Morris v. Morris
2006 Fulton County D. Rep. 3393, 637 S.E.2d 838, 282 Ga. App. 127 (2006)
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Rule of Law:
An action to reform an option contract based on mutual mistake is not barred by the statute of limitations if the option was exercised within the contractually specified time period, even if the general statutory period for a reformation action has expired.
Facts:
- In 1993, E. E. Morris leased all of his 548 acres of farmland to his son, Harold Wayne Morris.
- On August 19, 1994, E. E. Morris and Harold Wayne Morris entered into a contract giving Harold Wayne a ten-year option to purchase his father's land.
- Due to a scrivener's error by a legal secretary, the option contract only described approximately 312 of the 548 acres, omitting a 236-acre parcel.
- In 1995, E. E. Morris executed a will that specifically excluded Harold Wayne, noting that the below-market-value lease and option contracts would serve as his inheritance.
- E. E. Morris passed away in 1997.
- On January 8, 2003, well within the ten-year option period, Harold Wayne Morris notified his brother Marion Morris, the executor of the estate, of his intent to exercise the option to purchase the land.
Procedural Posture:
- On March 20, 2003, Marion Morris, as executor of the estate, filed a declaratory judgment action in Randolph County Superior Court (a trial court) to determine the extent of the property covered by the option.
- Harold Wayne Morris filed an answer and counterclaim asserting his right to purchase all of his father's land.
- A bench trial was held, after which Harold Wayne Morris amended his pleadings to formally seek reformation of the contract.
- The trial court found that a mutual mistake had occurred but denied reformation, ruling that Harold Wayne Morris had waited too long to correct the mistake.
- Harold Wayne Morris appealed this ruling to the Court of Appeals of Georgia (an intermediate appellate court).
- The estate filed a cross-appeal challenging the trial court's evidentiary rulings and its finding of mutual mistake.
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Issue:
Is a claim for reformation of an option contract based on mutual mistake barred by the statute of limitations or laches when the claim is asserted more than seven years after the contract's execution but within the ten-year period for exercising the option?
Opinions:
Majority - Johnson, P.J.
No. A claim for reformation of an option contract based on mutual mistake is not time-barred if the option was exercised within the period specified in the contract. The court found itself bound by the Supreme Court of Georgia's precedent in Redmond v. Sinclair Refining Co., which held that the critical deadline is for the exercise of the option, not the reformation of the contract. Since Harold Wayne Morris exercised his option in January 2003, within the ten-year period that expired in August 2004, his action to reform the contract was also timely. Although the trial court's reasoning regarding lack of diligence and the estate's statute of limitations argument were persuasive, the Redmond precedent was controlling. The court also affirmed the trial court's finding that a mutual mistake occurred due to the scrivener's error and that allowing Harold Wayne Morris to amend his pleadings to seek reformation was not an abuse of discretion.
Analysis:
This case solidifies a significant exception to the general statute of limitations for contract reformation in the specific context of option contracts. It establishes that the timeline for seeking reformation is tied to the exercise of the option, not the discovery of the mistake. This precedent provides substantial protection for holders of long-term options, who might not discover a scrivener's error until they are ready to exercise their rights, potentially years after the contract was signed. The decision reinforces that the substantive right to exercise the option within the agreed-upon period carries with it the ancillary right to ensure the contract accurately reflects the parties' original intent.
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