*1 A.2d 663 Partner, by its PARTNERSHIP General 1726 CHERRY STREET CORPORATION, Lopatin, and Sonia 1726 CHERRY STREET Winokur, Lopatin, of Residu- and Michael Trustees Barton J. ary Ralph Lopatin Deed of Trust Dated October Trust of Under 10, 1967, Appellants, PROPERTIES,
BELL ATLANTIC INC. Pennsylvania. Superior Court of Argued Feb. 1994.
Filed Jan. *2 appellants. for Hangley, Philadelphia, T. Willima Philadelphia, appellee. A. Baughman, Jon JOHNSON, CIRILLO, JJ. BECK and Before BECK, Judge. the issue of whether the
In this contract case we revisit of alleged- admission of evidence precludes evidence rule during negotiations ly misrepresentations fraudulent misrepresen- the alleged to written where leading agreements, subject agree- dealt with specifically tations concern a *3 that the bar of the ments. We conclude therefore, and, affirm. applies in transaction
The of this case was commercial genesis real estate were parcels City Philadelphia which two of Center Barton J. Wino- and conveyed by plaintiffs appellants, sold — kur, Cherry and the 1726 Lopatin, Lopatin Michael Sonia (the appellee, “Lopatins”), to Partnership Street defendant — (“Bell Atlantic”). parcels These Properties, Bell Atlantic Inc. Bell Atlantic assemblage of an of land on which part were building office known as the ultimately large constructed a this Lopatins commenced action “Bell Atlantic Tower.” parcels, of the sale of their shortly after the consummation conduct by that the victims of fraudulent alleging they were negotiations concerning Atlantic in the course of the Bell sale.
In the land on Bell Atlantic Tower acquire order which built, Bell Atlantic land from several purchased separately was owners, The essence Lopatins. different one of which was negotia- claim that the course of the Lopatins’ during of the agreements tions which the execution of written of preceded Atlantic parties, orally misrepresented sale between the Bell possible acquisition intentions with to its of another respect its Parcel”) (the “CIGNA of land owned CIGNA parcel in This vicinity Lopatin parcels. parcel located in the ultimately Atlantic and included purchased was Bell which Bell Atlantic Tower was assemblage of land on aware they that Lopatins constructed. The contend to the CIGNA respect of Bell Atlantic’s real intentions with Parcel, substantially higher they upon would have insisted not have sold them Lopatin parcels for the or would price all. began negotiations their Lopatins, they to the
According that wished to by taking position they Bell Atlantic with last parcels scope be the seller land.within seeking Atlantic assemblage intended of land that Bell was highest price the last seller receive the acquire because would first only agreed to be the They allege for its land. in agree- accept price to sell reflected Atlantic to the of what is agreed ments because Bell inclusion commonly referred to as .a “Most Favored Nation” clause clause, agreements. agreed those Bell Atlantic parcels to the for their would be price paid Lopatins if Atlantic adjusted retroactively acquired Bell later upward assemblage parcels proposed certain other enumerated target at a of certain stated price prices. excess the fact dispute At the of this lies heart subject that were made parcels proposed assemblage the “Most Favored Nation” clause did include CIGNA Moreover, included Parcel. the written sale “integration” clause: following *4 This constitutes the entire between instrument and no agreements, Seller and Purchaser there are or understandings, representations warranties between them as set forth except herein. Lopatins explain- any
The the omission of mention of the by claiming orally misrepre- CIGNA Parcel that Bell Atlantic Lopatins sented that the Parcel was not to be CIGNA in assemblage included and that Bell Atlantic had no Thus, of it. buying Lopatins intention the- contend Parcel in to insist on reference to the CIGNA any no reason Atlantic ulti- agreements their written of sale. When Bell of price Parcel for a excess mately purchase did CIGNA price paid Lopatins, foot it had per square fraud, or seeking damages commenced this action for Lopatins agreements or rescission of the of sale. reformation before the Honor- six-day non-jury After a trial conducted Lord of the of Common Pleas of Philadel- Craig able G. Court Atlantic, the trial court entered a verdict for Bell phia County, claims barred having Lopatins’ concluded that all of the were parol parol as a matter of law evidence rule. has described as follows: generally parties agreement adopt writing to an a as the Where here, complete expression agreement, final and of their as of to the formation of the negotiations leading is inadmissible to show an intent at variance with language agreement. Alleged prior of the written or contemporaneous representations agreements oral or con- subjects that are dealt cerning specifically with written contract are in or merged superseded integration contract. The effect of an clause is to make the particularly applicable. evidence rule Thus the writ- contract, if unambiguous, express ten must be held to all of conversations, negotiations, prior execution, oral nor testimony, its neither writ- agreements, writings, explain ten or other admissible of the contract. vary the terms Inc., Schneider, 49, Pa.Super. McGuire 348 — (1987) (citations omitted). A.2d 117-18 supported application the trial court its thorough opinion evidence rule in which the attempted synthesize Pennsylvania court law regarding specific question operate how the rule is meant to a case where, here, as fraud in the inducement of a contract Since the trial court entered alleged. judgment appellee alone, as matter law based on the evidence rule we review the trial court’s action to determine if it was purely *5 of the law interpretation pertinent on an erroneous
