Opinion ID: 67236
Heading Depth: 3
Heading Rank: 2

Heading: Mutual Error

Text: The Rutherfords contend that there clearly existed an antecedent agreement between the parties that the leased premises pertained to a sevenacre tract of land located north of the shell road. Further, they argue that this agreement was incorrectly reduced to writing, that the error was mutual, that their consent was vitiated, and reformation is warranted.6 Again, Louisiana law requires consent to have an enforceable contract, and consent can be rendered void by error. L A. C IV. C ODE A NN. art. 1927, 1948. In the event that an error causes a contract to recite terms to which neither party agreed, Louisiana law provides contract reformation as an equitable remedy. 6 Pioneer argues that the Rutherfords are barred from raising this claim on appeal because they did not press the issue to the district court. This argument is without merit because the Rutherfords alleged mutual error in their Counterclaim and in their Memorandum in Opposition to Summary Judgment, and the district court definitively ruled on the issue. 7 Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 274 (5th Cir. 1987). “Before an instrument will be reformed, ‘there must be clear proof of the antecedent agreement as well as an error in committing it to writing.’” Ill. Cent., 988 F.2d at1402 (quoting Pat S. Todd Oil Co., Inc. v. Wall, 581 So.2d 333, 336 (La. App. 3rd Cir. 1991)). Reformation is only available to “‘correct mistakes or errors in the written instrument when such instrument, as written, does not express the true contract or agreement of the parties.’” Phillips Oil , 812 F.2d at 274 (quoting Fontenot v. Lewis, 215 So.2d 161, 163 (La. App. 3d Cir. 1968)). Most importantly, “[t]he error or mistake must be mutual,” 7 and the party seeking reformation must establish the mutual error by clear and convincing evidence. Id. (emphasis added). In light of the summary judgment standard and the Rutherfords’ burden of proof at trial, this Court must ascertain whether, viewing all of the evidence in the light most favorable to the Rutherfords, enough evidence exists for a reasonable factfinder to determine that the Rutherfords have shown mutual error by clear and convincing evidence. In making this determination, “the court should focus on who reduced the proposed agreement to writing, who the parties to the agreement were, whether the provision at issue was central to the agreement, and what pains the parties took in reviewing the written instrument.” Id. at 275. The evidence in the present case demonstrates that Pioneer intended to modify the final lease to include all of the Rutherfords’ land. First, the “Premises Leased” provision is central to the lease agreement and was written 7 The Rutherfords characterize the issue as whether the parties mutually intended to change the agreement at the last minute. This is a mischaracterization of the issue—there is no requirement of mutual intent, but rather a requirement of mutual error. It is quite possible the Rutherfords did not intend to lease all of their property, but that does not evidence that Pioneer did not intend to lease all of the Rutherfords’ property. 8 in clear and unambiguous terms, beginning with “[a]ll of the land owned by Lessor.” Second, Pioneer reduced the agreement to writing, and it is undisputed that Pioneer inserted the final property description. Mr. Ruff’s affidavit explains that he inserted this property description after Ms. Jones faxed him the Cameron Parish Assessor’s records showing that the Rutherfords owned nearly twenty-two acres in Section 34. The lease’s final property description is not limited by any reference to seven acres or a shell road. The significance of the provision and Pioneer’s affirmative act to include “all land owned,” rather than a limiting provision, demonstrates that this language was not included by accident. Additionally, both parties were experienced in leasing—Pioneer is an oil and gas producer with experience in surface leases, and the Rutherfords had leased their own land before and were also represented by qualified counsel. All of these factors evidence that Pioneer was not mistaken when it agreed to lease all of the Rutherfords’ land. Still, the Rutherfords maintain that clear and convincing evidence exists that a mutual mistake was made. They argue that during the lease negotiations both parties consistently referred to the lease as seven acres, as evidenced by the prior lease drafts and Pioneer’s own correspondences with Ms. Jones. Additionally, in their affidavits, the Rutherfords explain that they were only willing to lease the land north of the shell road because they maintained their homesteads in the southern portion of the tract.8 These arguments do not convince us that the record contains clear and convincing evidence of mutual mistake. 