SECOND DIVISION
MILLER, P. J.,
MERCIER and COOMER, JJ.
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.
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August 12, 2020
In the Court of Appeals of Georgia
A20A1084. JPMORGAN CHASE BANK, N. A. v. DELPIANO et
al.
MERCIER, Judge.
JPMorgan Chase Bank, N. A. (“JPMorgan”) sued Daniel DelPiano and the
United States of America (collectively, “the defendants”) for equitable reformation
of a security deed relating to real property owned by DelPiano. It also sought a
declaratory judgment regarding the validity and priority of the deed. Following
discovery, the parties filed cross-motions for summary judgment. The trial court
denied JPMorgan’s motions and granted summary judgment to the defendants,
finding that the seven-year statute of limitation applicable to an equitable reformation
claim barred JPMorgan’s suit. Because the defendants were not entitled to judgment
as a matter of law on statute of limitation grounds, we reverse the trial court’s order
to the extent it granted summary judgment to the defendants, vacate the denial of
JPMorgan’s motions for summary judgment, and remand the case for further
proceedings.
Summary judgment is appropriate when the evidence, viewed most favorably
to the non-movant, demonstrates that no genuine issues of material fact remain and
the movant is entitled to judgment as a matter of law. See Occidental Fire & Cas. of
N. C. v. Goodman, 339 Ga. App. 427 (793 SE2d 606) (2016). So viewed, the record
shows that in 2004, DelPiano and his wife Pamela decided to buy a home in
Alpharetta (“the property”) for $3.3 million. The property was purchased in Pamela’s
name, and she took out a $2.64 million loan from Washington Mutual Bank
(“WaMu”) to finance the transaction.
At the closing in March 2005, Pamela executed the necessary loan documents,
including an adjustable rate note, through which she promised to repay the loan, and
a security deed granting WaMu a security interest in the property. Pamela’s signature
on the security deed was notarized by the closing attorney. Signature lines for an
“unofficial” witness, however, were inadvertently left blank during the transaction.
As subsequently described by the closing attorney:
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Although I was not aware at the time of Closing or its recording in deed
records, the Security Deed which [Pamela] and I both executed, did not
contain the signature of an unofficial witness. . . . The omission of the
signature of an unofficial witness on the Security Deed was a clerical
mistake. As the closing attorney, it was my job to ensure that the
documents were properly executed, but I made the mistake of allowing
the Closing to conclude before having the unofficial witness sign the
Security Deed.
Despite the missing signature, the closing attorney recorded the security deed
in the Fulton County deed records on April 1, 2005. Pamela began making monthly
payments on the WaMu loan, but she stopped paying in March 2006, and the loan
went into default.
DelPiano and Pamela divorced in May 2008. Pursuant to the parties’ divorce
settlement, DelPiano assumed sole responsibility for the outstanding balance of the
loan, and Pamela quit-claimed her interest in the property to DelPiano in 2010.
DelPiano, however, made no payments on the loan following the divorce.
WaMu owned the adjustable rate promissory note and related security deed
until 2008, when WaMu was acquired by the Federal Deposit Insurance Company
(“FDIC”). On September 25, 2008, the FDIC sold WaMu’s assets, including the note
and security deed, to JPMorgan. According to JPMorgan, it discovered the missing
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signature on the security deed in 2011, through discussions with the bank’s
foreclosure counsel.
In 2015, a document assigning the FDIC’s interest in the security deed to
JPMorgan was recorded in the Fulton County deed records. Approximately one year
later, on May 17, 2016, JPMorgan filed the instant action, seeking “to correct the
inadvertent attestation omission” in the security deed and to obtain a declaration that
the security deed “is valid, enforceable, and occupies a first priority security interest
and lien position on the [p]roperty[.]” JPMorgan named several defendants, including
DelPiano (the property owner) and the United States of America (on behalf of the
Department of Justice), which had filed restitution liens on the property relating to
criminal proceedings against DelPiano.1 Those restitution liens, however, were filed
after April 1, 2005, when the security deed was recorded.
JPMorgan and the defendants filed cross-motions for summary judgment, with
the defendants raising, among other things, a statute of limitation defense. The trial
court agreed with the defendants that JPMorgan’s equitable reformation claim was
time-barred. It thus granted summary judgment to the defendants on that claim, as
1
The other named defendants are not part of this appeal.
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well as JPMorgan’s related request for a declaratory judgment, and denied
JPMorgan’s motions for summary judgment. This appeal followed.
