FROM CLAY CIRCUIT COURT HONORABLE OSCAR G. HOUSE, JUDGE
ACTION NO. 09-CI-00159
AND ORAL ARGUMENT FOR APPELLANT: Ralph Hoskins Corbin,
FOR APPELLEE, CHASE HOME FINANCE, LLC: Griffin Terry Sumner
Louisville, Kentucky Miles R. Harrison Louisville, Kentucky
Peter Matthew Cummins Louisville, Kentucky ORAL ARGUMENT FOR
APPELLEE, CHASE HOME FINANCE, LLC: Peter Matthew Cummins
BEFORE: ACREE, D. LAMBERT, AND THOMPSON, JUDGES.
LAMBERT, D., JUDGE
Harms and his wife, Pamela Harms, appeal from a judgment
entered by the Clay Circuit Court which reformed a mortgage
and deed based on the equitable principle of mutual mistake.
In this appeal, the Harmses argue that the unjust enrichment
claim asserted by Chase Home Finance, Inc.
("Chase"), was time-barred, and, even if not so
precluded, the trial court exceeded its authority in
reforming the deed in addition to the mortgage. Having
reviewed the record, we conclude that the trial court did not
err in ordering the reformation of the deed and mortgage, or
in entering judgment against the Harmses for unjust
enrichment. Therefore, we affirm.
FACTUAL AND PROCEDURAL HISTORY
1998, the Harmses entered into a contract whereby they would
purchase the 4.92-acre subject property from subdivision
developer, Triple S Development, Inc. ("Triple S"),
on an installment plan. Upon receipt of the initial down
payment of $6, 250, Triple S would convey a landlocked
one-acre portion of the property, on which a residence
stands,  to the Harmses. This conveyance was duly
recorded in the Clay County Clerk's Office. Upon payment
of the remaining purchase price ($24, 500), Triple S was to
convey the remaining 3.92 acres to the Harmses. The Harmses
made the initial payment in April of 1999, and Triple S
conveyed the house lot to them, with an easement across the
remainder for access. The Harmses remitted $24, 500 by April
of 2001, and at that time, Triple S conveyed the remaining
acreage to the Harmses per the contract.
dispute at the core of this appeal originated in the second
deed from Triple S to the Harmses. The second deed included
an acknowledgment of the first conveyance, and explicitly
stated that the property subject to the prior conveyance was
not part of the second conveyance: "There is excepted
from this conveyance that tract of land previously conveyed
to Larry and Pam Harms of record in Deed Book 249 at Page
160[.]" This second deed was also duly recorded in the
Clay County Clerk's Office.
2002, the Harmses sold their property-ostensibly both lots-to
Richard and Karen Cheek for $250, 000. In discovery, the
parties to this conveyance indicated they had intended the
transaction to include the entirety of the real property the
Harmses had purchased from Triple S. Larry Harms himself
testified in deposition that the intent of the transaction
was "selling the house" and all of his property
located "up there on the hill and house included."
The sales contract between the parties included not only both
the residence and the surrounding acreage as the subject
matter of the transaction, but also included a refrigerator
and stove located within the residence.
Cheeks obtained financing for the transaction through Century
21 Mortgage ("Century 21"). Century 21 retained the
services of a law firm to perform a title examination, which
failed to notice that the conveyance only included 3.92 of
the total 4.92 acres. Century 21 assigned its mortgage to
JPMorgan Chase Bank, N.A., which assigned it to Chase in
December of 2008. The mortgage and the subsequent assignments
thereof were also duly recorded.
the Cheeks encountered financial difficulties and defaulted
on their loan. Chase initiated this foreclosure action. The
trial court granted judgment in favor of Chase, and ordered
the property sold. Ethel Smith purchased the property at the
judicial sale for $206, 000 on June 4, 2010. Smith discovered
the discrepancy in the deed soon after, and successfully
moved the trial court to postpone distribution of the sale
proceeds. The sale was not confirmed at that time, and
following motions by both the Master Commissioner and Smith
herself, the trial court ordered the proceeds returned to
Smith on August 30, 2010.
contacted the Harmses about correcting the mistake to allow
Smith to take clear title to the house lot. The Harmses
refused to do so, insisted they still owned the property, and
demanded payment for their interest. With leave of the trial
court, Chase amended its complaint in 2011 to seek
reformation of the mortgage and deed, and to assert a claim
of unjust enrichment against the Harmses. Smith intervened in
the action in 2012.
and the Harmses filed competing motions for summary judgment,
and the trial court granted Chase's motion. The trial
court concluded that Chase's unjust enrichment claim was
not time-barred. The trial court also found the mortgage to
have contained a mutual mistake. It ordered the mortgage and
deed be reformed to match the clear intent of the Harmses and
the Cheeks in their 2002 transaction. The trial court also
confirmed the sale, ordering Smith to remit the bid ...