based issue. specific this authorities, the trial court discussed numerous
Although Pennsylvania prece- vast amount of attempting to reconcile a issue, opinion found that the ultimately on this court dent The in Bardwell v. Pennsylvania Court of Supreme controlled 375 Pa. Company, Willis Bardwell, premises leased business plaintiffs this case. financial sought to recover certain from defendants. Plaintiffs had allegedly had suffered because defendants they losses the condition of leased orally fraudulently misrepresented were made dur- allegedly The premised. misrepresentations lease, but to the execution ing negotiations leading in lease The Bardwell court were included itself. not relief, opining: plaintiffs denied repre- or oral alleged prior contemporaneous Where subject which agreements specifi- or concern a is sentations contract, the written cally with in the written dealt entire contract covers or cover the purports now and well settled that parties, clearly the law is oral alleged accident or mistake the the absence merged superseded or or representations contract, parol evidence subsequent supercede or the written contract is inadmissi- vary, modify ble in evidence. if slightest plaintiffs doubt
There is falsity alleged representa- oral merely averred the tions, would have been inadmissible. evidence thereof oral further averred that these plaintiffs Does the fact averring made without representations fraudulently were accident or fraudulently were or mistake subsequent from the written contract complete omitted testimony to make the admissible? The answer to suffice “no”; if it were question otherwise mockery, become a all a to the would because avoid, modify nullify have to written contract would do (and prove) representa- it to aver that the false would be fraudulently tions made. were rule has had a checkered career *6 wisely it been well and settled Pennsylvania. Now that has permit we will not it to be evaded and undermined such misrepresentations may proved tactics. Fraudulent be if it averred and modify or a written contract is avoid from the written proved (complete) that were omitted fraud, accident or mistake. contract omitted) (citations 506-07, 100 and footnotes Id. at A.2d in (emphasis original). sum,
In Bardwell the admission of permits in concerning subject dealt with representations integrated agreement and made to or contem modify or poraneous agreement with the execution of the only alleged of that where it is agreement avoid the terms representations that the that those would be parties agreed included in the written but were omitted agreement commonly or This is referred to as “fraud accident mistake. in execution” the the evidence party proffering the because that the because he or contends he she executed that the document by being she was defrauded led believe actually contained terms that were signing he or she was is to from a distinguished omitted therefrom. Such a case one, in case such as the instant where “fraud the inducement” prior representa the of additional party proffering evidence that the addi parties agreed tions does not contend that the agreement, in the written but representations tional would be fraudulently were representations rather claims that the them, he or she never would have entered and that but for agreement. into the in legal dispute continuing
The crux of the this case is the words, of this In other is vitality clearly expressed principle. Pennsylvania Bardwell the law of today? Appellants argue overruled, has been it is although actually Bardwell never longer Appel- nevertheless no the law of this Commonwealth. lants on cases such Auto rely Berger Pittsburgh Equip- as Co., shortly ment 387 Pa. decided after Bardwell. the defendant executed a lease of Berger, space, allegedly representation on the storage reliance strong floor in leased area was plaintiff lessor intended enough weight goods defendant support representation The was included alleged store there. lease, ever intended alleged parties nor was it of the floor turned out strength that it be included. When and lessor inadequate, premises to be defendant vacated under lease. sought to recover the balance of rent due clearly following conflicting court Berger expressed rule without ever Bard- mentioning view of the well: that, prelimi- contention since all principal
Plaintiffs
merged
nary negotiations and verbal
contract,
lease
superceded by
subsequent written
and,
parties,
the entire
between
constituted
*7
mistake,
in
of an
of
accident or
the absence
averment
by
to
from
its terms could not be added
nor subtracted
a total
of what is
misconception
evidence. This is
...
