Reformation – Mutual Mistake

Deslonde v. Nationstar Mortgage, LLC, et al., [Ms. 1200483, Dec. 10, 2021] __ So. 3d __ (Ala. 2021). The Court (Sellers, J.; Bolin, Wise, and Stewart, JJ., concur; Parker, C.J., concurs in the result) affirms the Baldwin Circuit Court’s summary judgment dismissing Brett Deslonde’s claim seeking reformation of a loan modification agreement. The Court first explains “the party seeking to reform an instrument on the basis of a mutual mistake bears the burden of proving by ‘clear, convincing, and satisfactory evidence that the intention he seeks to substitute was that of both parties.’ Beasley v. Mellon Fin. Servs. Corp., 569 So. 2d 389, 394 (Ala. 1990). In other words, reformation of an instrument requires a showing that both parties negotiated terms that are not reflected in the actual instrument and that the instrument should, thus, be changed to properly detail the mutual agreement of the parties.” Ms. *10.

The Court holds the “the alleged misunderstanding in this case resulted solely from Deslonde’s mistake in failing to read the executed modification agreement, which clearly outlined the ‘future terms’ for repayment of his loan. A unilateral mistake, however, is legally insufficient to invoke a court’s equitable powers to reform an instrument. Therefore, rewriting the executed modification agreement to reflect the terms that Deslonde ‘expected and intended’ cannot be deemed a mutually agreeable resolution to this matter.” Ms. *14.

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