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Aames Funding Corp. v. Henderson
Citations: 620 S.E.2d 503; 275 Ga. App. 323; 2005 Fulton County D. Rep. 2715; 2005 Ga. App. LEXIS 955Docket: A05A1224
Court: Court of Appeals of Georgia; August 31, 2005; Georgia; State Appellate Court
Aames Funding Corporation sought reformation of a security deed after foreclosure, aiming to correct the property's legal description, which had erroneously omitted lots 18 and 19. The trial court granted summary judgment to the Hendersons and Butler, but this decision was reversed on appeal. The appellate court conducted a de novo review and determined that Aames met the burden for summary judgment under OCGA 9-11-56, showing no genuine issue of material fact existed. The Hendersons had refinanced their home at 1714 Holly Hill Road, which included lots 17, 18, 19, and 20, but the deed only referenced Lot 17. Daniel Henderson stated he believed he was securing the entire property and did not read the loan documents. Butler, who provided a loan to the Hendersons, understood her security interest to be subordinate to Aames's. An Aames officer's affidavit confirmed the lender's intention to secure the whole property. The court found that the evidence overwhelmingly supported the existence of a mutual mistake that warranted equitable reformation. The Hendersons did not contest the relevant facts or claim prejudice from the proposed changes. Aames is not barred from seeking reformation of a security deed despite its extinguishment due to foreclosure. A security deed serves to convey legal title for securing a debt and is extinguished upon satisfaction of that debt. However, this principle does not apply to equitable reformation actions. Aames aims to reform the deed to reflect the original intent of the parties, which is permissible under Georgia law even post-foreclosure. The law allows for correction of inadvertent errors in the deed, as demonstrated in precedent cases such as Chapman v. Cassels Co. and Flagg v. Hedrick, where reformation was deemed appropriate to rectify mistakes, including omissions or typographical errors, regardless of foreclosure status. The principle of reformation relates back to the date of execution of the deed, thus establishing Aames's security interest as superior to any subsequent judgment liens. Consequently, the trial court's denial of Aames's summary judgment motion and the grant of the appellees’ motion were erroneous. The judgment is reversed, with concurrence from judges Andrews and Phipps.