JAMES P. WHITCOMB v. BANK OF AMERICA, N.A.

• Court: Court of Appeals of Georgia
• Decided: October 26, 2022
• Docket: A22A1131
• Status: Published

Opinion

SECOND DIVISION RICKMAN, C. J., MILLER, P. J., PIPKIN, J.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. https://www.gaappeals.us/rules

October 26, 2022

In the Court of Appeals of Georgia A22A1131. WHITCOMB v. BANK OF AMERICA, N.A. et al.

MILLER, Presiding Judge.

In this property dispute, the trial court granted summary judgment to Bank of

America, N. A.1 and ordered the rescission of a deed under power and the reformation

of a security deed based on a mutual mistake. The property owner, James P.

Whitcomb, appeals from the trial court’s order. Whitcomb argues that (1) Bank of

America lacked standing to bring this action; (2) the deed under power could not be

rescinded based upon an alleged mistake, given the language of the deed; (3) Bank

of America’s claims were barred by its own negligence; (4) Bank of America was

required to tender the property back to him before bringing an action to rescind the

1 The appellee’s full name is Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP. foreclosure sale; and (5) Bank of America did not establish a prima facie case for

rescission and reformation. We determine that the trial court correctly ordered

rescission and reformation of the deeds based on a mutual mistake, and we therefore

affirm.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. A de novo standard of review applies to an appeal from an order either granting or denying summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.

(Citation omitted.) Ledford v. Smith, 274 Ga. App. 714, 715 (618 SE2d 627) (2005).

Viewed in this light, the evidence shows that Whitcomb and his former wife,

Laura Whitcomb, acquired two adjacent parcels of land in Forsyth County. The first

parcel encompassed 11.7 acres and contained a home, and the second parcel spanned

approximately 1.074 acres (the unimproved parcel). The former couple then executed

a security deed in favor of Sunshine Mortgage Corporation for a 1-acre tract from the

larger parcel, and the home was included in this 1-acre tract (the improved parcel).

Several years later, Whitcomb and Laura further conveyed a 4.04-acre tract from the

2 larger parcel to a third party. Laura then conveyed her interest in the properties to

Whitcomb via quitclaim deeds.

Thereafter, Whitcomb received a “refinance” loan from Wells Fargo Home

Mortgage, Inc., in the amount of $110,000.00, and the security deed for the Wells

Fargo Mortgage loan encumbered the unimproved parcel. Whitcomb then obtained

a loan from Wells Fargo Bank, N.A. in the amount of $159,243, and the

corresponding security deed again used the legal description for the unimproved

parcel.

In 2007, Whitcomb obtained a third loan — this time from Quicken Loans, Inc.

— in the amount of $207,000. Once again, the corresponding security deed used the

legal description for the unimproved parcel. In connection with this latest loan,

however, Whitcomb completed a “uniform residential loan application,” and the

application apparently bears his initials and signature. Accompanying the application

is a residential appraisal report. The report contains several photographs of the

interior and exterior of Whitcomb’s home; sketches of the floor plan for the home;

information regarding the size of each floor; and details on the sales of comparable

residential properties and the respective homes that were a part of these sales. The

loan application reflects that the purpose of the loan was to “refinance” a “primary

3 residence” and that the residence was built in 1992. A portion of the loan was used

to pay off the Wells Fargo Bank loan. The Quicken security deed was later assigned

to the plaintiff in the present case, Bank of America. Bank of America foreclosed on

the security deed, as evidenced by a deed under power, and then conveyed the

unimproved parcel to Federal National Mortgage Association (“Fannie Mae”). Years

later, Fannie Mae conveyed the unimproved parcel back to Bank of America via

quitclaim deed.

