Court Opinion

ID: 5957636
Source: CourtListenerOpinion
Date Created: 2022-01-13 06:44:18.506865+00
Date Added: 2024-06-11T08:48:00.465100
License: Public Domain

Asch, J. (dissenting).
Plaintiff sustained injuries in a collision with an automobile owned by defendant N & A Taxi, Inc. (Taxi) and operated by defendant Peralta. Taxi was insured by American Transit Insurance Company (American) and plaintiff was insured by Nationwide Mutual Insurance Company (Nationwide) on the date of the accident. Commencing an action against defendants Taxi and Peralta, plaintiff received no response from them nor from American which had been forwarded a copy of the summons and complaint. Interpreting American’s lack of response to be a denial of coverage, plaintiff demanded arbitration against Nationwide under the uninsured motorist endorsement of her policy. She was awarded $8,500 on September 30, 1986, and upon payment of the award by Nationwide, plaintiff executed a release and trust agreement on behalf of Nationwide on December 10,1986.
Thereafter, American contacted plaintiff’s counsel and offered $3,000 in settlement. On advice of counsel, plaintiff executed a general release in favor of Taxi and Peralta on January 6, 1987, in return for the $3,000 consideration. After Nationwide demanded return of its $8,500 payment, because of the loss of its subrogation rights, plaintiff commenced this action to rescind the release given to American’s insureds.
The Supreme Court granted Nationwide’s motion for summary judgment on its counterclaim for the $8,500. It held that the uninsured motorist provision was never applicable since the vehicle was insured, that uninsured coverage may not be made applicable by waiver and that the arbitration was based on a mutual mistake of fact as to the status of the offending vehicle.
The sole grounds for vacating an arbitration award where the objecting party participated in the arbitration are set forth in CPLR 7511 (b) (1) as follows:
"1. The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the rights of that party were prejudiced by:
*256"(i) corruption, fraud or misconduct in procuring the award; or
"(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or
"(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or
"(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.”
While the IAS Court found that the arbitration award was based upon a mutual mistake of fact as to the insurance status of the offending vehicle, "[t]he exclusive grounds for vacating such an award are set forth in CPLR 7511, and do not include newly discovered evidence as a basis for such relief.” (Levine v Klein, 70 AD2d 532, 533.) Additionally, contrary to the conclusion reached by the IAS Court, uninsured motorist coverage may become applicable by the waiver of the insurer.
However, while the arbitration award has not been rendered void, Nationwide still retains a valid counterclaim for damages suffered by reason of plaintiff’s breach of her obligations under the trust agreement, in releasing the defendants Taxi and Peralta, American’s insureds. Further, while the plaintiff asserts that the general release given to defendants may be rescinded on grounds of a unilateral mistake of fact, equitable relief by way of rescission will be granted in the case of unilateral mistake only when the following conditions are met: enforcement of the contract would be unconscionable; the mistake is material; the mistake occurred despite the exercise of ordinary care by the party in error and it is possible to place the parties in status quo (13 Williston, Contracts § 1573, at 489 [3d ed]).
The issue of whether the plaintiff made a unilateral mistake of fact despite the exercise of ordinary care, remains a factual issue at this stage of the proceeding, and accordingly, the Supreme Court should have denied both defendant Nationwide’s motion and plaintiff’s cross motion for summary judgment.
Wallach and Kassal, JJ., concur with Sullivan, J. P.; Rosenberger and Asch, JJ., dissent in a separate opinion by Asch. J.
*257Judgment, Supreme Court, Bronx County, entered December 24, 1991, which awarded judgment to defendant-respondent in the sum of $12,657.92, reversed, on the law, without costs and disbursements, the complaint dismissed, plaintiff directed to pay Nationwide the $3,000 she received from American Transit, partial summary judgment on liability granted to Nationwide on its counterclaim, the counterclaim severed and the matter remanded for a hearing on Nationwide’s damages.