On October 5, 2023, Justice Cohen of the New York County Commercial Division issued a decision in ACP Hous. Assoc., L.P. v. ABJ Milano, LLC, 2023 NY Slip Op. 33469(U), holding that a claim for mutual mistake failed because, among reasons, of the delay in raising the issue, explaining:
It is well established that in order to reform a written agreement, it must be demonstrated that the parties came to an understanding but, in reducing it to writing, through mutual mistake or through mistake on one side and fraud on the other, omitted some provision agreed upon or inserted one not agreed upon. Reformation on grounds of mutual mistake requires proof, by clear and convincing evidence, that an agreement does not express the intentions of either party. Reformation based upon a scrivener’s error requires proof of a prior agreement between parties, which when subsequently reduced to writing fails to accurately reflect the prior agreement. There is a heavy presumption that a deliberately prepared and executed written instrument manifests the true intention of the parties,’ and a correspondingly high order of evidence is required to overcome that presumption. Defendant has the initial burden of showing that there was no mutual mistake with respect to the property conveyed; thereafter, the burden shifts to plaintiff to raise a material question of fact.
Here, Buyer has made a prima facie showing of entitlement to judgment as a matter of law on Seller’s claim for reformation of the agreement by either a scrivener’s error or through mutual mistake. Seller has failed to raise an issue of fact as to Buyer’s or its counsel’s state of mind or their intention to purchase the Vacant Lot at the time the Contract was signed. Seller relies on marketing materials, a conversation between its broker and Buyer which was communicated to Seller in an email, and the Term Sheet-all of which occurred in or prior to October 2015, before any transaction documents were shared. Seller prepared the transaction documents, including the November 2015 email cover letter which included the Vacant Lot, and sent the deed descriptions expressly did so as well.
Moreover, the inclusion of the Vacant Lot in the transaction documents cannot credibly be characterized as a stray reference in the contract or an isolated scrivener’s error. The Vacant Lot is included in several, separately-prepared Closing Deliverables. For example, the Deed describes the premises as “163-165 West 122nd Street”. The multiple affirmative explicit inclusions of the Vacant Lot in the transaction documents are inconsistent with the claim of an inadvertent scrivener’s error, which must be shown by clear and convincing evidence.
Furthermore, because reformation is grounded in equity, courts consider the length of delay in discovering the mistake, as well as a party’s detrimental reliance on the contract terms. Seller’s delay of nearly three years in asserting its alleged mistake, while at the same time leaving it to Buyer to pay carrying expenses and taxes, weighs against Seller.
In sum, the summary judgment record demonstrates that to the extent there was any mistake, it was a unilateral mistake or misunderstanding by Seller, which cannot support a reformation claim.
(Internal quotations and citations omitted).