Bank of America then filed a complaint against Whitcomb in the Forsyth

County Superior Court, requesting that the foreclosure sale be rescinded and also

asking that the Quicken security deed be reformed to include the legal description for

the improved parcel which contained the home. The underlying allegation was that,

due to a mutual mistake, the Quicken security deed incorrectly contained the

description of the unimproved parcel, whereas the parties had intended for the deed

to encumber the improved parcel, as evidenced by the residential loan application that

secured the loan. In his interrogatory responses, Whitcomb stated that he could not

recall completing the loan application, but he simultaneously admitted that he

“believed at the time that a house was located on [the unimproved] tract.” Bank of

America later filed a motion for summary judgment on its complaint, which the trial

4 court granted after a hearing. The trial court agreed that Quicken and Whitcomb

intended for the Quicken security deed to encumber the improved parcel on which

Whitcomb’s home was located. As a result, the court ordered that Bank of America’s

deed under power be rescinded and that the Quicken security deed be reformed to

identify the improved parcel. Whitcomb then filed the present appeal.

1. First, Whitcomb argues that the trial court “necessarily” determined that

Bank of America had standing to bring this action, but the bank lacked standing

because it was a voluntary purchaser of property from a non-party, Fannie Mae.

Whitcomb, however, has waived this argument because he failed to raise it in the trial

court.

“The constitutional and procedural concept of ‘standing’ falls under the broad

rubric of ‘jurisdiction’ in the general sense[,]” and “a plaintiff with standing is a

prerequisite for the existence of subject matter jurisdiction.” (Citations omitted.)

Blackmon v. Tenet Healthsystem Spalding, Inc., 284 Ga. 369, 371 (667 SE2d 348)

(2008). Nonetheless, the “timely assertion of a standing defense is necessary” to

prevent the needless consummation of judicial and private resources if the plaintiff

has no capacity to pursue the claim. Lewis v. Van Anda, 282 Ga. 763, 765 (1) (653

SE2d 708) (2007). To this end, a plaintiff’s lack of standing is “a waivable defect,”

5 and “[t]he failure to assert a plaintiff’s alleged lack of standing prior to the entry of

judgment results in the waiver of such defense.” (Citations omitted.) Id.

Here, Whitcomb failed to challenge Bank of America’s standing either in his

many responsive pleadings filed below or at the hearing on Bank of America’s

motion for summary judgment. Thus, at no point during the trial court proceedings

did Whitcomb assert this argument, and the trial court’s order is notably devoid of

any discussion on this specific claim.2 Whitcomb having waived his challenge to

Bank of America’s standing to pursue this action, this Court will not consider this

argument. See I. A. Group., LTD. Co. v. RMNANDCO, Inc., 346 Ga. App. 396, 398-

399 (1) (816 SE2d 359) (2018) (defendant’s challenge to the plaintiff’s standing was

waived for failure to raise it in the trial court); see also Fulton County Bd. of

Assessors v. Calliope Properties, LLC, 312 Ga. App. 875, 878 (1) (720 SE2d 312)

(2011) (“[T]he failure to raise a timely objection based upon the real party in interest

results in a waiver of that issue.”).

2 We observe that Whitcomb stated in the trial court, on various occasions, that Bank of America voluntarily purchased the unimproved parcel from Fannie Mae. But Whitcomb never made this argument in the context of standing, as he now does on appeal.

6 2. Next, Whitcomb argues that the trial court erred in holding that Bank of

America could rescind the deed under power because the language of the deed under

power expressly subjects the sale of the property to what an accurate survey or

inspection of the property would have shown, which is a 1.074-acre tract with no

home located on it. We conclude that the language of the deed under power did not

serve as a bar to rescission of the deed.

In all cases where the form of the conveyance or instrument is, by mutual mistake, contrary to the intention of the parties in their contract, equity will interfere to make it conform thereto. The cause of the defect is immaterial so long as the mistake is common to both parties to the transaction. And the negligence of the complaining party will not defeat his right to reformation if the other party has not been prejudiced. A mistake relievable in equity is some unintentional act, omission, or error arising from ignorance.