1. Without dispute, the security deed filed with respect to the property on April
1, 2005, lacked the signature of an unofficial witness, rendering it “ineligible for
recording.” Wells Fargo Bank, N. A. v. Gordon, 292 Ga. 474, 475 (1) (749 SE2d 368)
(2013). See also OCGA § 44-14-33 (2005) (“In order to admit a mortgage to record,
it must be attested by or acknowledged before an officer . . . ; and, in the case of real
property, a mortgage must also be attested or acknowledged by one additional
witness.”); OCGA § 44-14-61 (2005) (“In order to admit deeds to secure debt or bills
of sale to record, they shall be attested or proved in the manner prescribed by law for
mortgages.”). Although the county clerk accepted the deed for recording, it was
facially defective, not in “recordable form,” and did not provide “constructive notice
to . . . subsequent bona fide purchasers.” Gordon, supra. JPMorgan thus seeks
equitable relief to reform the deed by correcting the inadvertent clerical error
committed by the closing attorney. See DeGolyer v. Green Tree Servicing, 291 Ga.
App. 444, 447 (1) (662 SE2d 141) (2008) (“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.” (citations
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and punctuation omitted)); OCGA § 23-2-21 (a) (“A mistake relievable in equity is
some unintentional act, omission, or error arising from ignorance, surprise,
imposition, or misplaced confidence.”).
Generally, a suit to reform a written document based upon a mutual mistake
must be filed within seven years from the date the mistake was or, in the exercise of
reasonable diligence, should have been discovered. See Haffner v. Davis, 290 Ga.
753, 756 (3) (725 SE2d 286) (2012). An equitable exception to the statute of
limitation exists, however, where reformation would not prejudice the original parties
to the document, their privies, or any subsequent bona fide purchasers for value that
lacked notice of the mistake. See id. This exception “permits the grant of equitable
relief in the form of contract reformation” outside the seven-year period, even if the
party seeking reformation failed to exercise reasonable diligence in discovering the
mistake. Ehlers v. Upper West Side, 292 Ga. 151, 153 (1) (733 SE2d 723) (2012)
(citations and punctuation omitted).
The trial court found that JPMorgan (through WaMu, its predecessor in
interest) should have discovered the mistake on the face of the security deed as early
as 2005, when the deed was executed and recorded. See Cline Drive Land Trust v.
Wells Fargo Bank, N. A., 339 Ga. App. 342, 345 (793 SE2d 550) (2016) (“[A]n
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assignee takes the assignment subject to defenses against the assignor, including the
defense of the bar of the statute of limitation.”) (citation and punctuation omitted). It
thus concluded that the reformation claim, filed well over seven years later, is time-
barred. Again, however, the limitation period only bars a reformation claim if a
relevant party would be prejudiced by the reformation. Otherwise, the claim falls
within the equitable exception to the seven-year statute of limitation. See Haffner,
supra; Ehlers, supra.
The record contains no evidence of prejudice here. DelPiano does not argue
that a corrected security deed would prejudice him. And although the United States
claims significant prejudice if a reformed deed is allowed to trump its recorded
restitution liens, such prejudice is irrelevant. The government was not a party to the
defective security deed, in privity with one of those parties, or a bona fide purchaser
for value of the secured property. It enjoys no connection to the property other than
as a third-party judgment creditor seeking to collect criminal restitution from
DelPiano. The equitable exception’s prejudice inquiry does not consider prejudice to
a judgment creditor such as the United States. Rather, it focuses on the parties to the
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defective instrument, their privies, and subsequent bona fide purchasers for value.2
See Haffner, supra.
Neither DelPiano nor the United States has established the type of prejudice
necessary to remove this reformation case from the statute of limitation’s equitable
exception. Accordingly, the trial court erred in finding that the seven-year limitation
period bars JPMorgan’s claims as a matter of law. See Ehlers, supra at 154 (1).
2. The defendants argue that, regardless of whether the trial court properly
granted them summary judgment on statute of limitation grounds, the summary
judgment ruling should be affirmed as “right for any reason.” See City of Gainesville
v. Dodd, 275 Ga. 834, 835 (573 SE2d 369) (2002) (“Under the ‘right for any reason’
rule, an appellate court will affirm a judgment if it is correct for any reason, even if
2
Arguing for an expanded prejudice inquiry, the United States relies heavily
on our decision in Cohen v. Wachovia Mtg. Co., 332 Ga. App. 109 (770 SE2d 17)
(2015). In Cohen, we found that a joint property owner who was not named in a
security deed encumbering the property would be prejudiced if the court reformed the
security deed to include her as a grantor, particularly given her denial that the parties
intended the security deed to cover her property interest. Supra at 112-113 (2). Citing
this prejudice, we concluded that the seven-year statute of limitation barred the
reformation claim. Id. at 113. The circumstances in this case are entirely different.
