COUNTRYWIDE BANK, F.S.B., now known as COUNTRYWIDE HOME LOANS, INC., and AMERICA'S WHOLESALE LENDER, CO. v. LUANN R. RIMBOLD (a/k/a Luann R. Rimbold Beaulieu) and IVAN G. BEAULIEU.

Plaintiffs filed their "Complaint For Declaratory Relief and to Quiet Title" on May 31, 2011, with respect to two mortgages granted in 2007 by Defendant Luann R. Rimbold ("Luann") [Note 1] on property at 176 Fieldston Street, Springfield, Massachusetts (the "Property") in connection with Defendants' acquisition of the Property as joint tenants with rights of survivorship. In Count I, Plaintiffs seek reformation of the subject mortgages to include Defendant Ivan G. Beaulieu's ("Ivan") interest in the property by naming him as a borrower. In Count II, Plaintiffs request declarations that Plaintiff America's Wholesale Lender holds a valid first mortgage on the Property, and that Plaintiff Countrywide Home Loans, Inc. holds a valid second mortgage on said Property. Count III of the Complaint repeats all previous allegations and states merely that Plaintiffs seek to "quiet title" to the Property.

Defendants, acting pro se, each filed a response to the Complaint on June 30, 2011, generally denying all of Plaintiffs' allegations. However, Defendants did not appear at the Case Management Conference held on September 1, 2011, did not respond to Plaintiffs' interrogatories, did not file any opposition to Plaintiffs' Application for Entry of Final Judgment pursuant to Mass. R. Civ. P. 33(a)(4), and did not appear for the August 7, 2013 hearing on Plaintiffs' Application for Entry of Final Judgment.

At the hearing on Plaintiffs' Application for Entry of Final Judgment, the Court determined that Defendants should be defaulted, but found that Plaintiffs' Complaint nevertheless lacked sufficient factual allegations to entitle them to the equitable and declaratory relief requested. The Court allowed Plaintiffs additional time to submit supplementary documentation to support their claims, such as closing or mortgage application documents evidencing the parties' alleged intent.

Plaintiffs filed a Request for Judgment by Default under Mass. R. Civ. P. 55(b)(2) on September 27, 2013. Except for an Affidavit of Scrivener's Error, however, no additional evidentiary materials were submitted to supplement the bare factual allegations asserted in the Complaint. Accordingly, and notwithstanding Defendants' defaults, the court denied Plaintiffs' Request for Judgment by Default, finding that the facts alleged (even if taken as true) were insufficient to support entry of judgment granting Plaintiffs the equitable and declaratory relief requested in the Complaint. Subsequently, the pro se Defendants' unopposed motions to remove their defaults were allowed, and pretrial conferences were held on February 24, 2015 and March 4, 2015.

A one-hour trial was conducted on July 15, 2015. Plaintiffs called two witnesses: Ivan and the closing attorney, Dennis Tully, Esq. Defendants called only Luann. A total of eight, agreed exhibits were put into evidence: the Deed into Defendants; Dennis Tully's Affidavit of Scrivener's Error; the mortgage on the property granted by Luann to Mortgage Electronic Registration systems, Inc. ("MERS") as nominee for the lender America's Wholesale Lender, Co. and its successors and assigns, securing payment under the promissory note signed by Luann; the promissory note referenced in said mortgage; an unsigned uniform residential loan application relating to a $33,200 "balloon fxd2nd equity 30/15" mortgage application to Countrywide Bank, FSB and listing the borrower as Luann; an unsigned "Document Correction and Fees Due Agreement" relative to the loan from America's Wholesale Lender, with signature lines for each of the sellers and for Luann as borrower; an offer to purchase the Property, signed by both Ivan and Luann, and accepted by the sellers; and a Purchase and Sale Agreement for the Property, signed by both Ivan and Luann, and the sellers.

At the conclusion of the trial, the parties were advised in open court that post-trial memoranda of law and/or proposed findings of fact and rulings of law would be due thirty days after the parties receive notification from the court that the trial transcript is available for inspection. By written notice sent by mail on August 12, 2015, the court notified the pro se Defendants and counsel for Plaintiffs that the transcript was available for inspection and that all briefs and/or memoranda of law should be submitted to the court on or before September 11, 2015. The pro se Defendants filed their "Joint Post Trial Brief" on September 11, 2015. Plaintiffs made no post-trial filings. On September 11, 2015, the court took the matter under advisement.