(Citation omitted.) Bank of America v. Cuneo, 332 Ga. App. 73, 78 (2) (770 SE2d 48)

(2015). Stated differently, “[a] mutual mistake is one in which both parties participate

by each laboring under the same misconception.” (Citation omitted; emphasis

supplied.) Ledford, supra, 274 Ga. App. at 727 (4). The mistake need not be “literally

exactly the same” but only “sufficiently mutual” to find the true intention of the

parties. Cuneo, supra, 332 Ga. App. at 80 (2). “Furthermore, although the evidence

7 as to the mistake must be clear, unequivocal and decisive, there is no rule that

reformation will be denied unless the mistake be admitted by both parties.” (Citation

and punctuation omitted.) Occidental Fire & Cas. of North Carolina v. Goodman,

339 Ga. App. 427, 429 (1) (793 SE2d 606) (2016). Equity may intervene and allow

reformation “even if a foreclosure has already occurred and even if the reformation

alters the priority of lienholders.” Potter’s Properties, LLC v. VNS Corp., 306 Ga.

App. 621, 624 (703 SE2d 79) (2010); DeGolyer v. Green Tree Servicing, LLC, 291

Ga. App. 444, 447-448 (1), (3) (662 SE2d 141) (2008) (upholding the rescission of

the foreclosure deed and the reformation of the security deed where the security deed

contained a mutual mistake).

(a) As a preliminary matter, the trial court properly determined that, as a matter

of law, Bank of America was entitled to rescission of the deed under power because

Quicken and Whitcomb intended for the Quicken security deed to encumber the

improved parcel. This was demonstrated by various key items of evidence. First,

Whitcomb submitted the Quicken loan application and affirmed that the purpose of

the loan was to refinance his primary residence which was built in 1992. Second, a

detailed residential appraisal report was affixed to the application, and this report

contained numerous photographs of Whitcomb’s home and specifications concerning

8 the home. Third, by Whitcomb’s own admission in his interrogatory responses,

Whitcomb believed that a house was located on the parcel identified in the loan

documents. “The above evidence shows that [Whitcomb] executed several documents

exhibiting [his] intent to encumber the [parcel] that included [his] residence, not an

undeveloped property.” Salas v. JP Morgan Chase Bank, N.A., 334 Ga. App. 274, 282

(3) (779 SE2d 48) (2015). And, Quicken issued the loan funds based on the

application that Whitcomb submitted. See Cuneo, supra, 332 Ga. App. at 79 (2) (“The

issue is whether the parties’ mutually intended for the [b]ank to lend money and for

the loan to be secured by the property, and in considering that issue, the court may

consider other evidence related to the loans and deeds.”). Subsequently, the erroneous

property description for the unimproved parcel “carried over” to the deed under

power, and therefore the same mistake that materialized in the Quicken security deed

appeared in the deed under power. Black v. Nationstar Mtg., LLC, 344 Ga. App. 217,

221 (a) (809 SE2d 487) (2018).

(b) Although Whitcomb argues that the trial court should have focused on the

deed under power and not the Quicken deed, this argument fails under our decision

in Black, supra, 344 Ga. App. at 221 (a). In that case, we determined that the parties

had intended that two parcels be conveyed in a security deed, rather than the single

9 parcel that was reflected in the security deed. Id. This Court explained that “although

the mistaken property description later carried over to the Deed Under Power and the

Special Warranty Deed, this [did] not contravene the original intent” of the parties

when the mutual mistake arose. Id. Put simply, we reiterated that “it is the parties to

the original instrument that must be mutually mistaken for reformation to occur.”

(Citation omitted.) Id. Similarly, in this case, the trial court properly examined the

parties’ intent at the time that the Quicken security deed was formed.

(c) Next, the language of the deed under power did not preclude Bank of

America from seeking rescission. We recognize that the deed under power states that

“this conveyance is subject to . . . any matters which might be disclosed by an

accurate survey and inspection of the property. . . .” In Whitcomb’s view, this

language means that the foreclosure sale was subject to what an accurate survey or

inspection of the property would have shown, which is a 1.074-acre tract without a

home located on it. But Whitcomb fails to recognize that he and Quicken were

laboring under a mutual mistake, and the Quicken security deed “as written does not

express the contract or intent of either of the parties.” (Citation omitted; emphasis

supplied.) Yeazel v. Burger King Corp., 241 Ga. App. 90, 94 (2) (526 SE2d 112)

(1999). Because the Quicken security deed arose from a mutual mistake and does not

10 reflect the parties’ actual agreement, the subsequent deed under power is not binding

on Bank of America with regard to the identity of the property underlying the deed.

