GARY M. WEINER, ESQ., Chapter 7 Trustee of the Bankruptcy Estate of Gail Dupuis, v. GAIL DUPUIS.

This lawsuit is the second chapter in the efforts to sort out the financial affairs of defendant Gail Dupuis, who filed for bankruptcy in 2012. Those efforts stumbled in the first chapter, in a federal bankruptcy court, because of conveyancing mistakes that Ms. Dupuis didn't commit or cause. The Chapter 7 trustee of Ms. Dupuis's bankruptcy estate brought this lawsuit to correct those mistakes, and he has moved for summary judgment to accomplish that result. Largely because of facts that Ms. Dupuis admitted during the bankruptcy proceedings, and owing to the narrow relief that the Trustee seeks from this Court – mere correction of a scrivener's error – this Court must do as the Trustee requests.

These are the undisputed facts. Over two days in January 2005, Ms. Dupuis purchased from Cynthia Carron three abutting parcels along Haynes Hill Road in Wales, Massachusetts. Parcel 1 included a residence at 95 Haynes Hill Road. Parcels 2 and 3 had no address, as they were largely undeveloped.

Ms. Dupuis admitted in the bankruptcy court that she intended to buy Parcel 1 first. Thus, on January 18, 2005, she received a deed from Ms. Carron to what Dupuis expected would be Parcel 1. That deed recites a purchase price of $207,000. Dupuis executed that same day a mortgage on Parcel 1. The next day, Carron executed and delivered to Dupuis two additional deeds, one for undeveloped Parcel 2 and the other for undeveloped Parcel 3, each selling for $30,000 apiece.

A careful reader will notice that the prior paragraph states that Ms. Dupuis received a deed on January 18 that she "expected" would be for Parcel 1. It turns out that while "95 Haynes Hill Road, Wales, MA 01081" is written in the margin of the January 18 deed (there are no street numbers in the margins of the January 19 deeds), the words "Parcel 2," and not "Parcel 1," appear in the description of the property conveyed by way of the January 18 deed.

It is undisputed that no one brought the Parcel 1/Parcel 2 error to Ms. Dupuis's attention in 2005. She also was unaware of the error in 2007, when she refinanced with Wells Fargo Bank, N.A. the mortgage she placed on Parcel 1 in 2005. Dupuis admitted in the bankruptcy court that she intended to give Wells Fargo a mortgage on Parcel 1, as it was her only residential parcel, in exchange for a $169,700 loan. One would have thought that, before making a loan of that size, Wells Fargo would have checked Dupuis's title to Parcel 1, and thereby catch the mistake in the deed that Dupuis received on January 18, 2005. Think again: not only did Wells Fargo miss that error, but Wells Fargo compounded the mistake by recording a mortgage (one intended to replace the correctly drafted, existing mortgage on Parcel 1) that said it encumbered Parcels 2 and 3.

The 2005 and 2007 errors weren't terribly important as long as Ms. Dupuis made payments on her Wells Fargo note. She did so regularly until late 2011. Around that same time, she learned of the two mistakes. She corrected the first through her own efforts, obtaining in February 2012 a confirmatory deed from Ms. Carron that acknowledged that the January 18, 2005 deed should have read "Parcel 1" instead of "Parcel 2." Dupuis didn't resolve the second error before filing for bankruptcy in March 2012.

In March 2012, the bankruptcy court appointed Gary M. Weiner, Esq. (the plaintiff in the action now before this Court) as the Chapter 7 Trustee for Ms. Dupuis's bankruptcy estate. The Trustee discovered the mistake in Wells Fargo's mortgage. He thereafter brought a proceeding in the bankruptcy court, against Wells Fargo, to avoid that mortgage on account of its misidentification of the mortgaged parcel.

After the Trustee sued Wells Fargo, Ms. Dupuis filed a motion to compel the Trustee to abandon any interest the bankruptcy estate may have had in any real estate owned by Dupuis. There followed, in May 2014, the filing of an Agreed Statement of Facts. All of the parties before the bankruptcy court – the Trustee, counsel for Dupuis, and counsel for Wells Fargo – signed the Statement. It contains the undisputed facts that are central to this Decision.

The bankruptcy court denied Ms. Dupuis's abandonment motion in January 2015, but the court didn't resolve the Trustee's dispute with Wells Fargo until October 2016. At that time, acting pursuant to 11 U.S.C. § 544, the court "avoided" Wells Fargo's mortgage. The court also "preserved" the mortgage for the benefit of the bankruptcy estate pursuant to 11 U.S.C. § 551. Preserving a lien for the bankruptcy estate "entitles [the] estate to the full value of the preserved lien – no more and no less." DeGiacomo v. Traverse (In re Traverse), 753 F.3d 19, 31 (1st Cir. 2014). The bankruptcy court told the parties in January 2015 that one consequence of avoiding Wells Fargo's mortgage and preserving it for the benefit of the Dupuis bankruptcy estate would be that the Trustee could file an action in state court to reform the mortgage, so that it would describe the correct mortgaged parcel. That's exactly what the Trustee has done.

