by Thomas E. Baynes, Jr.
If there is anything that takes the professional sweat off a dirt lawyer’s brow, or places a smile on a malpractice carrier’s face, it is the equitable safety net of reformation, definitely a doctrine for the legally maladroit. It has to be admitted that one of the main reasons we trial lawyers exist in the commercial law arena is to extricate our dirt lawyer partners from chaos caused by the complex transaction documents they create. We’re not suggesting ambiguity here—we are talking about out-and-out mistakes.
So here is the formula for the rescue and, fortunately, the scope of the doctrine is easily ascertained:
Where an agreement has been actually entered into, but the contract, deed, or other instrument in its written form does not express what was really intended by the parties thereto, equity has jurisdiction to reform the written instrument so as to conform to the intentions, agreement and understanding of the parties.1
The classical fact scenario is a written document, which incorrectly states the deal between the parties, and, at least according to one of the parties, the error was mutual. The court’s role is not rewriting the instrument or conjuring up a new agreement,2 but from the evidence determining the intent of the parties as to the correct language.3 Literally and legally, reformation does not get any simpler.
Considerations of justice and fair dealing have uniformly influenced courts of equity to relieve an individual from the consequences of a written instrument which are prejudicial to him, and which by a mistake, does not contain the true intention of the parties, and prevent the party in whose favor such mistake is made from deriving any advantage from that part of said instrument which was unintended by the parties.4
The black letter criteria for reformation is a written agreement,5 a mutual mistake6 (or fraud, or misrepresentation by a party and a mistake by the other party),7 and proof by clear and convincing evidence.8
“Reformation only corrects the defective writing so as to accurately reflect true terms actually agreed to by parties.”9 Reformation does not seek to interpret what the language in the document states.10 Yet, as with any other equitable remedy, reformation requires that there be no adequate remedy at law.11
Now, when it is time to draft a complaint, it should be remembered that older decisions often discuss the specific (somewhat antiquated) pleading requirements for setting forth a cause of action.12 Pleading is now more liberal with the ability to amend even after a loss.13 Further, it is now clear that reformation can be raised defensively,14 and there are a few opinions that suggest it being allowed without the necessity of pleadings.15
Realistically, a complaint seeking reformation must allege a cause of action. To accomplish this, it should set forth the facts concerning the creation of the written agreement, its language, the language intended by the parties, the mutual mistake, and how the parties’ performance under the reformed agreement will be affected. This latter criterion is critical because where there is no difference in the result, a court will not grant reformation.16 Ultimately, the plaintiff has the burden of proving all these elements of reformation by clear and convincing evidence.17
Looking to the necessity of having a written instrument, there is an instant revelation regarding reformation: the operation of the doctrine is not barred by the statute of frauds.18 Further, the use of parol evidence to establish the mutual mistake has long been approved in Florida law.19 In reformation, it does not matter if language is incorrect or missing.20 Reformation can be used to establish consideration even if not stated, but cannot be used to create additional obligations to the instrument.21
Through reformation you can even add the missing signature to the agreement.22 In Tri County Produce Dist. Inc. v. N.E Production Credit Assn., 160 So. 2d 46, 49 (Fla. 1st DCA 1963), the court described reformation as follows:
The decisions from this and other jurisdictions are replete with instances in which written instruments have been reformed on the ground of mutual mistake so as to include land erroneously omitted; to delete land which had been erroneously included; to add signature of a witness and seals to instruments which were inadvertently omitted. Research reveals only one decision, however, which squarely confirms the power of a court of equity to reform a mortgage by adding the signature of a mortgagor inadvertently omitted therefrom by reason of mutual mistake so as to evidence the true agreement of the parties.
The doctrine presumes the written instrument is the sole expositor of the intent of the parties.23 The emphasis is on the “mutuality” of the mistake at the time of execution.24 A failure in the proof of mutual mistake may establish a unilateral mistake, which is the criterion for rescinding the agreement—something you probably don’t want as a legal alternative. Considering the benefits of reformation, rescission is an ineffectual remedy in most instances because the parties often cannot be returned to the status quo. Fortunately, equity prefers reformation to rescission.25 Conversely, there can be no reformation for unilateral mistake unless it is coupled with fraud, misrepresentation, or inequitable conduct on the part of the defendant.26
Interestingly enough, certain mistakes lack mutuality and are deemed per se unilateral. Legislation, ordinances, regulations, and gifts evidenced by written documents can fall victim. Courts have consistently held errors of government are not reformable as there is an absence of mutuality with individual members of the public.27 As to gifts based on love and affection transferred to the beneficiary, the courts have disallowed reformation with an exception where there is some form of valuable consideration between the parties to show the mutuality of the transaction.28 The mutual mistake component of reformation includes mistake of law,29 notwithstanding ignorantia legis neminen excusat.