See, e.g., Hudson v. Godowns, 320 Ga. App. 157, 159-160 (3) (739 SE2d 462) (2013)

(explaining that where there was a “mutual mistake of fact,” “there had been no

meeting of the minds,” which is essential to the enforceability of a contract). Compare

Hurst v. McDaniel, 159 Ga. App. 702, 703 (2) (285 SE2d 40) (1981) (written

agreement was “binding on the parties even if the writing did not express the contract

actually made” because there was no mutual mistake). Therefore, the language of the

deed under power did not preclude Bank of America from seeking rescission.

Despite Whitcomb’s urging to the contrary, our decision in Interchange Drive,

LLC v. Nusloch, 311 Ga. App. 552 (716 SE2d 603) (2011) does not require a different

result. In Nusloch, we held that a deed under power was subject to various covenants,

in accordance with the express language of the deed. Id. at 556. In so holding, we

found that the deed was considered “the true, complete understanding between the

parties[,]” and we further acknowledged that “when a grantee accepts a deed, he is

bound by the covenants contained therein[.]” (Citation and punctuation omitted.) Id.

at 556-557. Importantly, however, Nusloch did not involve a mutual mistake, id., and

11 so our decision in that case does not dictate that rescission and reformation are not

available in this appeal.

3. Next, Whitcomb claims that the trial court erred by not holding that Bank of

America’s claims were barred by its own negligence. Whitcomb posits that Bank of

America had the opportunity to inspect the unimproved parcel prior to the purchase,

and its failure to confirm that a house existed there amounted to negligence that

prevents recovery. We determine that any alleged negligence on the part of Bank of

America is not fatal to its claims.

As the Supreme Court of Georgia has repeatedly explained, where a mistake

is common to both parties to the transaction, “the negligence of the complaining party

will not defeat his right to reformation if the other party has not been prejudiced.”

Curry v. Curry, 267 Ga. 66, 67 (1) (473 SE2d 760) (1996). See OCGA § 23-2-32 (b);

see also Ehlers v. Upper W. Side, LLC, 292 Ga. 151, 153 (1) (733 SE2d 723) (2012)

(although there was an absence of “reasonable diligence” to discover the error in the

deed, “there is an exception that permits the grant of equitable relief in the form of

contract reformation even in cases of negligence when the other party has not been

prejudiced”); Long v. Walls, 226 Ga. 737, 741 (177 SE2d 373) (1970) (rejecting the

argument that the plaintiff did not take “certain precautionary steps” because the

12 plaintiff sought reformation based on a “mutual mistake of the parties”). “Prejudice

may arise from a change in conditions such as will preclude the court from arriving

at a safe conclusion as to the truth of matters in controversy, and which makes the

doing of equity doubtful or impossible, such as the death of a key witness.” (Citation

and punctuation omitted.) 100 Lakeside Trail Trust v. Bank of Am., N.A., 342 Ga.

App. 762, 766 (1) (804 SE2d 719) (2017).

Here, Whitcomb “ha[s] not suffered any prejudice as [he] received a loan for

[$207,000], as promised, and used part of that loan to satisfy [an] earlier loan from

[another lender]. . . . Nor [has Whitcomb] shown that [he] [will] suffer any prejudice

if the deed is reformed.” Vibert v. Bank of Am., N.A., 327 Ga. App. 782, 784 (761

SE2d 162) (2014).3 Whitcomb alludes to prejudice, arguing that the unimproved

parcel is now worth less than when the foreclosure sale occurred and that a storage

building located on the unimproved parcel was in “great shape” and will now require

“substantial sums to make it useful again.” But, “[f]actual assertions contained in a

3 Whitcomb argues that Bank of America bore the burden of proving that he would not be prejudiced and that the trial court improperly placed the burden on him to show prejudice. This argument appears untenable under precedent from the Supreme Court of Georgia. See Zaimis v. Sharis, 275 Ga. 532, 533 (1) (570 SE2d 313) (2002) (no impediment to reformation of a lease because the defendant failed to show that he would be prejudiced). In any event, the record before us does not show prejudice to Whitcomb.

