Mathews v. Emerson
2014 La. App. LEXIS 1347, 2014 WL 2155378, 141 So. 3d 346 (2014)
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Rule of Law:
A court may reform a written instrument, such as a deed, when the party seeking reformation proves by clear and convincing evidence that the instrument fails to reflect the true intent of both parties due to a mutual error.
Facts:
- Amanda Fontenot Mathews owned a two-acre lot and received regular royalty payments from an existing mineral lease on the property.
- In September 2006, Mathews listed the property for sale and explicitly noted on the listing agreement and the official MLS listing that she would reserve the mineral rights.
- On April 3, 2007, the prospective buyer, Jennifer Lynn Emerson O’Brien Duke, initialed every page of a seven-page property disclosure statement which clearly stated 'mineral rights reserved-long term lease'.
- Duke then made a purchase offer for $113,500, less than the $125,000 asking price (which was for the surface rights only), and the resulting buy/sell agreement acknowledged receipt of the property disclosure statement.
- At the closing on April 24, 2007, the cash sale deed omitted the mineral reservation. Mathews asked if her minerals were reserved and was assured by her realtor and the closing agent that they were.
- For approximately two years after the sale, Mathews continued to receive the mineral royalties without any objection or claim from Duke.
- In the summer of 2008, after the Haynesville Shale discovery increased mineral values, Mathews discovered the omission in the deed.
- When Mathews' representative approached Duke with an act of correction, Duke allegedly admitted the mineral reservation was intended but had been left out of the deed, and she subsequently refused to sign the correction.
Procedural Posture:
- Amanda Fontenot Mathews (plaintiff) filed suit against Jennifer Lynn Emerson O’Brien Duke (defendant) in a Louisiana district court (the trial court) seeking reformation of a cash sale deed.
- After a trial on the merits, the trial court found that a mutual error existed and issued a judgment in favor of Mathews, ordering that the deed be reformed to include a mineral reservation in her favor.
- Duke (as appellant) appealed the trial court's judgment to the Louisiana Court of Appeal, Second Circuit (the intermediate appellate court).
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Issue:
Does a mutual error regarding the reservation of mineral rights in a cash sale deed, where evidence indicates both seller and buyer intended for the seller to retain those rights but the deed failed to include the provision, justify judicial reformation of the deed?
Opinions:
Majority - Brown, C.J.
Yes, a mutual error regarding the reservation of mineral rights justifies judicial reformation of the deed. The court affirmed the reformation because the evidence overwhelmingly supports the trial court's factual finding of a mutual mistake. Mathews consistently expressed her intent to reserve the mineral rights through the MLS listing and the property disclosure statement, which Duke initialed and acknowledged. The fact that Duke purchased the property for less than the list price (which excluded minerals) and that Mathews continued to receive royalties for two years without objection further demonstrates the parties' true intent. Under the manifest error standard, the appellate court must give great deference to the trial court’s credibility determinations and factual findings, which were reasonably based on the evidence presented.
Dissenting - Moore, J.
No, the error in this case does not justify reformation of the deed. The party seeking reformation must establish mutual error by clear and convincing evidence, a burden the plaintiff failed to meet. The critical legal documents—the buy/sell agreement and the cash sale deed—both omitted any mineral reservation. The plaintiff's failure to read the documents she signed constitutes an inexcusable error from which the law should not provide relief. Citing precedent, the dissent argues that a party may not avoid the provisions of a contract they signed but failed to read, as 'signatures to obligations are not mere ornaments.'
Analysis:
This decision reaffirms the availability of the equitable remedy of reformation to correct a mutual mistake in a written contract, even one as formal as a real estate deed. The case highlights the tension between the high 'clear and convincing' evidentiary standard for reformation and the deferential 'manifest error' standard of appellate review for trial court factual findings. The ruling signifies that extrinsic evidence, such as pre-contract disclosures and post-contract conduct, can be powerful enough to overcome the text of an unambiguous, signed agreement, particularly when a trial court finds that evidence highly credible. It suggests that a party's failure to read a contract is not an absolute bar to reformation if the proof of mutual mistake is sufficiently strong.
