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Wells Fargo Bank, N.A. v. Coleman

Court of Appeals of North Carolina

February 3, 2015

WELLS FARGO BANK, N.A., successor by merger to Wachovia Bank, N.A., Plaintiff,
v.
EDNA S. COLEMAN a/k/a EDNA COLEMAN, et al., Defendants

Heard in the Court of Appeals October 20, 2014

Page 605

Womble Carlyle Sandridge & Rice, LLP, by Kenneth B. Oettinger, Jr., Chad Ewing, and Lee Davis Williams, for plaintiff-appellant.

Biesecker, Tripp, Sink & Fritts, L.L.P., by Joe E. Biesecker and Christopher A. Raines, for defendant-appellee.

DIETZ, Judge. Chief Judge McGEE and Judge STEPHENS concur.

OPINION

Page 606

Appeal by plaintiff from order entered 20 February 2014 by Judge A. Robinson Hassell in Davidson County Superior Court, No. 11-CVS-3357.

DIETZ, Judge.

In 2007, Robert and Edna Coleman refinanced their home mortgage through Wells Fargo Bank, N.A. (then Wachovia Bank). The Colemans' home is situated on two lots adjacent to another two empty, undeveloped lots. The deed of trust prepared by Wachovia listed the correct street address for the Coleman home, but mistakenly referenced the book and page number and tax parcel ID of the adjacent, undeveloped lots.

In 2010, Wells Fargo attempted to foreclose on the property and discovered, for the first time, the mistaken references in the deed of trust. Wells Fargo sought reformation of the instrument on the ground of mutual mistake. Defendants Edna Coleman and the Estate of Ronald Coleman (who passed away) moved for summary judgment, arguing that had Wells Fargo acted with reasonable diligence, it would have immediately discovered the error. Defendants also argued that the reformation claim is barred by the statute of limitations, the equitable doctrine of laches, and the non-claim statute. The trial court granted Defendants' motion for summary judgment.

We reverse and remand this case for further proceedings. A claim for reformation does not require proof that the party seeking reformation acted with reasonable diligence. Indeed, even if the mistake was the result of negligence or neglect, a trial court still has the authority to reform the instrument if there is clear, cogent, and convincing evidence that the mutual mistake prevents the instrument from embodying the parties' actual, original agreement. Likewise, this action is one to enforce a deed of trust, with the reformation claim a necessary part of that enforcement effort. Thus, the non-claim statute, which bars certain untimely claims against a decedent's estate, does not apply.

Finally, with respect to the statute of limitations and laches defenses, there are genuine issues of material fact that preclude entry of summary judgment. Both defenses turn on when Wells Fargo should have discovered the mistake in the exercise of reasonable or due diligence. There is competing evidence on this issue and it must be resolved by a jury. Accordingly, we reverse the trial court's entry of summary judgment and remand for further proceedings.

Facts and Procedural History

Defendants Edna S. Coleman and the Estate of Ronald G. Coleman own lots 42, 43,

Page 607

44, and 45 in the Rockland Shores Estates subdivision in Davidson County, North Carolina. Although the lots are neighboring, they are of considerably different value. Mr. Coleman acquired lots 42 and 43, which are commonly known as 167 Lakeview Drive, Linwood, North Carolina, on 3 March 1987. This property is improved with a single-family home and had a tax value of $95,000 at the time the complaint was filed in this action. Mr. Coleman and his wife acquired lots 44 and 45 on 24 September 1996. This unimproved property is located adjacent to the developed property and had a tax value of $11,900 at the time the complaint was filed.

On 19 January 2007, Mr. Coleman borrowed money from Wells Fargo's predecessor in interest, Wachovia Bank, N.A., in the principal amount of $138,567.00. A promissory note was completed that same day, secured by a deed of trust executed by both Mr. and Mrs. Coleman. The deed of trust, prepared by Wachovia and recorded in the Davidson County Registry on 8 February 2007, identified the property as:

All that real property situated in the County of Davidson, State of North Carolina:
Being the same property conveyed to the Grantor by Deed recorded in Book 1007, Page 1013, Davidson County Registry, to which deed reference is hereby made for a more particular description of this property.
Property Address: 167 ...

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