petition alleges
involved
this
What the
[in
case].
made,
promise
agreement
not a contractual
plaintiff
in
which should have
contained
the written lease
a
by
testimony,
could not be added
it
oral
but
therefore
of
floor
strength
of an
fact as
the
the
existing
statement
A
of
a materi-
storage purposes....
misrepresentation
made,
fact,
innocently
upon by
if relied
the
though
al
even
be,
that it
the
upon
as intended
should
confers
party
falsity
the
when
right
the
rescind
contract
the
latter
of the evi-
purpose
is discovered.
representation
vary
not to alter or
presented by
here
defendant was
dence
instrument,
but to rescind it in its
the terms of
written
alleged
misrepresentation
entirety because
factual
to enter into it.
which induced defendant
omitted.)1
(citations
64-65,
Id.
149 if the agreement party to execution of written by the agreement to enter the that he was induced alleges however, may party misrepresentations provided, rather but achieve a reformation thereby words, In other only. obtain total rescission may theory on the proceed must asserting misrepresentations agreement, induced the misrepresentation that since the injured option is void or voidable at party. recognized Berger the trial court
In the instant
Supreme
decided
Court
and certain other cases
signal
departure
early
appeared
late fifties and
sixties
fraud in the induce
admitting evidence of
from Bardwell
Co.,
Music
v. J.M.
Highmont
Corp.
ment. See also
Hoffman
(1959). Nevertheless,
345, 155
trial court
363
397 Pa.
A.2d
that Bardwell was resuscitated
in the instant case concluded
Palmer,
432 Pa.
Court Nicolella
Supreme
1968
(1968),
consis
502,
fairly
20
and thereafter has been
248 A.2d
involving
court
in cases
sales
tently applied by
except
Schneider,
See,
alia, McGuire v.
defective real estate.
inter
curiam,
Inc.,
per
Pa.Super.
aff'd
Kessler,
(1988);
LeDonne v.
519 Pa.
548 A.2d
(1978).
280,
defendant’s
*8
signed
a
time before he
the
long
cations he had reviewed
that
alleged
and commenced work. He
construction contract
if any
contract
substantial
signed
before he
the
he asked
in the
had. been made and was told that
changes
specifications
made,
contract
any
had been but if
were thereafter
the
none
adjusted accordingly.
commencing
would be
After
work
price
had
specifications changes
discovered that substantial
plaintiff
prior
signing
commencing
been made
to his
the contract and
completed
job,
he sued defen-
Although plaintiff
work.
as a
compensation
for the additional
he felt he was due
dant
Nicolella,
in the
432 Pa.
changes
specifications.