Now, on the basis of the pleadings, and the witness testimony and documentary evidence admitted at trial, and in light of Plaintiffs' failure to submit any argument (either orally at trial or in writing post-trial), I find that Plaintiffs have failed to meet their burden to prove, by clear and convincing evidence, that failure to include Ivan's name on the two mortgages was the result of mutual mistake. Further, as there is no claim or showing of an actual controversy as to the validity or extent of the mortgages in question, beyond allegations of mutual mistake as to the failure to include Ivan's name on the mortgages, and whereas Plaintiffs have failed to establish any facts relative to Plaintiffs' status as current holders of the subject mortgages, there is no basis on which this court can grant the declaratory relief Plaintiffs have requested—that Plaintiffs hold valid first and second mortgages on the Property. Rather, the court can only determine and declare that said mortgages, as recorded, encumber Luann's interest in the Property, subject to Ivan's right of survivorship. Finally, because Plaintiffs have not shown that they are entitled to any relief on their quiet title claim, it must also be rejected.

DISCUSSION

Count I - Reformation

Plaintiffs claim that the failure to include Ivan's name on the mortgages was the result of mutual mistake, meriting reformation of the subject mortgages to include Ivan as a borrower and thereby secure the debts to the Plaintiff lenders with mortgages covering the interests of both record owners of the Property. As discussed below, however, the evidence falls far short of a "full, clear, and decisive" showing of mutual mistake. See Smiches v. Smiches, 423 Mass. 683 , 687 (1996) (An instrument, such as a mortgage, may be reformed to correct a mutual mistake "upon full, clear, and decisive proof of the mistake." (internal quotation marks omitted)).

The term "mutual mistake" in the context of reformation "means a mistake common to all parties to a written contract or instrument, and it usually relates to a mistake concerning the contents or the legal effect of a contract or instrument." Page v. Higgins, 150 Mass. 27 , 30-31 (1889) (emphasis added). The mutual mistake doctrine exists to effectuate the agreement intended by the parties to a contract where the contract language fails to capture that agreement. Caron v. Horace Mann Co., 466 Mass. 218 , 222 (2013). Thus, a party may be entitled to reformation of a deed or similar instrument on the theory of mutual mistake if both parties were laboring under the same misapprehension as to an essential fact; but only if the parties have had a meeting of the minds and reached a prior agreement that the written document fails to express. Id. at 223.

As an initial matter, the evidence presented in this case was sparse, establishing only the barest of facts. Pursuant to a deed dated March 22, 2007 and recorded at the Hampden County Registry of Deeds (the "Registry") in Book 16583, Page 40, the Property was conveyed to the Defendants as "joint tenants with right of survivorship" (the "Deed"). On March 26, 2007, Defendant Luann executed two mortgages on the Property to secure promissory notes totaling $166,000 (the full amount of the consideration recited in the Deed). One of the mortgages was granted to MERS as nominee for America's Wholesale Lender in the amount of $132,800, and is recorded at the Registry in Book 16583, Page 43 (the "First Mortgage"). The second mortgage was granted to MERS as nominee for Countrywide Bank, FSB in the amount of $33,200, and is recorded at the Registry in Book 16583, Page 56, following the First Mortgage (the "Second Mortgage"). Luann is the sole "Borrower" listed in both the First and Second Mortgages. And only Luann's typed name and signature appear on the two Mortgages. The undisputed co-owner of the Property, Ivan, is not named in, and did not sign, either of the Mortgages.

Plaintiffs contend that failure to include Ivan as a borrower was due to mutual mistake and scrivener's error, and that the true intent of the parties was to have the Mortgages encumber the property interests of both co-owners. However, Plaintiffs here presented no evidence that Ivan agreed with either Plaintiff to have his interest in the Property mortgaged as security for the notes signed by Luann. Plaintiffs tendered no evidence of a mortgage application made by Ivan, or any correspondence between Plaintiffs and Ivan that might evidence an agreement to be bound by the Mortgages. Absent any evidence of an agreement between Ivan and the Plaintiffs, there can be no "mutual mistake" basis for a reformation of the Mortgages to include Ivan's interest in the Property.

There is also insufficient evidence to support a showing of mutual mistake on this subject made by Luann and either Plaintiff. Plaintiffs appear to rely upon the fact that the Deed conveyed the Property to both Defendants as joint tenants with rights of survivorship, and upon the fact that the $166,000 consideration recited in the Deed is identical to the combined amount secured by the two Mortgages. [Note 2] But while these facts might support a logical inference that the Plaintiff lenders and/or their agents themselves may have made unilateral mistakes in accepting only Luann's interest in the Property as security for the purchase money loans made to Luann, such an inference, without more, is not "clear and convincing evidence" of a mutual mistake of all parties. There is also no evidence that Luann (the only other party to the promissory notes and the Mortgages) had knowledge of the lenders' mistakes. Id. at 222 ("The mistake must either be mutual…or be made by one party and known to the other party." (internal quotation marks omitted)). The Mortgages do not, on their faces, suggest an intention to include Ivan's interest. The Mortgages also do not list or otherwise reference either a second borrower or a second owner of the Property. As drafted by the lenders, they indicate that only Luann is to sign as borrower. [Note 3]

