Opinion ID: 739567
Heading Depth: 2
Heading Rank: 3

Heading: Mutual Mistake and Misrepresentation

Text: 33 A party has a valid defense to a breach of contract claim based on mutual mistake of fact, but mistakes of fact do not include mistakes as to matters which the contracting parties had in mind as possibilities at the time they entered into the contract. Guthrie v. Times-Mirror Co., 124 Cal.Rptr. 577, 581 (Cal.Ct.App.1975) (citations omitted). Additionally, both negligent and innocent misrepresentations of material facts bar recovery under a contract. Id. at 584. However, an insurer waives its fraud and mistake defenses when it accepts and retains a premium while on notice of the facts alleged. See Rutherford v. Prudential Ins. Co. of Am., 44 Cal.Rptr. 697, 705-06 (Cal.Ct.App.1965). Here, it is disputed whether, as of July 1979, when Skandia received the OCF letter, Skandia was put on notice that the OCF asbestos exposure might have been broader than described in Endorsement No. 10 of the Aetna umbrella policy. It is undisputed that Skandia retained the insurance premium and made no attempt to return it until this lawsuit was initiated. There are genuine issues of material fact regarding whether Skandia waived its right to assert the defenses of fraud and mistake. Skandia is not entitled to summary judgment on these issues.