result of the
504-05,
at
terms his defendant alleged by statement prior evidence of parol ie., price and that concerning subject, specifications, a terms length at covered The Court agreement. quoted was of that could not support plaintiff from Bardwell its decision on of since relying recover statements had those statements were fraudu plaintiff alleged not that 506-08, 248 agreement. from the written Id. at lently omitted A.2d 22-23. argue the trial they are incorrect when that
Appellants as a construing court erred in Nicolella clear reaffirmation view, In appellants’ in Bardwell. expressed the broad rule only may vary a the terms party Nicolella establishes that not integrated agreement of an written based on precontractual According appellants fraudulent Ni- misrepresentations.2 holding Berger colella does not alter the and reaffirms the rescinding not barred from proposition agreement misrep- based on fraudulent precontractual words, In admissible to resentation.3 evidence is yoid voidable of fraud show the contract was because Appellants attempt demonstrate' that inducement. consistently apply decided after Nicolella Pennsylvania cases the same principle. barring parol vary evidence to
2. The distinction is between admitting parol prove agreement evidence to fraud in terms parties In the former case the are bound terms inducement. theory agreement. that since fraud latter case holds Therefore, being. agreement no valid came into induced alleged admissible to that the is void. evidence is show carry through Interestingly appellants explaining do the rele- Appellants’ complaint of this to this vance distinction case. alternative- ly sought damages they if in the amount would have received parcel CIGNA had been included in the Most Nation Clause Favored adjustment (precisely price sought by the kind Nicolella agreement. plaintiff), We or reformation or rescission of the would appellants’ import argument they understand the much better price adjustment sought plea abandoned alone, for a rescission their appear arguing since it would are now that under provide only remedy law will them. Nicolella this is the
151 Pennsylvania We, too, consistency to find attempted have examination alleged. fraud is Our cases where evidence parol conclude that reluctantly to cases has led us of the pertinent yield per cases can analysis of the intellectually sound no Substantively identical of principles. consistent set fectly they have differently because cases have been decided different starkly the two one or the other of analyzed under in Bardwell expressed parol of the evidence conceptions or Berger.4 therefore, rely we cannot on
In this deciding accounts for and rule that parol analysis Rather, we the issue. every case that addresses reconciles from emerges overriding pattern analysis rely on the cases re- on certain particular emphasis with precedent, cases, has panel court. these cently decided Nicolella, has in one such case and applied Bardwell arising from conflicting that the doctrine expressly stated appear to be longer decisions would no Berger/Highmont under convince us that These decisions Pennsylvania.5 law of formulation of the appropriate this case the the facts of in Bardwell. to be is the one enunciated applied evidence rule fray question have reached entered the on this 4. Other courts that have Court of thoughtful opinion issued In a the same conclusion. 1981, Judge irreconcil- Weis found an Appeals Third Circuit in for the Highmont. Berger and and cases like conflict between Bardwell able (3d Cir.1981). Laboratories, Hines, 407-08 647 F.2d Inc. v. Betz poorly rea- that Bardwell was Interestingly, Court also concluded and, Pennsylvania, would Supreme Court of revisited soned if not be followed. although Supreme the outset of this discussion 5. We note at any presented case in recent the issue in this Court has not discussed decisions, Trust guidance from the fact that in Resolution we take some Redevelopment Authority, Pa. 638 A.2d Corporation v. Urban support of a Nicolella v. Palmer in the Court did cite to Although the Court did general evidence rule. definition operates in the face on the issue of how the rule not render a decision claim, ultimately decided the case the inducement of a fraud in rule, nevertheless grounds than the before it on continuing conveys convic- at least the Court's the citation to Nicolella viability of that decision. tion of the *10 The most of these cases is McGuire v. noteworthy first and Schneider, Inc., 344, (1987), A.2d 115 which Pa.Super. 