Jerald M. Brown and Margaret A. Brown v. Terri S. Bush

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

DIVISION II

CA03-100

September 3, 2003

JERALD M. BROWN and AN APPEAL FROM GARLAND COUNTY

MARGARET A. BROWN CIRCUIT COURT

APPELLANTS [CV-2001-1157]

v.

HONORABLE DAVID B. SWITZER,

TERRI S. BUSH CIRCUIT JUDGE

APPELLEE

AFFIRMED

Andree Layton Roaf, Judge

This appeal follows the trial judge's reformation, as a result of the parties' mutual mistake, of a land sale contract to reflect the correct number of acres to be conveyed with a corresponding abatement of the purchase price. We affirm the trial judge's decision in all respects.

In 1989, appellants Jerald Brown and Margaret Brown entered into a contract to sell 5.68 acres of land in Garland County to Raymond Ridge and Cynthia Ridge. They agreed to sell a large contiguous tract of land to the Ridges in 1994. Appellants' surveyor mistakenly included the 5.68 acres in the description of the second tract, and their attorney did not notice the error when he prepared the contract, which erroneously stated that 49.84 acres were to be conveyed. The Ridges later entered into a contract to sell one of the acres. In 1999, after the Ridges experienced marital problems, appellee Terri Bush offered to buy the larger parcel of land from appellants. Mr. Ridge's attorney, J. Sky Tapp, prepared the contract, wherein appellants sold "49.84 acres more or less" to appellee. In doing so, he copied the erroneous legal description of the property originally set forth in appellants' contract with the Ridges. Pursuant to the Ridges' divorce settlement, Mr. Ridge conveyed his interest in the smaller tract, which contained the Ridges' homestead, to Mrs. Ridge and their children.

After appellee built a house on the property in question, she applied for a loan, and the erroneous legal description was discovered. Represented by Mr. Tapp, appellee sued appellants and the Ridges (along with their new spouses) for specific performance of the contract, with compensation for the missing acres. With a new attorney, appellants sought rescission of the contract and the recusal of Mr. Tapp as appellee's counsel. According to appellants, Mr. Tapp's lack of due diligence warranted rescission. Cynthia Ridge filed a counterclaim seeking quiet title of the smaller tract. At trial, appellants called Mr. Tapp as a witness, attempting to prove that his negligence in handling the transaction caused the error in the legal description. The judge refused to recuse Mr. Tapp from representing appellee. Appellee presented evidence that the loss in acreage had decreased the appraised value of the property, including improvements, from $350,000 to $332,000.

In the decree, the judge denied appellants' request for rescission and found that a mutual mistake had occurred regarding the actual number of acres purchased, which was 4.68 acres less than what appellee had intended. He reduced the purchase price by the cost per acre, multiplied by 4.68, and reformed the contract as follows: "[T]he original principal sum paid by [appellee] to [appellants] in said Contract of Sale is hereby reformed from $117,180.79 to the reformed sum of $105,952.16." He also awarded appellee an attorney's fee of $1,500 on the ground that the error in the legal description had been caused by appellants' agents. This appeal followed.

Arguments

Appellants make the following two arguments on appeal: (1) the trial judge should have rescinded, not reformed, the contract; and (2) the trial judge erred in awarding attorney's fees to appellee's counsel.1

Rescission or Reformation

Although appellants agree that a mutual mistake occurred2, they contend that the trial judge should have rescinded the contract and not reformed it. Appellants argue that rescission is warranted in this case because appellee's attorney, Mr. Tapp, did not practice due diligence in preparing the contract's legal description. It is not disputed that Mr. Tapp copied the legal description used in appellants' contract with the Ridges that was prepared by appellants' first attorney and was based upon information supplied by a surveyor hired by appellants. Appellants state that the issue is: "Does the principle of `due diligence' require the attorney representing the purchaser of an interest in real estate to make a reasonable effort to investigate or examine the title, or to cause such investigation or examination to be made, at the time of purchase?" They explain: "It is respectfully submitted that his failure to discover the mistake at the inception of this contract should tip the balance between the choices of relief, rescission instead of reformation." In their brief, appellants argue extensively about whether Mr. Tapp disregarded appellant Jerald Brown's purported request that title insurance be obtained when the contract with appellee was prepared; whether he was acting as a fiduciary for appellants; whether he had a duty to provide title insurance; and whether his failure to obtain such insurance amounted to negligence. Although appellants have not appealed the trial court's refusal to disqualify Mr. Tapp as appellees' counsel, they contend that this issue may come within the supreme court's jurisdiction over the discipline of attorneys and the regulation of the practice of law. We disagree.

Mr. Tapp's actions have no relevance to whether reformation was warranted because his purported negligence played no part in the judge's decision. The trial judge stated that "any appearance of impropriety is de minimis and no showing of prejudice was made by [appellants] to warrant such removal or disqualification." The trial court concluded that, even if Mr. Tapp had been negligent in preparing the contract's legal description, it would have no legal effect on the outcome of this case. None of the cases cited by appellants support their argument that a party's attorney's negligence may prevent the court from ordering the remedy of reformation in the presence of mutual mistake. Additionally, there is sound authority that it does not foreclose reformation in the event of mutual mistake: "A mistaken party's fault in failing to know or discover the facts before making the contract does not bar him from avoidance or reformation ... unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing." Restatement (Second) of Contracts § 157 (1981). Because there was no allegation that appellee or Mr. Tapp failed to act in good faith, reformation was a possible remedy.

