Can Utah courts reform contracts without considering opposing evidence of intent? Wolf Mountain Resorts v. ASCU Explained

In Wolf Mountain Resorts v. ASCU, the Utah Court of Appeals addressed whether a district court can reform a contract based on alleged scrivener’s error without considering extrinsic evidence from the opposing party regarding the parties’ original intent.

Background and Facts

Wolf Mountain and ASCU entered into a leasehold mortgage containing a due-on-sale clause with specific exceptions. When ASCU was sold to Talisker, Wolf Mountain sued for foreclosure, claiming the sale violated the clause. ASCU argued that the exception language contained scrivener’s errors—specifically, that “Mortgagee” should have read “Mortgagor” in two instances—and sought contract reformation to permit the sale. The district court agreed with ASCU and reformed the mortgage without considering Wolf Mountain’s affidavit from the original drafter stating the language was intentional.

Key Legal Issues

The central issue was whether the district court erred in granting summary judgment for contract reformation without considering extrinsic evidence that disputed the claim of scrivener’s error. The court also addressed whether parol evidence is admissible to demonstrate mutual mistake in contract drafting.

Court’s Analysis and Holding

The Court of Appeals reversed, holding that the district court erred by failing to consider Wolf Mountain’s extrinsic evidence. The court explained that contract reformation based on alleged mutual mistake requires clear and convincing evidence that the language doesn’t reflect the parties’ original intent. Since determining the parties’ intent presents a question of fact, and Wolf Mountain presented an affidavit from the original drafter contradicting the scrivener’s error claim, summary judgment was inappropriate. The court noted that parol evidence is admissible to demonstrate mutual mistake, creating an exception to the general rule against extrinsic evidence for contract interpretation.

Practice Implications

This decision emphasizes that courts must consider all relevant evidence when evaluating contract reformation claims. Practitioners defending against reformation should present affidavit testimony from original drafters or negotiators to create factual disputes about intent. The ruling also confirms that the presumption favoring written contracts can be overcome, but only through clear and convincing evidence, making factual development crucial in reformation cases.