Oops! Will That Typo Cost You?

According to a recent Eleventh Circuit case, Patterson v. CitiMortgage, Inc., No. 14-14636, the answer is no. 

Toby Breedlove (an additional plaintiff in the suit) had bought a house with a CitiMortgage loan. After falling behind in his payments and hoping to avoid a foreclosure, Breedlove sought to sell the house to Patterson in a short sale. Patterson and CitiMortgage negotiated over a price. Patterson offered $371,000, which was rejected; then $412,000, which was rejected; then $444,000. It is the response to the offer of $444,000 that is at issue here. 

CitiMortgage sent Patterson a letter that stated that it wished to receive a payoff of $113,968.45. This was not what CitiMortgage meant to communicate. That amount is clearly much lower than the amounts which the parties had been discussing. Nevertheless, Patterson received the letter and immediately agreed to go forward with the deal. Patterson did not confirm the amount of the deal; neither did CitiMortgage. On the date of closing, CitiMortgage received the payment of $113,968.45 and at that point realized its mistake. It contacted the closing attorney’s assistant and stated that it was rejecting the funds and would be returning them. CitiMortgage then contacted Patterson and informed him that it had meant to accept the $444,000 offer, with a few tweaks. Patterson, however, demanded that CitiMortgage accept the $113,968.45 for the house, since that had been the amount stated in CitiMortgage’s letter. 

For reasons that are never made clear, two years went by before CitiMortgage took any further action, moving to foreclose on Breedlove’s house. That resulted in this lawsuit seeking to enforce the sale of the house for $113,968.45. 

The question in this case was whether CitiMortgage’s unilateral clerical error in the letter to Patterson prevented the parties from forming a valid contract. Georgia courts (the law that applied) often do not save contracting parties from their own mistakes if due diligence would have prevented the error. However, Georgia courts also refuse to allow parties to take advantage of obvious mistakes made by the other side. When the other party should have known that there was a mistake involved, then that can be grounds for rescinding the contract. And here, CitiMortgage’s mistake should have been obvious to Patterson. They had been discussing numbers in the $400,000s; he should have realized that a number in the $100,000s had to be a typo. Therefore, there was no contract between the parties.