Reformation is an equitable remedy that is available when the parties have reached a complete agreement but, through mutual mistake, the terms of their agreement are not correctly reflected in the written instrument purporting to evidence that agreement. See Hope v. Hope, 333 Ark. 324, 969 S.W.2d 633 (1998); Lambert v. Quinn, 32 Ark. App. 184, 798 S.W.2d 448 (1990). A mutual mistake is one that is reciprocal and common to both parties, each alike laboring under the same misconception in respect to the terms of the written instrument. Yeargan v. Bank of Montgomery County, 268 Ark. 752, 595 S.W.2d 704 (Ark. App. 1980). A mutual mistake must be shown by clear and decisive evidence that, at the time the agreement was reduced to writing, both parties intended their written agreement to say one thing and, by mistake, it expressed something different. Lambert v. Quinn, supra. Whether a mutual mistake warranting reformation occurred is a question of fact. Id.

Even in reformation cases, where the burden of proof is by clear and convincing evidence, this court defers to the superior position of the trial judge to evaluate the evidence, Akin v. First National Bank, 25 Ark. App. 341, 758 S.W.2d 14 (1988), and the proof need not be undisputed. Lambert v. Quinn, supra. Although we review traditional equity cases de novo on the record, the test on review is not whether we are convinced that there is clear and convincing evidence to support the trial judge's finding but whether we can say that the trial judge's findings are clearly erroneous. Id.

It is true that a mutual mistake of fact as to a material element of a contract can be an appropriate basis for rescission. Carter v. Matthews, 288 Ark. 37, 701 S.W.2d 374 (1986); Blythe v. Coney, 228 Ark. 824, 310 S.W.2d 485 (1958); First Nat'l Bank of Wynnev. Coffin, 184 Ark. 396, 42 S.W.2d 402 (1931). It is not, however, the only remedy available to the purchaser. The plaintiff is entitled to have the case tried on his own theory, as set forth in his pleadings. See Darnell v. Bibb, 143 Ark. 580, 221 S.W. 1061 (1920). A contract for the sale of land may be reformed to show the true intent of the parties upon a showing of mutual mistake. Bicknell v. Barnes, 255 Ark. 697, 501 S.W.2d 761 (1973). In the sale of land by acreage where the quantity of acres is essential to the contract, the purchaser is entitled to an adjustment of the acreage and a corresponding adjustment as to the purchase price when a mutual mistake regarding the amount of acreage is proved. Id; Christy Co. v. Ainbinder/Searcy Ltd., 3 Ark. App. 63, 621 S.W.2d 886 (1981).

Additionally, there are circumstances when rescission is not appropriate. Generally, a contract cannot be rescinded, except by mutual consent, where the circumstances have been so altered by part execution that the parties cannot be restored to the status quo. Herrick v. Robinson, 267 Ark. 576, 595 S.W.2d 637 (1980). This is such a case. There is no dispute that appellee has built a house, appraised at $180,000, on the property. Thus, there is no simple way that the parties can be restored to the status quo. A court of equity may fashion any reasonable remedy justified by the proof. Jones v. Ray, 54 Ark. App. 336, 925 S.W.2d 805 (1996). We hold that the remedy imposed in this case was appropriate under the circumstances and affirm the trial judge's reformation of the contract.

Attorney's Fee

Appellants argue in their second point that the judge abused his discretion in awarding appellee an attorney's fee for being forced to defend the claims of Mrs. Ridge. They again assert that, if Mr. Tapp had practiced "due diligence," Mrs. Ridge's rights could have been resolved when the contract was prepared. Appellants, however, have failed to cite any authority for their argument that an attorney's fee should not have been awarded. Assignments of error unsupported by convincing argument or authority will not be considered on appeal. Johnson v. Jones, 64 Ark. App. 20, 977 S.W.2d 903 (1998).

Additionally, we cannot say that the trial judge abused his discretion in awarding an attorney's fee to appellee. Arkansas Code Annotated section 16-22-308 (Repl. 1999) provides that, in a civil action based on contract, the prevailing party may be allowed a reasonable attorney's fee. Ouachita Trek & Dev. Co. v. Rowe, 341 Ark. 456, 17 S.W.3d 491 (2000). Because of the trial judge's intimate acquaintance with the trial proceedings and the quality of service rendered by the prevailing party's counsel, the judge's decision regarding attorney's fees will be reversed only if an abuse of discretion is shown. See Jones v. Abraham, 341 Ark. 66, 15 S.W.3d 310 (2000). From the bench, the judge noted that appellee had also been required to defend the Ridges' quiet title claim and that the original error precipitating this lawsuit was made by appellants' employees (his surveyor and first lawyer). Appellants do not dispute the fact that the original error in the description was made by their first attorney in reliance upon information supplied to him by a surveyor who had been hired by appellants. Accordingly, the judge did not abuse his discretion in awarding appellee this fee.

Affirmed.

Vaught and Baker, JJ., agree.

1 In their brief, appellants state that the contract in question was flawed in that a "necessary sixty-foot Southerly call was left out of the Northern boundary by the surveyor." Appellants, however, note that the trial judge did not rule on this question and they admit that it is not necessary for this court to address it. The failure to obtain a ruling from the trial court is a procedural bar to this court's consideration of the issue on appeal. See Ross Explorations, Inc. v. Freedom Energy, Inc., 340 Ark. 74, 8 S.W.3d 511 (2000).

2 We note that appellants do not dispute the fact that the mutual mistake concerned a material element of the contract. They have not argued that the contract, which stated the site contained "49.84 acres more or less" was in gross, rather than per acre, or that it did not warrant the quantity of land sold.