DEUTSCHE BANK NATIONAL TRUST COMPANY, TRUSTEE v.
MANUEL J. PEREZ et al., SC 19289
Judicial District of Stamford-Norwalk
Foreclosure; Mortgages; Contracts; Whether Trial Court Lacked the Authority to Reform the Mortgage. The plaintiff brought this action seeking to foreclose a mortgage on property jointly owned by defendants Manuel J. Perez and his wife, Janet Shaw. The plaintiff also sought to reform the mortgage, which was executed solely by Perez, to include Shaw as a mortgagor and implicate her undivided one-half interest in the property. The plaintiff claimed that Shaw's name was omitted from the mortgage by mutual mistake of the parties and that the mortgage was intended to convey a 100 percent security interest in the property. The trial court found that there was a mutual mistake in the execution of the mortgage, ordered that it be reformed to include Shaw's name as a mortgagor and rendered a judgment of strict foreclosure on the mortgage as reformed. The defendants appealed, claiming the court lacked the authority to reform the mortgage where Shaw was not an intended signatory of the mortgage and had never agreed to mortgage her interest in the property. The Appellate Court (146 Conn. App. 833) reversed the judgment of strict foreclosure as to Shaw, concluding that the trial court abused its discretion in reforming the mortgage in the absence of clear, substantial and convincing evidence that Shaw participated in Perez’ efforts to obtain the loan or execute the mortgage and absent any finding of fraud or improper motives on the part of either Perez or Shaw. It noted that, in exercising its equitable power of reformation, a court is limited to correcting mistakes in a written instrument and generally does not have the power to add a party to the contract. The Appellate Court found that the trial court abused its discretion in reforming the mortgage to add Shaw as a party because, in so doing, the court created an entirely new contract, which it lacked authority to do. In this appeal, the Supreme Court will decide whether the Appellate Court properly determined that the trial court lacked the authority to reform the mortgage.