13 party’s brief are not evidence unless supported by the record.” (Citation omitted.)

Dukes v. Munoz, 346 Ga. App. 319, 322 n.3 (1) (816 SE2d 164) (2018). In the face

of record evidence on the benefits Whitcomb received from the mistake in the

Quicken security deed, Whitcomb has failed to identify any actual evidence on the

purported diminution in value of the unimproved parcel or the storage building. In

other words, Whitcomb merely supposes that he will be prejudiced by the rescission

and reformation of the deeds, and this Court has been clear that a party “cannot defeat

summary judgment by relying on uncertain and speculative possibilities and

inferences.” Hobday v. Galardi, 266 Ga. App. 780, 782 (598 SE2d 350) (2004).

Therefore, the trial court was correct in its determination that any negligence on the

part of Bank of America did not bar its claims.

4. Next, Whitcomb argues that, as an act of equity, Bank of America was

required to tender the unimproved parcel back to him before filing suit to rescind the

foreclosure sale. This argument fails because it finds no support in the law.

We recognize, as Whitcomb argues, that “when a debtor seeks to set aside a

foreclosure sale, he must first pay what he owes to the creditor absent extraordinary

circumstances.” Underwood v. Colony Bank, 362 Ga. App. 548, 557 (3) (869 SE2d

535) (2022). This maxim stems from the codified principle that “[he] who would have

14 equity must do equity and must give effect to all equitable rights of the other party

respecting the subject matter of the action.” OCGA § 23-1-10. But our appellate

courts have never held that, pursuant to this Code section, the holder of a deed must

tender the subject property to a debtor as a prerequisite to seeking rescission or

reformation of the deed. Nor does Whitcomb identify any such appellate decision.

Moreover, although Whitcomb repeatedly invokes OCGA § 23-1-10 as a basis

to require the tender of the unimproved parcel back to him, the scope of the statute

convinces us that no such tender was required in this case. OCGA § 23-1-10

“embodies both the ‘unclean hands’ doctrine and the concept that ‘one will not be

permitted to take advantage of his own wrong.’” (Citation omitted.) Goodson v. Ford,

290 Ga. 662, 666 (5) (725 SE2d 229) (2012). Here, Bank of America has not

committed any wrongful acts that triggered the application of OCGA § 23-1-10 and

required a return of the unimproved parcel to Whitcomb before it sought rescission

and reformation. Indeed, Whitcomb identifies no alleged wrongdoing that directly

relates to the pivotal question underlying Bank of America’s claim, i.e., whether there

was a mutual mistake underlying the formation of the Quicken security deed. See,

e.g., 100 Lakeside Trail Trust, supra, 342 Ga. App. at 767 (2) (holding that OCGA

15 § 23-1-10 did not bar the bank’s action to reform the security deed where the bank’s

alleged wrongdoing of failing to perform a title search and inducing the grantor to

stop making payments did not relate to whether there was a mutual mistake in the

forming of the security deed). Accordingly, we are unpersuaded by Whitcomb’s

argument that Bank of America was required to tender the unimproved parcel back

to him before pursuing its claims.

5. Lastly, Whitcomb argues that, for various reasons, the trial court erred in

holding that Bank of America established a prima facie case for rescission and

reformation.4 We conclude that none of Whitcomb’s arguments served as a bar to

Bank of America’s claims.