This Court has the "broad power to reform, rescind, or cancel written instruments, including mortgages, on grounds such as fraud, mistake, accident, or illegality." Beaton v. Land Court, 367 Mass. 385 , 392 (1975); see also Wells Fargo Bank, N.A. v. Yandoli, 21 LCR 167 , 170 (2013). American Oil Co. v. Cherubini, 351 Mass. 581 , 587 (1967), observed fifty years ago that a court's power to correct an instrument containing an erroneous description of land has "long been established. . . ." Reformation is available when a party presents "full, clear and decisive proof that the instrument failed to express the intent which both parties had in making it." New York, N.H. & H.R. Co. v. Plimpton, 238 Mass. 337 , 340 (1921); see also Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747 , 756 (1993); Ward v. Ward, 70 Mass. App. Ct. 366 , 368 (2007). A party seeking reformation also must prove that reformation will not affect the rights of persons who haven't participated in the reformation lawsuit. See Beach Associates, Inc. v. Fauser, 9 Mass. App. Ct. 386 , 395 (1980).

The Trustee's proof that Ms. Dupuis intended to give Wells Fargo in 2007 a mortgage on Parcel 1, instead of Parcels 2 and 3, comes from the Agreed Statement of Facts that counsel for Dupuis signed and filed with the bankruptcy court in May 2014. Dupuis doesn't contest those facts. Even if she had, the doctrine of judicial estoppel likely would have forced her to accept the Agreed Statement anyway. See Otis v. Arbella Mut. Ins. Co., 443 Mass. 634 , 640-41 (2005); In re Schiavone, 24 LCR 798 , 802-03 (2016). It is also undisputed that reformation will affect only the Trustee and Dupuis, and no third parties.

The Land Court routinely fixes errors in a mortgage's legal description of an encumbered property so as to make the mortgage conform to the parties' undisputed financing arrangements. See Wells Fargo Bank, N.A. v. Aquino, 20 LCR 9 , 9-10 (2012); Framingham Cooperative Bank v. O'Grady, 1 LCR 40 , 41-32 (1993). Ms. Dupuis embraces the equitable underpinnings of this Court's power to correct drafting errors in mortgages, but she contends that equity actually demands that this Court leave Wells Fargo's (now, the Trustee's) mortgage as is. She first portrays the 2007 mistake as being Wells Fargo's alone: after all, Wells Fargo drafted the defective mortgage, and Wells Fargo put it on record. But mortgages usually aren't unilateral documents. The Wells Fargo mortgage is no exception: it had two parties, Wells Fargo and Dupuis. It's undisputed that both parties intended to enter into a loan transaction, both parties intended for that loan to be secured by a mortgage, and both parties intended for that mortgage to encumber Parcel 1. The mistake here, appearing in a document that Wells Fargo's agents prepared and Dupuis signed, was thus mutual and not unilateral. See Duclersaint v. Federal National Mortgage Ass'n, 427 Mass. 809 , 813 n. 4 (1998).

Ms. Dupuis also argues that, as of the time of the mistake, Wells Fargo was in a better position than Dupuis to suffer its consequences. She contends (although the record doesn't contain proof for this) that Wells Fargo obtained title insurance for the 2007 mortgage. She argues (again, without proof) that the attorneys who handled the 2007 refinancing for Wells Fargo carried malpractice insurance. She also assumes that Wells Fargo has some sort of "errors and omissions" insurance that covers the 2007 error. It's also undisputed that as successor to the 2007 mortgage, the Trustee enjoys (for the moment) a mortgage on Parcels 2 and 3, which must have some value. Dupuis argues that forcing the Trustee (whom Dupuis claims is essentially Wells Fargo's cat's paw) to pursue other sources of satisfaction of Dupuis's debts is preferable to Dupuis losing her home, someday, to foreclosure.

Some Massachusetts "mutual mistake" cases weigh as a factor whether one of the parties to a transaction has assumed the risk of a mistake. See, for example, Maloney v. Sargisson, 18 Mass. App. Ct. 341 , 345-47 (1984); Covich v. Chambers, 8 Mass. App. Ct. 740 , 749-51 (1979); see also Restatement (Second) of Contracts, § 152 (1979). But those cases involve a request by a party to rescind a contract on the grounds of facts misapprehended by both parties before entering into the agreement, where the true facts (once known) reveal that the contract won't achieve its intended purpose. Those cases do ask whether the parties agreed, in advance of learning the true facts, to allocate the risk of the unknown fact to one party or the other. Wells Fargo and Ms. Dupuis didn't misapprehend any facts at the time they formed the contracts at issue in this case. It is undisputed that Dupuis wanted to refinance her 2005 residential mortgage; Wells Fargo agreed to loan Dupuis $169,700 to make that happen, provided it received a mortgage on Parcel 1; and Dupuis agreed to give Wells Fargo such a mortgage. The mistake in this case came after the parties reached their agreement: both sides reasonably expected that the mortgage document memorializing their agreement would be correct, and they performed their obligations (Wells Fargo funding its loan, and Dupuis repaying it, for a time) as if that document were correct.

The Court's work in this case ends with reformation of the Wells Fargo/Dupuis mortgage. It's up to other courts to decide whether and how the parties, including Ms. Dupuis, should be held to the agreement that gave rise to the mortgage, and to determine the equities of repayment.

Judgment shall enter accordingly.