## Facts

- Sellers bought a five-acre rural parcel with seven irrigation water shares and an apparent ditch-and-culvert route onto the land.
- The sellers did not use canal water on the parcel and did not inspect the irrigation works; canal water had not been delivered to the parcel for years.
- An obstruction in the canal system prevented water from being delivered into the ditch leading to the property.
- Buyers purchased the parcel and water shares intending to use irrigation-dependent improvements (home, animals, garden), assuming irrigation water could be delivered via the visible ditch system.
- After closing, buyers discovered the obstruction; neither party knew of it at contracting.
- Buyers sued for rescission, damages, and fees, alleging mutual mistake and misrepresentation (including claims against the broker).

## Issues

1. Whether there was a mutual mistake of material fact about the deliverability of irrigation water to the parcel.
2. If mutual mistake existed, whether equity permitted reformation and specific performance rather than rescission of the land sale contract.
3. Whether the real-estate broker was liable for misrepresentation or nondisclosure regarding irrigation water delivery.
4. Whether the damages and attorney’s fees awards were proper.

## Decision

- The court affirmed the finding of mutual mistake: both parties believed irrigation water could be delivered to the parcel through the existing ditch system, but a barrier prevented delivery.
- The court held the trial court could, in equity, reform the contract to reflect the parties’ shared intent and order performance consistent with that intent, rather than rescind.
- The court vacated portions of the judgment and remanded because the decree implementing the sellers’ water-delivery obligation was insufficiently clear and required further specification.
- The court affirmed dismissal of claims against the broker for lack of proof of actionable misrepresentation.
- The court generally left the damages award intact but remanded for reconsideration as needed after the trial court clarified the reformed performance obligation; it denied attorney’s fees on appeal.

## Legal Principles

- A mutual mistake of material fact may justify equitable relief when the contract, as written, does not reflect the parties’ shared understanding at contracting.
- In cases of mutual mistake, a court of equity has discretion to select an appropriate remedy, including rescission or reformation followed by enforcement as reformed.
- Reformation may be appropriate where the parties’ basic bargain can be achieved by correcting the contract to require performance consistent with their common intent, rather than undoing the transaction.
- Specific performance of a reformed contract requires terms and obligations stated with sufficient clarity to be workable in enforcement.
- Broker liability for misrepresentation requires proof of a false statement of existing fact and culpability (such as knowledge or negligence); a shared mistaken assumption, without such proof, does not establish liability.

## Conclusion

The court upheld equitable reformation and enforcement of a land sale affected by a mutual mistake about irrigation-water delivery, rejected broker misrepresentation claims, and remanded for the trial court to specify and implement a workable water-delivery obligation and adjust related relief if necessary.


Thieme v. Worst, 745 P.2d 1076 (Idaho Ct. App. 1987)