Here, the judge ultimately ordered rescission on a theory mainly utilized in other circumstances. Quoting Villanueva v. Amica Mut. Ins. Co., 374 N.J.Super. 283, 289–90, 864 A.2d 428 (App.Div.2005), the Chancery judge found Murray's mistake was “of so great a consequence” that, despite the absence of wrongful acts or omissions on defendant's part, “to enforce the contract as actually made would be unconscionable.” See www. goodreads. com/ author/ quotes/ 7702.
The basic rule is that where an insurance company has settled a claim based upon a mistake of fact, even a unilateral mistake, it is entitled to relief in the absence of prejudice to the payee. See Young v. State Farm Mut. Auto. Ins. Co., 80 N.J.Super. 582, 586-87, 194 A.2d 488 (App.Div. 1963); see also Villanueva v. Amica Mut. Ins. Co., 374 N.J.Super. 283, 286-91, 864 A.2d 428 (App.Div. 2005). Judge Conford, writing for this court in Young, concluded that when a payment of insurance proceeds is induced by a mistake of fact, the insurer can rescind the settlement as long as the settling claimant would not be prejudiced thereby.
Second, even if Zoebisch's alleged mistake actually constitutes a mistake of fact, he has not shown that the mistake is so great that enforcement of the settlement would be unconscionable. See Villanueva v. Amica Mut. Ins. Co., 864 A.2d 428, 432 (N.J. Super. Ct. App. Div. 2005). Regardless of the value of these surviving claims, Zoebisch reaped substantial benefits from the settlement.
See Stephenson v. Spiegle, 429 N.J.Super. 378, 385 (App. Div. 2013) (citing Villanueva v. Amica Mutual Ins. Co., 374 N.J. Super 283, 289-90 (App. Div. 2005)). The relief of rescission, however, cannot be granted where the mistake occurs as a result of the mistaken party's own negligence.
Consider Great American Ins. Co. v. Yellen, 58 N.J. Super. 240, 244 (N.J. Super. Ct. App. Div. 1959), in which the Court held: "It is the general rule that one who has paid money under a mistake of fact but for which payment would not have been made may have restitution from the payee notwithstanding that the mistake was unilateral and a consequence of the payor's negligence, providing, however, that such restitution will not prejudice the payee." See also Smith v. Fireworks by Girone, Inc., 380 N.J. Super. 273, 292 (N.J. Super. Ct. App. Div. 2005) (applying Yellen); Villanueva v. Amica Mut. Ins. Co., 374 N.J. Super. 283, 290 (N.J. Super. Ct. App. Div. 2005) (same). Similarly, in PaineWebber, Inc. v. Levy, 293 N.J. Super. 325, 327-328 (N.J. Super. Ct. Law Div. Oct. 26, 1995), the Court held:
Inst. Bldg. & Loan Ass'n v. Edwards, 81 N.J. Eq. 359, 86 A. 962, 964–65 (1913) ; see also Home Owners' Loan Corp. v. Collins, 120 N.J. Eq. 266, 184 A. 621, 623 (1936) (citing Inst. Bldg. & Loan Ass'n ); Fleisher v. Colon, No. A–2807–10T1, 2012 WL 360282, at *6 (N.J.Super.Ct.App.Div. Feb. 6, 2012) (citing Inst. Bldg. & Loan Ass'n ); Villanueva v. Amica Mut. Ins. Co., 374 N.J.Super. 283, 864 A.2d 428, 432 (2005) (even rescission for a unilateral mistake is not barred by the mistaken party's negligence where there is no “legal prejudice as a result of that mistake.”); Smith v. Fireworks By Girone, Inc., 380 N.J.Super. 273, 881 A.2d 1243, 1254 (2005) (rescission of insurance settlement appropriate even for a unilateral mistake “in the absence of prejudice”)
(1) The mistake must be of so great a consequence that to enforce the contract as actually made would be unconscionable; (2) the matter as to which the mistake was made must relate to the material feature of the contract; (3) the mistake must have occurred notwithstanding the exercise of reasonable care by the party making the mistake, and; (4) it must be able to get relief by way of rescission without serious prejudice to the other party, except for loss of his bargain. Villanueva v. Amica Mut. Ins. Co., 374 N.J.Super. 283, 864 A.2d 428, 432 (2005). There is no dispute that Weisman voluntarily submitted to the arbitration process that resulted in the settlement agreement.
Restitution is an available remedy for an insurance company seeking recovery of payments made under a unilateral mistake of fact in the absence of detrimental reliance. See Great Am. Ins. Co. v. Yellen, 58 N.J. Super. 240, 244 (App. Div. 1959);Villanueva v. Amica Mut. Ins. Co., 374 N.J. Super. 283, 289 (App. Div. 2005). "It is the general rule that one who has paid money under a mistake of fact but for which payment would not have been made may have restitution from the payee notwithstanding that the mistake was unilateral and a consequence of the payor's negligence, providing, however, that such restitution will not prejudice the payee."
Restitution is an available remedy for an insurance company seeking recovery of payments made under a unilateral mistake of fact in the absence of detrimental reliance. See Villanueva v. Amica Mut. Ins. Co., 374 N.J. Super. 283, 289 (App.Div. 2005);Great Am. Ins. Co. v. Yellen, 58 N.J. Super. 240, 244 (App. Div. 1959). Indeed, courts have found that even the lack of care on the insurer's part will not bar an award of restitution. See Villanueva, 274 N.J. Super. at 289 (noting that ordinary negligence will not bar relief so long as the insurer has met its duty of good faith and fair dealing).
Second, regardless of Waste Management's argument that its obligation to pay royalties terminated with the sale of the transfer stations, they are not entitled to recovery because they are unable to prove a mistake of fact as a defense to the voluntary payment rule. See Villanueva v. Amica Mut. Ins. Co., 374 N.J. Super. 283, 287 (App. Div. 2005) ("[O]ne who has paid money under a mistake of fact but for which payment would not have been made may have restitution from the payee notwithstanding that the mistake was unilateral and a consequence of the payor's negligence, providing, however, that such restitution will not prejudice the defendant." (quoting Great Am. Ins. Co. v. Yellen, 58 N.J. Super. 240, 244 (App.