While the essence of reformation today is its standard of proof, such standard was not always so clear. For years the burden of the plaintiff was to prove the writing was a product of mutual mistake by “[c]lear, convincing and satisfactory evidence, not alone by a preponderance of the evidence, but he must establish the fact by such evidence as to show conclusively that a mistake had been made, that such mistake was mutual to both parties and to satisfy the court of such mistake beyond a reasonable doubt.”30
While this judicial tautology may not have affected a plaintiff’s case where the equity court presided without a jury, it would have been a tongue twister as a jury instruction. This “reasonable doubt” standard has been attributable to dicta in Pomeroy’s Equity Jurisdiction—assuming any treatise sets out dicta.31 More likely it appears that “reasonable doubt” is a misstatement of “reasonable controversy” which had been used earlier by most courts.32 Nonetheless, this criteria was first questioned by the Second District Court of Appeal,33 recognized later by the Third and Fourth districts34 as confusing, and finally in 1974, the Florida Supreme Court stated that the “reasonable doubt” language was incorrect and clear and convincing was the standard of proof.35
It should be noted that a party to a document such as a deed has the ability to proceed through the chain of title to reform any erroneous instrument, notwithstanding that as a matter of law the instrument has merged with the deed.36 The plaintiff in reformation has the same rights as any of its remote grantees to cure the defect.37 The reformation will relate back to the effective date of the instrument38 except as against a bona fide purchaser without notice.39
However, the long scope of the doctrine is limited by the statute of limitations.40 Under Florida law, F.S. §95.231(2), reformation of a deed must be brought within 20 years. As to other written instruments, it appears F.S. §95.11(2)(b) would require the equitable actions to be brought within five years. If the mutual mistake is based on fraud, F.S. §95.11(3)(j) requires the action to be brought within four years.
Where the trial court has ordered reformation of the instrument, it also has jurisdiction to enforce the newly reformed document in the same proceeding.41 One should also keep in mind that in equity the trial court’s findings come with the presumption of correctness.42
Ultimately, the “clear and convincing” standard of proof must be recognized as the policy statement of reformation. It also establishes the safety net of this doctrine, which disregards so many legal norms of contract law such as the statute of frauds and allowing parol evidence to modify an instrument’s language. “Rigorous application of a higher standard of proof in reformation cases promotes the policy that the parties should not be subjected to contractual obligations to which they never agreed.”43
Finally, what may be the most interesting part of the doctrine of reformation is that the judicial decisions of 100 years ago are still precedent today. So, tear this article out of this journal and put it aside for the next time your dirt lawyer partner wanders into your office claiming there is some confusion with his or her last transactional creation. q
1 Smith v. Royal Auto Group Inc, 675 So. 2d 144, 150 (Fla. 5th D.C.A. 1996); see Jacobs v. Parodi, 39 So. 833 (Fla. 1905).
2 Southern Lead Corp v. Glass, 138 So. 59 (Fla. 1931); Olster v. Paskow, 289 So. 2d 11 (Fla. 3d D.C.A. 1974).
3 Southeastern Fidelity Ins. Co. v. Broughton, 293 So. 2d 139 (Fla. 1st D.C.A. 1974); Steffens v. Steffens, 422 So. 2d 963 (Fla. 4th D.C.A. 1982).
4 Jackson v. Magbee, 21 Fla. 622 (Fla. 1885).
5 Pomeroy’s Equity Jurisprudence, Chapter 32 (1905); Kooman, Fla. Chancery Pleading and Practice, §§371-373(1939); Baynes, Florida Mortgages, §8-3 (1999); Restatement of Contracts (Second) §155.
6 Circle Mort Corp. v. Kline, 645 So. 2d 75 (Fla. 4th D.C.A. 1994); Old Colony Ins. Co. v. Traponi, 118 So. 2d 850 (Fla. 2d D.C.A. 1960).
