[30ASR2d145]
v.
NATIONAL PACIFIC INSURANCE
COMPANY, LTD., Defendant
High Court of
Trial Division
CA No. 39‑92
[1] When a party signs an instrument
without reading it, the party may not avoid enforcement of a contract on the
ground that he or she did not read the instrument or did not understand its
contents.
[2] A party who did not read a contract
may nonetheless be granted relief when he or she was induced by misrepresentation.
[3] A mutual mistake of fact occurs when
the parties to an agreement have a common intention, but the written contract
erroneously fails to reflect their intention due to a mistake on the part of
both parties in writing the agreement.
Accordingly, in order for the affirmative defense of mutual mistake to
be sustained, defendant must raise fact issues showing that both parties were
acting under the same misunderstanding of the same material fact.
[4] A party is not ordinarily allowed to
avoid a contract due to a mistake as to the contents of the contract. However, where the writing does not reflect
the agreement previously made and the term was not omitted by agreement,[30ASR2d146] the court will grant reformation for mutual
mistake despite the negligence involved in failing to read the document, the parol evidence rule, and the Statute of Frauds.
[5] A motion for summary judgment may be
denied at any time and for any reason when the court concludes that justice is
served by proceeding to trial rather than resolving the case on motion.
Before KRUSE, Chief Justice,
and TAUANU`U, Chief Associate Judge.
Counsel: For
Plaintiff, Marshall Ashley
For Defendant, Brian M.
Thompson
Order Denying Motion for Summary Judgment:
We earlier denied defendant National Pacific
Insurance Company's ("NPI") motion for summary judgment, satisfied on
the extent of the record then before us that a genuine issue of fact existed as
to whether a provision of the relevant insurance contract between the parties
was entered into by mutual mistake, and thus opening the contract to
reformation. See
The underlying dispute involves a transaction in
which plaintiff American Samoa Power Authority ("ASPA") agreed to
purchase insurance for a turbine that it had rented. The language of the insurance agreement
clearly indicates that insurance would only cover damages resulting from the
negligence of ASPA or its employees.
There is no indication that the damage involved in this case was related
to the negligence of ASPA or its employees.
ASPA complains that it was unaware of this limiting language, and that
the limitation does not represent the true intentions of the parties. Conversely, NPI argues that the language of
the agreement reflected exactly the extent of coverage that it offered to ASPA.
STANDARD OF REVIEW
Summary judgment is appropriate where there is no
issue with respect to any material fact, and the moving party is entitled to
judgment as a matter of law. T.C.R.C.P.
Rule 56. It may be invoked only when
"no genuine issue as to any material fact" exists. Anderson v.
NPI claims that in our denial of its earlier motion
for summary judgment, we delimited the issues for trial to the issue of whether
or not there was a mutual mistake regarding the limitation of insurance
coverage to damages resulting from the negligence of ASPA employees. Nowhere in the opinion did we so delimit the
issues. We simply found that the issue
of mutual mistake presented a genuine issue for trial. See
[1-3] It is basic contract law that
a party to a contract has a duty to read the contract and "may not later
complain that he did not read the instrument or that he did not understand its
contents." John D. Calamari & Joseph M. Perillo, Contracts § 9‑42 (2d ed. 1979). An exception to this general rule exists for
contracts induced by misrepresentation for the reason of mistake.
[A] mutual
mistake of fact occurs where the parties to an agreement have a common intention,
but the written contract erroneously reflects that intention due to a mistake
on the part of both parties in writing the agreement. Accordingly, in order for the affirmative
defense of mutual mistake to be sustained, defendant must raise fact issues
showing that both parties were acting under the same misunderstanding of the
same material fact.
Newsom v. Starkey, 541 S.W.2d 468, 472 (
[4] ASPA's rendition of the facts is, essentially, that NPI
never informed ASPA about the limitation of insurance coverage to damage caused
by the negligence of ASPA or its employees, and that ASPA was not otherwise
aware of this limitation. ASPA does not allege
fraud on the part of NPI, nor [30ASR2d148] that NPI was mistaken as to the
contents of the document. These
circumstances give rise to a factual question as to whether the language of the
policy contradicts an actual agreement entered into by the parties, or if the
fault belongs solely to ASPA.
When a party signs an
instrument without reading it, it is clear that in a loose (but not legal)
sense he is operating under a mistake as to the contents of the document. Under the rules previously stated, however,
he is not ordinarily allowed to avoid the contract. Nonetheless, the situation is different if
the writing does not reflect the agreement previously made and the term was not
omitted by agreement. In such a
situation most courts have granted reformation for mutual mistake despite the
negligence involved in failing to read the document, the parol
evidence rule, and the Statute of Frauds.
John
D. Calamari & Joseph M. Perillo, Contracts § 9‑43 (2d ed. 1979)
(citations omitted). Even if we assume ASPA's argument to be correct, it does not support the
finding of a mutual mistake, because it does not attempt to show that NPI was
mistaken as to the contents of the agreement, nor that NPI had ever agreed in
any way to provide more extensive coverage than what was enumerated in the
written policy. ASPA's
argument makes factual claims only about what ASPA requested, not about what
NPI agreed to provide. The deposition of
Victor H. Stanley (at 29) does provide testimony, however, that NPI's representative agreed with Mr. Stanley to provide the
more extensive coverage. We are puzzled
as to why this testimony received no mention in ASPA's
memorandum opposing summary judgment.
[5] A motion for summary judgment
may be denied at any time and for any reason when the court concludes that
justice is served by proceeding to trial rather than resolving the case on
motion. Charles Alan Wright, Law of Federal Courts
§ 99 (2d ed. 1972). Finding that
an issue of material fact exists regarding the extent of coverage that NPI
agreed to provide, we deny the motion for summary judgment.
The motion for summary judgment is denied.
It is so ordered.