The United States has no interest in the property other than as a judgment creditor and
was not, in any way, part of the transaction that led to the defective security deed.
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that reason is different than the reason upon which the trial court relied.”). We
disagree.
(a) DelPiano challenges JPMorgan’s standing to seek judicial relief regarding
the security deed, asserting that the bank has not demonstrated that it has an interest
in the loan or the adjustable rate promissory note underlying the deed. The record
shows, however, that JPMorgan purchased WaMu’s assets, including the promissory
note secured by the security deed, from the FDIC in 2008. The security deed was
subsequently assigned to JPMorgan, and the assignment was recorded in 2015.
DelPiano criticizes JPMorgan for not offering into evidence the actual
documents that transferred the promissory note from WaMu to the FDIC to
JPMorgan. According to DelPiano, without such evidence, JPMorgan cannot prove
that it is entitled to enforce the promissory note under the Uniform Commercial Code.
But JPMorgan does not seek to enforce the note at this point. It has asserted an
equitable claim to correct a mistake in the security deed and to establish priority of
that deed following reformation. DelPiano has not shown that JPMorgan lacks
standing to bring this claim. See Occidental Fire & Cas. of N. C., supra at 431 (5) (as
the assignee of a contracting party, plaintiff had standing to bring action to equitably
reform the written instrument); see also Ins. Agency of Glynn County v. Atlanta Cas.
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Co., 255 Ga. App. 323, 324 (1) (565 SE2d 547) (2002) (“Reformation of written
instruments may be had by the immediate parties thereto and by those standing in
privity with them, such as their successors.” (citation and punctuation omitted)).
(b) The defendants argue that they are entitled to summary judgment on the
declaratory judgment claim because (1) JPMorgan’s request for a declaration
regarding priority of its security deed is not a proper basis for declaratory relief, and
(2) JPMorgan should not be able to retroactively perfect a defective security interest.
We have previously held, however, that a trial court may equitably reform a recorded
but defective security deed and enter a declaration “that the security deed ha[s] first
priority[.]” DeGolyer, supra. Moreover, reformation of such security deed “relates
back to the date of the execution,” giving the deed holder “priority over any interest
that may have been obtained afterward.” Id. The defendants’ arguments with respect
to JPMorgan’s request for declaratory relief, therefore, lack merit.
(c) Both defendants challenge JPMorgan’s request that the trial court declare
the security deed “equitably subrogated” to the priority position held by mortgage
liens that were paid off using the WaMu loan proceeds. The trial court, however,
never addressed whether equitable subrogation applies here, resolving the case
instead on an erroneous legal theory regarding the statute of limitation. And it is clear
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that JPMorgan seeks equitable subrogation as an alternative to reformation of the
security deed, in the event the security deed is not corrected to give the bank a first-
priority security interest. See Chase Manhattan Mtg. Corp. v. Shelton, 290 Ga. 544,
549 (4) (722 SE2d 743) (2012) (under certain circumstances, doctrine of equitable
subrogation will deem that new creditor has same priority as paid-off senior lien
creditor if the new creditor’s security interest “is for any reason not a first lien on the
property”). We decline to address this alternative claim – which may never become
an issue in the case – for the first time on appeal. See Dodd, supra at 838-839; Roca
Properties v. Dance Hotlanta, 327 Ga. App. 700, 713-714 (3) (761 SE2d 105) (2014)
(declining to address grounds for summary judgment not ruled upon by the trial
court).
3. Finally, JP Morgan argues that it was entitled to summary judgment on
various grounds. As discussed above, the trial court’s summary judgment ruling was
based on an erroneous application of the seven-year statute of limitation governing
equitable reformation claims. Although the trial court should not have denied
JPMorgan’s motions for summary judgment on that basis, we will not now address
whether the trial court erred in refusing to grant the bank’s motions on alternative
grounds. As we have explained, while an appellate court may determine that a
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summary judgment ruling was right for a reason other than that given by the trial
court, it “should not consider whether the trial court was ‘wrong for any reason.’”
Piedmont Hosp. v. D. M., 335 Ga. App. 442, 449 (3) (779 SE2d 36) (2015).
Accordingly, we vacate the trial court’s ruling to the extent it denied JPMorgan’s
motions for summary judgment and remand the case for consideration of the
arguments presented in those motions. See id. On remand, the trial court should also
review any arguments raised in the defendants’ summary judgment motions that have
not been resolved in this opinion.
Judgment reversed in part and vacated in part, and case remanded with
direction. Miller, P. J., and Coomer, J., concur.
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