7 Hopkins v. Mills, 156 So. 532 (Fla. 1934).
8 Canal Insurance Co. v. Hartford Ins. Co., 415 So. 2d 1295 (Fla. 1st D.C.A. 1982).
9 Providence Square Assn v. Biancardi, 507 So. 2d 1366 (Fla. 1987).
10 Mathews v. Florida Crossbreeders, Inc., 330 So. 2d 183 (Fla. 2d D.C.A. 1976).
11 Palmer v. R.S. Evans, Jax Inc., 69 So. 2d 342 (Fla. 1954); Florida Ins. Co. v. Bozeman, 50 So. 513 (Fla. 1909); Taylor v. Glen Falls Ins. Co., 32 So. 882 (Fla. 1902).
12 Home v. Turner Cypress Lumber Co., 45 So. 1016 (Fla. 1908); Crosby v. Int. Investment Co., 101 So. 2d 15 (Fla. 2d D.C.A. 1958).
13 Rowland v. Whitehead, 375 So. 2d 607 (Fla. 2d D.C.A. 1979).
14 Chase v. Sullivan, 126 So. 359 (Fla. 1930); Inglia v. First Union Bank, 797 So. 2d 26 (Fla. 1st D.C.A. 2001).
15 Schroeder v. Gebhart, 825 So. 2d 442 (Fla. 5th D.C.A. 2002).
16 Aetna Cas. Co v. Breckenridge, 121 So. 102 (Fla. 1929). There will be no reformation where the mistake is caused by culpable negligence. Continental Cas. Co. v. City of Ocala, 149 So 381 (Fla. 1933).
17 Fidelity Ins Co. v. Hilliard, 62 So 585 (Fla. 1913); Samet v Prudential Ins Co., 294 So. 2d 35 (Fla. 3d D.C.A. 1974); Sobel v. Lobel, 168 So. 2d 195 (Fla. 3d D.C.A. 1964); see Kelly v. Threlkeld, 193 So. 2d 7 (Fla. 4th D.C.A. 1966).
18 Miley v. Miley, 402 So. 2d 557 (Fla. 2d D.C.A. 1981).
19 Mathews v. Florida Crossbreeders, Inc., 330 So. 2d 183 (Fla. 2d D.C.A. 1976).
20 Roberts v. Pfeiffer, 135 So. 2d 246 (Fla. 2d D.C.A. 1961).
21 Kelly v. Threlkeld, 193 So. 2d 7 (Fla. 4th D.C.A. 1966); Bond v. Hewitt, 149 So. 606 (Fla. 1933).
22 Smith v. Royal Auto Group Inc., 675 So. 2d 144, 153 (Fla. 5th D.C.A. 1996).
23 Crosby v. Andrews, 55 So. 57 (Fla. 1911); Baldwin v. Christopher, 79 So. 339 (Fla. 1918); Watkins v. Deadamich, 187 So. 2d 369 (Fla. 2d D.C.A. 1966).
24 Howard v. Howard, 467 So. 2d 768 (Fla. 1st D.C.A. 1985); Canal Ins. Co. v. Hartford Ins. Co., 415 So. 2d 1295 (Fla. 1st D.C.A. 1982); Barnacle Bill Seafood Gallery v. Ford, 453 So. 2d 165 (Fla. 1st D.C.A. 1984).
25 Pendleton v. Witcoski, 836 So. 2d 1025 (Fla. 1st D.C.A. 2002); Shell Creek Land Co. v. Watson, 133 So. 621 (Fla. 1931); Mexican Crude Rubber Inc. v. Howard, 134 So. 585 (Fla. 1930).
26 Ayers v. Thompson, 536 So. 2d 1151 (Fla. 1st D.C.A. 1988); Pitofsky v. Liberty Mutual Ins Co., 386 So. 2d 1235 (Fla. 3d D.C.A. 1980); Robinson v. Wright, 425 So. 2d 586 (Fla. 3d D.C.A. 1982); Hopkins v. Mills, 156 So. 532 (Fla. 1934).
27 Tampa Northern RR. Co. v. City of Tampa, 140 So. 311 (Fla. 1932), Carr v. City of Kissimmee,86 So. 699 (Fla. 1920); see also Providence Sq. Assn, Inc v. Biancardi, 507 So. 2d 1366 (Fla. 1987); Pittman v. Fleming, 253 So. 2d 497 (Fla. 1st D.C.A. 1971).