(a) First, Whitcomb briefly contends that Bank of America did not show that

reformation of the security deed would be equitable because it did not allege or prove

that the price it paid for the unimproved parcel at foreclosure was not the fair market

value of the property. A review of the record shows that Whitcomb did not raise this

argument in the trial court, either in any pleading or at the hearing on Bank of

America’s motion for summary judgment. “After summary judgment is granted to a

4 Many of the arguments in this enumeration of error have been recast from previous claims that have already been addressed in this opinion. As such, we consider only the new arguments presented.

16 movant/plaintiff, a nonmovant/defendant may not raise an argument or defense not

asserted in the trial court.” (Citation and punctuation omitted.) Ambrosio v. Giordano,

358 Ga. App. 764, 769 (3) (856 SE2d 349) (2021). Therefore, this argument has been

waived.

(b) In a similarly cursory argument, Whitcomb claims that (1) Bank of America

failed to show the value of the improved parcel either at the time that the security

deed was executed or at the time of the foreclosure sale; and (2) Bank of America also

failed to prove that the two parcels have the same value. In Whitcomb’s view, these

supposed deficiencies demonstrate Bank of America’s failure to show that

reformation of the security deed would be equitable. This argument is wholly

unpersuasive.

In a reformation action such as this one, the purpose of equity is to make the

instrument reflect the actual bargain between the parties and ensure that the parties

receive that which was bargained for. See 100 Lakeside Trail Trust, supra, 342 Ga.

App. at 768 (4) (equity required reformation of the security deed to prevent a windfall

to the appellant which was not bargained for). Accordingly, in determining whether

equity should intervene in this case, “the only inquiry is, does the instrument contain

what the parties intended it should and understood that it did? If not, then it may be

17 reformed by aliunde proof, so as to make it the evidence of what was the true bargain

between the parties.” (Citation omitted; emphasis supplied.) Aames Funding Corp.

v. Henderson, 275 Ga. App. 323, 325-326 (620 SE2d 503) (2005). As the record here

plainly shows a mutual mistake, the trial court correctly ordered the equitable

reformation of the security deed to reflect the actual bargain between the parties.

(c) Next, Whitcomb argues that he presented evidence demonstrating that he

did not intend to give Quicken any security interest in the improved parcel and that

summary judgment was not warranted. Whitcomb relies on an affidavit, in which he

stated, “I did not intend to give Quicken Loans, Inc. a security interest in a 1-acre

tract of land,” and “Quicken Loans, Inc. never agreed to accept, and I never agreed

to convey, the 1.00 acre tract[.]”

The trial court was correct, however, in determining that these self-serving and

conclusory statements did not preclude the grant of summary judgment to Bank of

America. In the absence of substantiating facts, a self-serving and conclusory

affidavit is insufficient to create an issue for trial. Jones v. Bank of America Mtg., 254

Ga. App. 217, 218 (1) (561 SE2d 867) (2002). See also Cuneo, supra, 332 Ga. App.

at 79 (2) (“[T]he doctrine of mutual mistake is not so narrow as to foreclose its

application simply by one party’s affidavit asserting that she did not intend to borrow

18 the money.”). Whitcomb identifies no proper facts substantiating his averments.

Instead, he merely argues that the appraisal report shows that the “subject” of the

residential appraisal was the unimproved parcel and that the parties’ only mistake was

believing that his home was located on that parcel. But this is precisely the basis for

the application of the reformation doctrine. As we have unequivocally explained, “the

doctrine of equitable reformation requires the Court to find that the parties were

acting under the identical mistaken belief.” (Citation omitted; emphasis supplied.)

Cuneo, supra, 332 Ga. App. at 79 (2). The record in this case plainly shows a

sufficiently mutual mistaken belief that Whitcomb’s home was located on the

unimproved parcel, and the trial court properly concluded that Whitcomb and

Quicken intended for the loan to be secured by the parcel that contained the home.

Because Bank of America was entitled to rescission of the deed under power

and reformation of the Quicken security deed, the trial court properly granted its

motion for summary judgment.

Judgment affirmed. Rickman, C. J., and Pipkin, J., concur.