Opinion ID: 2204851
Heading Depth: 3
Heading Rank: 3

Heading: Kingik's Waiver Of Survivor Benefits Was Effective.

Text: Kingik argues her waiver of survivor benefits is invalid because the waiver form she signed is confusing and misleading. Kingik testified that she thought the Application for Retirement Benefits form's waiver only affected her right to receive dental and vision coverage through PERS. She explained that her understanding of the waiver's effect was based on conversations she had with Welch where, she alleges, Welch assured her that she would receive surviving spouse benefits and medical coverage after he died. Kingik admitted that she [m]ost likely did not read the form before signing it. The Division argues that, despite Kingik's subjective misunderstanding, the waiver is objectively clear and effectively describes the rights spouses relinquish by signing it. The clarity of the Division's waiver form is a legal question we review de novo. [14] Both parties cite to ERISA regulations governing waiver and agree that the waiver language on the form Kingik signed was required to describe or explain the right the spouse is giving up and affirmatively state that the spouse is giving up a right rather than contain generalized and indeterminate language. [15] The ALJ concluded that the waiver form reasonably describes or explains the right the spouse is giving up and is very clear in categorizing three options as `Survivor Options.' Directly under the section where the member selects his or her retirement benefit option, the form cautions: IMPORTANT. . . ALL BENEFITS INCLUDING MEDICAL COVERAGE WILL CEASE UPON DEATH OF THE APPLICANT if a survivor option is not selected. (Emphasis in original.) Following this warning, the form contains a section entitled SPOUSE'S WAIVER OF SURVIVOR OPTION with a signature line for the spouse to acknowledge and approve the benefit selected and to freely waive entitlement to continuing survivor benefits . . . upon the death of the named applicant. (Emphasis in original.) Because the survivor options are clearly designated, because the form unambiguously warns that all benefits including medical coverage will cease on the applicant's death if a survivor option is not selected, and because the form contains a clearly-worded waiver clause, we agree with the ALJ that the waiver plainly and adequately describes both the rights and the effect of signing the form. Although we do not believe the Application for Retirement Benefits form's layout or language obfuscates the meaning of the waiver Kingik signed or the validity of Welch's election, we agree with the ALJ that the Division's forms could be improved. For example, some of the Application for Retirement Benefits form's language is arguably internally inconsistent. The form's waiver section states that [i]f you are married, the waiver below must be completed to select a regular income benefit. But the term regular income benefit is not an option; this phrase appears nowhere else on the form. The Division's forms could be improved, but we agree with the ALJ's conclusion that the Application for Retirement Benefits form describes the rights Kingik relinquished by signing the waiver. We are satisfied that the form adequately explained that Kingik's benefits would stop upon Welch's death if no survivor option was selected.
Kingik argues that she is entitled to void the waiver because she was mistaken as to its basic assumption  that signing it would affect her right to receive survivor benefits. The Restatement (Second) of Contracts § 154 explains that a party bears the risk of the mistake when: (a) the risk is allocated to him by agreement of the parties; or (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient; or (c) the risk is allocated to him by the court on the ground that it is reasonable under the circumstances to do so. [16] Kingik argues that she does not bear the risk of her mistake under Restatement § 154(b) and (c). Regarding subsection (b), she argues she was not aware that she had only limited knowledge with respect to the facts to which the mistake related because she believed she was waiving one thing when she purportedly waived another. The Division counters that Kingik bore the risk of the mistake because she acted with what she knew was limited knowledge but treated that knowledge as sufficient. Kingik's admission that she [m]ost likely did not read the waiver form or other parts of Welch's retirement application undermines her ability to claim mistake as a defense. If she did not read the waiver, she must have known she was acting with limited knowledge of the contents and meaning of the contract, yet her signature indicates that she treated her knowledge of it as sufficient. Under these circumstances, the law requires that Kingik bear the risk of her mistake. Kingik also argues that the risk of error should be allocated to the Division under Restatement § 154(c) because it was the Division's duty to appropriately inform [Welch] of his rights, and because it is the Division's forms which caused the mistake in this case. We have subscribed to the principle that the risk of mistake should be borne by the party who has the greater interest in the consequences of a contract term. [17] The Division had no financial interest in Welch's election because its liability under each option was actuarially equal. The superior court observed that [i]t seems fair to say that the information about what rights were being waived was of great importance to [Kingik] while of lesser importance to [the Division], so under the facts of this case, the risk of mistake should be assigned to [Kingik]. Given the relative disparity in the parties' interests, we agree that Kingik properly bore the risk of her unilateral mistake.
Kingik alleges that she did not subjectively intend to waive anything other than dental and vision coverage. Therefore, she argues, there was no meeting of the minds on the essential terms of the offer and she did not form a valid contract with the Division. Contract formation is a legal question not involving agency expertise, so we apply the substitution of judgment standard of review. [18] Mutual assent is an elementary requirement of an enforceable contract. [19] An agreement to a contract may be imputed based on the reasonable meaning of a party's words and acts. [20] Because a contract is assessed under an objective standard, if a party objectively manifested an intention to be bound by the terms of a contract, that assent cannot be defeated by evidence of the party's . . . subjective contrary intentions. [21] Kingik signed and notarized a waiver that contained a plainly worded clause stating that her benefits would cease unless a survivor option was selected. Her signature was an objective manifestation of intent sufficient to create an enforceable contract with the Division. Only Kingik's objective manifestations of intent may be considered. [22] Her unexpressed subjective intentions are irrelevant to the mutual assent analysis as a matter of law. [23] Therefore, the contract does not fail for lack of mutual assent. Finally, Kingik argues that she and the Division had a material misunderstanding and that this misunderstanding prevented contract formation. She points out that while the Division intended the waiver to be a waiver of survivor benefits, she only meant it to waive her vision and dental benefits. The Restatement (Second) of Contracts § 20 recognizes an exception to the normal mutual assent rules for certain misunderstandings. Under the Restatement, [t]here is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and. . . neither party knows or has reason to know the meaning attached by the other. [24] This portion of Kingik's argument fails because, as the Division points out, it had no way of knowing that Kingik subjectively intended to waive only vision and dental coverage, but Kingik did have reason to know that the Division intended the waiver to affect her survivor benefits. Indeed, the waiver Kingik signed contained no reference to dental or vision coverage, but it did include express language regarding waiver of survivor benefits. The Restatement's exception for misunderstandings does not support Kingik's claim.