28 Burleson v. Brogdon, 364 So. 2d 391 (Fla. 1st D.C.A. 1978); Kelly v. Therkeld, 193 So. 2d 7 (Fla. 4th D.C.A. 1966); Smith v. Pattishall, 176 So. 568 (Fla. 1937); Triesback v. Tyler, 56 So. 947 (Fla. 1911); see also Herrin v. Abber, 46 So. 2d 183 (Fla. 1908).
29 Alexander v. Kirkman, 365 So. 2d 1038 (Fla. 3d D.C.A. 1978); Heisler v. Fla. Mortgage Co., 142 So. 242 (Fla. 1932); Jackson v. Magbee, 21 Fla. 622 (Fla. 1885); Jacobs v. Parodi, 39 So. 833 (Fla. 1905).
30 Goodstone v. Shamblen, 141 So. 2d 8, 17 (Fla. 2d D.C.A. 1962).
31 6 Pomeroy’s Equity Jurisprudence, §682, p. 1148 (1905); it is clear that Pomeroy is quoting from many jurisdictions using the same misstated standard.
32 See Franklin v. Jones, 22 Fla. 526 (Fla. 1886).
33 Goodstone v. Shamblen, 141 So. 2d 8, 17 (Fla. 2d D.C.A. 1962).
34 Sobel v. Lobel, 168 So. 2d 195 (Fla. 3d D.C.A. 1964); Ins. Company of N. America v. Ours, 266 So. 2d 168 (Fla. 4th D.C.A. 1972).
35 Allstate Ins. Co v. Vanater, 297 So. 2d 293 (Fla. 1974);
36 Novack v. Blue Cross & Blue Shield of Florida, 859 So. 2d 608 (Fla. 1st D.C.A. 2003).
37 Burlsen v. Brogdon, 364 So. 2d 391 (Fla. 1st D.C.A. 1978).
38 Providence Sq. Assn v. Biancardi, 507 So. 2d 1366 (Fla. 1987); Porter v. Meigs, 74 So. 2d 82 (Fla. 1954).
39 Smith v. Pattishall, 176 So. 568 (Fla. 1937); Holley v. May, 75 So. 2d 696 (Fla. 1954); Nall v. Rayborn, 451 So. 2d 921 (Fla. 1st D.C.A. 1984); Roberts v. Hart, 573 So. 2d 12 (Fla. 4th D.C.A. 1990); Sanders v. Thomas, 821 So. 2d 1214 (Fla. 1st D.C.A. 2002).
40 Triano v. Triano, 549 So. 2d 1053 (Fla. 5th D.C.A. 1989); Ryan v. Lobo Gonzales, 841 So. 2d 510 (Fla. 4th D.C.A. 2003); Erickson v. Insurance Co., 63 So. 716 (Fla. 1913); see, Davis v. Monahan, 832 So. 2d 708 (Fla. 2002); Defensive use: Inglia v. 1st Union Bank, 797 So. 2d 26 (Fla. 1st D.C.A. 2001); Laches: Fla. Stat. §95.11(6); Niagara Fire Ins Co v. Allied Electric, 319 So. 2d 594 (Fla. 3d D.C.A. 1975); Getter v. Simmons, 49 So. 13 (Fla. 1909).
41 Manhattan Fire & Marine Inc., v. Sommers, 222 So. 2d 450 (Fla. 4th D.C.A. 1969); So. States Fire Ins. Co. v. Vann, 68 So. 645 (Fla. 1915).
42 Baker v. Falcon Power Inc., 788 So. 2d 1104 (Fla. 4th D.C.A. 2001); Tatum v. City Bldg Assn., 79 So. 839 (Fla. 1918).
43 USAA Cas. Ins. Co. v. Threadgill, 729 So. 2d 476 (Fla. 4th D.C.A. 1999).
Thomas E. Baynes, Jr., has been a U.S. bankruptcy judge for the Middle District of Florida since 1987. He received his law degrees from Emory University and Yale University. A member of the American Law Institute and the Hillsborough Association of Women Lawyers, he is a certified state court mediator and arbitrator and author of Florida Mortgages (2d ed. West Thompson 1999).
This column is submitted on behalf of the Trial Lawyers Section, Thomas D. Masterson, chair, and Thomas P. Barber, editor.