8 Again, the Rutherfords homesteads were destroyed by hurricane Rita during the negotiations. The Rutherfords maintain that they intended to rebuild their homesteads in the same location and never discussed the possibility of leasing the entire twenty-acre tract. 9 Though the parties consistently referred to seven acres, none of the previous drafts described land that the Rutherfords actually owned, nor did they mention a shell road or provide any means of identifying which seven acres of the twenty-acre tract were to be leased. It is also undisputed that seven acres was an approximation and neither party was certain as to the exact number of acres to be covered by the lease. When prompted to provide a more detailed property description, the Rutherfords’ attorney instructed Pioneer to “see [the] attached property description from the Cameron Parish Assessor’s Office,” which showed that the Rutherfords owned 21.95 acres in the “W/2 NE/4 SE/4 SEC 34.” Ms. Jones also faxed Pioneer a map highlighting an area within section 34, but the fax cover sheet did not direct Pioneer’s attention to this map, and the highlighted portion is largely unidentifiable because it was sent via fax and comprises only a very small portion of the map. The Rutherfords’ strongest evidence of mutual mistake is Pioneer’s enclosure of two $5,000 checks with a notation referencing a surface lease of “7 acres.” However, these still do not provide clear and convincing proof that Pioneer included the language “all land owned” in error. It may be that the individual writing the checks believed the lease was for seven acres, but the lease itself clearly describes all of the land owned by the Rutherfords in a twenty-acre tract. And there is no indication that the individual writing these checks had any involvement with the lease negotiations, the drafting of the final property description, or was aware of what the parties ultimately agreed upon. Last, the Rutherfords’ reliance on this court’s opinion in Illinois Central, which upheld a district court’s reformation of a contract after finding that a party’s inadvertent omission of a term constituted a mutual error and warranted reformation, is unpersuasive in the present context. See 988 F.2d at 1404–05. In Illinois Central, there existed strong evidence that the parties had previously 10 agreed to include a specific rider in the final sale. Id. at 1404. In fact, this very same rider had been included in a previous and related transaction between the parties. Id. at 1400, 1404. Yet, the drafting party inadvertently omitted the physical act of attaching the rider to the final agreement. Id. at 1404. And there was evidence that the other party was unaware of the rider’s omission prior to signing because its actions were in accordance with the rider’s terms. Id. at 1403 n. 17. Thus, the court determined that the physical omission of the rider was a mutual mistake, and reformed the agreement. Id. at 1404–05. Unlike Illinois Central, the present case involves an intentional, affirmative act to include language in the most prominent provision of the contract. Pioneer did not inadvertently omit a term, it specifically altered a limiting phrase to extend the lease to “all of the land owned” in a twenty-acre tract. It is implausible that this could be done by accident or mistake. And, Pioneer, through Ruff, denied any such mistake. Every prior draft contained the language “7 acres,” yet Pioneer consistently rejected this description, made repeated requests for a better property description, and ultimately revised the lease language to include “all of the land owned by Lessor.”9 This action reflects an affirmative, conscious choice by Pioneer rather than an inadvertent omission—a stark contrast to Illinois Central, where a specific rider, used by the parties in a related past transaction, was inadvertently failed to be physically attached to the final sale document. Viewing the above evidence in the light most favorable to the Rutherfords, a reasonable factfinder could not find mutual mistake by clear and convincing 9 As appellants assert in their brief to this court (p. 32) “it is hard to imagine how, inter alia, deleting ‘seven acres’ and inserting ‘all of the land owned by Lessor’ into the sixth draft of the lease was accidental.” Similarly, appellants also assert in their brief that “a close review of the record exposes the real motive behind Pioneer’s last minute deception of the Rutherfords.” (Id. at 39). 11 evidence.