Nor does the trial testimony of the closing agent, Dennis E. Tully, Esq., support Plaintiffs' claim of mutual mistake. Attorney Tully testified that he represented both Defendants and the Plaintiff lenders at the closing on March 26, 2007. [Note 4], [Note 5] He recalled that he was initially engaged by Defendants to represent them in connection with their purchase of the Property, and testified that he was fully aware of Ivan's concern that Ivan be given an interest in the Property, but that only Luann should be obligated on the notes.

Attorney Tully testified that, in his experience, it is not unusual for there to be only one borrower on the promissory note, even when the title is to be held in the names of both the borrower and a non-borrower. He testified that in such instances, his practice is to ensure that the mortgagee bank's interests are protected by having both the borrower and the non-borrower sign the mortgage. But when asked by Plaintiffs' counsel what he would do in a situation where the title is to be held by two parties, but the bank sends him documents that include only one borrower's name, Attorney Tully replied that he would follow the banks' instructions and have only the named borrower sign the indicated documents.

Attorney Tully did not testify as to either of the Plaintiff lenders' instructions for the Defendants' closing. And those instructions were not in evidence. He admitted that he did not prepare the Mortgages and other documents for Defendants' closing, and that he did not personally review all of the closing documents since, in his experience, closing documents are mostly pre-printed "boilerplate" sent to him by the lenders with the order to close.

Attorney Tully also testified that he typically does not explain every paragraph of the closing documents to his buyer-clients, but ordinarily highlights the parts he thinks the buyers need in order to understand their obligations. He also typically explains to those clients that the documents are basically for the benefit of the bank and not the mortgagors.

With respect to the Defendants' closing eight years earlier, Attorney Tully remembered "doing his best" to explain the documents to Luann and Ivan, but admitted that he was rushed. Ivan's memory differs. According to Ivan, Attorney Tully did not explain any of the closing documentation, but merely pointed out the tabbed pages that needed to be signed by Luann and became annoyed when Ivan attempted to review the closing packet himself.

Regardless of what was and was not explained at the closing, however, Attorney Tully viewed the situation as a mistake on his part in failing to protect the banks' interests by ensuring that both Luann and Ivan signed the Mortgages. He offered no reason to explain the mistake, other than the "pressure of the closing," and testified that he simply "dropped the ball" when he missed the fact that Ivan's name did not appear on the Mortgages.

Other than Attorney Tully's testimony (based on his usual practices) that he had made a mistake in not requiring Ivan to sign the Mortgages, there was no testimony or other evidence regarding the intentions of the Plaintiff lenders. And nothing in Attorney Tully's testimony established that either Ivan or Luann actually intended that the loan to Luann would be secured by both Ivan's and Luann's interests in the Property. Ivan's uncontroverted testimony suggests otherwise. Ivan and Luann were not married at the time they acquired the Property. Ivan testified that they had no plans for marriage at that time, and that he was not sure they would even stay together. [Note 6] I credit Ivan's testimony that he was concerned with only two things when he and Luann purchased the Property – first, that he would get the benefit of some interest in the property (an interest he characterized as a "security interest") in consideration for the cash he put up for closing costs and renovations; [Note 7] and second, that he would not be obligated on the promissory notes for the remainder of the purchase money. His testimony that he communicated these concerns to Attorney Tully prior to the closing was consistent with Attorney Tully's own recollections. There was nothing in Ivan's testimony, however, to suggest that, as a layperson, he understood the exact nature of the "security interest" he thought he would be receiving, or that he would be required to subject his interest in the Property to the Mortgages securing the loans made to Luann.

To the extent Ivan was mistaken in believing he would not have to sign onto the Mortgages because he was not obligated on the notes, such a mistake is not the same as the mistake Plaintiffs claim that they made, and is inconsistent with Plaintiffs' contention that all parties intended that both Ivan's and Luann's interests would be subject to the Mortgages. See Century Plastic Corp. v. Tupper Corp., 333 Mass. 531 , 534 (1956) ("The mistake of one party is not adequate ground for relief. The mistake must relate to the same subject matter and be shared in by both parties."). Moreover, there was absolutely no testimony elicited from Luann about her understanding or her intentions in the matter. And there was no documentary evidence of her intentions other than her signature as the sole borrower on the Mortgages.

