC " prepared to conduct a foreclosure of the Property[,] [i]t was at that time that [WMC] discovered that, by reason of the mistaken omission of Ms. Cohen as a grantor in the 2002 Security Deed, the 2002 Security Deed did not encumber a 100% interest in the Property." WMC alleged that " [a]s a result of the mistaken omission of Ms. Cohen as a grantor in the 2002 Security Deed, and as a result of Ms. Cohen's failure to execute the 2002 Security Deed as a grantor, [WMC] is unable to foreclose on the entire fee simple interest in the Property."

Richard and Vikki Cohen denied the existence of any mutual mistake of fact. They both averred by affidavit that they had not intended for Vikki Cohen's 50 percent interest in the property to be conveyed in the 2002 refinance transaction. Richard Cohen further averred that WMC had not intended for Vikki Cohen's interest in the property to be conveyed " at the timing of executing the 2002 Loan."

" Equity will relieve against mutual mistake, but only at the instance of a complainant who moves with reasonable diligence." [2]

An action to reform a written document may be brought within seven years from the time the cause of action accrues. As a general rule, the statute of limitation does not commence to run against an equitable action for reformation of a written instrument based on mutual mistake or fraud until the mistake or fraud has been, or by the exercise of reasonable diligence should have been, discovered.[3]

" A plaintiff cannot sit quietly by for a length of time exceeding that named in the statute of limitations, and avoid its operation and save his cause of action by the mere allegation that he made the discovery." [4] An action to reform a deed may not be barred by the seven-year statute of limitations, however, if the non-complaining party will not be prejudiced.[5]

The Cohens claimed that WMC's suit was barred because the statute of limitation in which to bring an action for reformation had expired. But the trial court disagreed, determining that the statute of limitation had been tolled by WMC's discovery of the " mutual mistake" in 2011, and that even if the statute of limitation had not been tolled based ...


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