To the extent Luann and either or both of Plaintiffs may have been mistaken in believing that Luann had the right to grant a mortgage encumbering a 100% interest in the Property, such mistaken beliefs also do not justify reformation of the Mortgages to encumber Ivan's interest in the Property where Ivan is not shown to have been a party to the mortgage application. Defendants hired Attorney Tully to represent them and they reasonably relied upon him to inform them of what was required of them at the closing. But it is apparent that Attorney Tully never did inform the Defendants of a need for Ivan's signature to be on the Mortgages. And if Attorney Tully had done so, it is not clear that Ivan would have signed. [Note 8]

In summary, the evidence is insufficient to support a conclusion that the failure to include Ivan's name on the mortgage is "materially at variance" with the intentions of all parties. See Franz v. Franz, 308 Mass. 262 , 266 (1941) (quoting Restatement of Contracts § 504) ("[I]t is settled that where both parties have an identical intention as to the terms to be embodied in a proposed written conveyance . . . [and the] writing executed by them [or at their direction] is materially at variance with that intention, either party can get a decree that the writing shall be reformed so that it shall express the intention of the parties, if innocent third persons will not be unfairly affected thereby."). Here, the Plaintiff lenders provided the closing attorney with closing documents which, as drafted, did not secure the loans with a mortgage on a 100% interest in the Property by encumbering both Luann's and Ivan's interests. But that this situation was due to a mutual mistake has not been proven through clear and convincing evidence of the parties' respective intentions, such as might be shown, for example, by the mortgage loan applications as submitted and approved, testimony of the loan officers who reviewed the mortgage applications, correspondence between the Plaintiff lenders and Defendants, or the closing instructions sent to the closing attorney.

Accordingly, whereas Plaintiffs failed to meet their burden of proving mutual mistake by clear and convincing evidence, judgment shall enter dismissing their Complaint for reformation under Count I. [Note 9]

Count II - Declaratory Judgment

An action for declaratory relief under G. L. c. 231A is available only when an actual controversy has arisen and is specifically set forth in the pleadings. "An actual controversy within the context of that statute is a ‘real dispute caused by the assertion by one party of a legal relation, status or right in which he has a definite interest, and the denial of such assertion by another party also having a definite interest in the subject matter, where the circumstances attending the dispute plainly indicate that unless the matter is adjusted such antagonistic claims will almost immediately and inevitably lead to litigation.'" Bello v. South Shore Hospital, 384 Mass. 770 , 778 (1981), quoting Bunker Hill Distrib., Inc. v. District Attorney for Suffolk Dist., 376 Mass. 142 , 144 (1978).

Here, the pleadings do not recite specifics about any alleged controversy other than those related to the reformation claim asserted in Count I. Nor was there any evidence introduced at trial that suggests any controversy regarding the validity or priority of either the First or Second Mortgages. Moreover, Plaintiffs' counsel expressly waived the opportunity for an opening statement at trial, and submitted no proposed findings or rulings, or post-trial brief in which the details of the controversy might have been explained. This leaves the court without option but to rely upon the pleadings and the characterization of Plaintiffs' claims as set forth in the Joint Pre- Trial Conference Memorandum, and thus to treat Plaintiffs' Count II claim as one for a declaratory judgment "to quiet title to [the Property] to include both property owners as party to the [two Mortgages]" and to declare that the First and Second Mortgages are valid first and second mortgages respectively on Defendants' joint ownership interests in the Property.

Plaintiffs, however, have failed to prove their case for reformation due to mutual mistake and failed to otherwise assert and demonstrate an alternative basis for reformation, such as fraud. Nor did Plaintiffs assert and demonstrate entitlement to an equitable mortgage on Ivan's interest in the property under an unjust enrichment theory. Indeed, there is no evidence that either of Plaintiffs are, in fact, present holders of the Mortgages and/or the associated promissory notes.

Accordingly, I find that neither Plaintiff is entitled to a declaration that it holds a valid mortgage on a 100% interest in the Property. Rather, Plaintiffs have demonstrated only that, on their faces, the Mortgages recorded at the Registry in Book 16583, Pages 43 and 56, encumber Luann's undivided interest in the Property, subject to Ivan's right of survivorship.

Count III - Quiet Title

Plaintiffs' Complaint articulates no specific problems to be determined and resolved with respect to the subject mortgage instruments aside from those alleged in support of the claim for reformation, which have been rejected. Nor did Plaintiffs, either through legal argument or introduction of evidence at trial, attempt to demonstrate the need for resolution of any other problems with the mortgage instruments. Accordingly, Count III shall be dismissed in conjunction with Count I. [Note 10]

Judgment to enter accordingly.