368 534 opinion by Supreme the Court. was affirmed without (1988). Schneider, Inc., 439, v. 519 Pa. McGuire McGuire, In that his had employee employer claimed by forth in a sent employment violated terms of set letter the understandings certain employer employee to the which However, several between them had been memorialized. into a parties months letter was entered after the sent containing fully integrated employment agreement written employee attempted different avoid exclusion terms. of evidence of the letter under the evidence employment contract the alleging prior executing that orally represented employee to the employer had 368 actually govern employee’s employment. letter would 351-53, 347-49, 116-17, In Pa.Super. 534 A.2d at at claim, panel held: response to is without merit. Bardwell v. Willis Appellee’s argument 503, 507, 102, (1953), Pa. 100 A.2d 104 our Company, 375 if a contract Supreme only party Court held to a final, averred that a omitted promise from accident, or could written contract because mistake After subse properly admitted. several different suggested e.g., which quent approach, decisions Co., 61, 64- Berger Pittsburgh v. Auto 387 Pa. Equipment Scoratow, 65, 334, (1956); 412 Nadolny 127 335 v. Pa. A.2d 488, 87, 491, Supreme 89 Court reas 195 A.2d Palmer, v. Pa. holding serted Bardwell in Nicolella 432 (1968). 502, 20, 507-8, A.2d 22-23 This court has 248 held that the assertions forth subsequently put where party specifically agree one contradicted ment, applies Bardwell and admissible execution, inducement, only prove fraud not the 6, Miller, 10, the contract. Abel v. 437 A.2d Pa.Super. 293 963, (1982); Kessler, 280, 965 LeDonne v. 256 294 Pa.Super. (1978). 1123, 1130 n. A cannot & 389 A.2d & n. 10 justifiably rely upon prior representations, yet sign oral contract the existence of those denying representations.
153 Kessler, at n. 389 A.2d at 294 LeDonne Pa.Super. understanding, any on “If relied plaintiffs 1130 n. 10. to the or representations promises, ..., should have they contract of the written execution agree- in the written by incorporating themselves protected now they which representations upon promises ment the which provisions should have omitted rely, and Bardwell v. nullify.” repudiate they now desire 508-09, A.2d at 105. Pa. at Company, Willis in original). 352-53, (emphasis at 119-20 Id. 534 A.2d could the McGuire court Thus, employee held that super- was preceded, terms of the letter rely on the *11 employment agreement. fully integrated by, ceded Id. Bard- after McGuire also applied have
Cases decided fraudulent allegedly on evidence of well to foreclose reliance & In Iron Worker’s Sav. misrepresentations. precontractual Inc., IWS, 255, 424 Ass’n v. Pa.Super. Loan the written (1993), of this court enforced panel for a example, despite against the debtor promissory of a note terms fraudulent orally and that the creditor allegation debtor’s the note would that the written terms of the debtor ly assured the Bardwell so, applied the court doing enforced. not be specifical that are rule, representations of excluding evidence fraud in the unless the written ly by contradicted Id. at 264-66, A.2d at 372.6 622 alleged. is execution in what have been approach has been taken different 6. A somewhat Kessler, cases”, namely, LeDonne v. inspection to as "the referred progeny. and its The LeDonne Pa.Super. A.2d 1123 estate, real for the sale of involve written line of cases residential, Despite integration clauses. always that contain almost clauses, permitted the admission of court has in some cases these this concerning the condition of representations by sellers of oral evidence prove test enunciated for this property that later to be untrue. The court, case, balancing requires a of type the LeDonne of as stated knowledge objectionable conditions de- parties' of "the extent of coverage against of inspection the extent rived from a reasonable integration to determine whether clause in order the contract’s insisting rely upon representations without justifiably oral party could overly of an broad protection the deletion upon further contractual or rasa, might appellants a we with agree Given tabula a permit parol the better would avoid view To from induced. shield a fraudulently contract justified by fraud or her cannot be consequences his certainty in evidence erodes admit argument (Second) of The Restatement Contracts contractual relations. where fraud recognizes § 214 the admission . alleged: contemporaneous to or Agreements negotiations and evidence to adoption writing with the of a admissible (d) mistake, duress, lack ... illegality, establish cause____ invalidating consideration Id., Comment c: complete binding integrated appears
What to be may ... Such invali- voidable fraud.... on dating commonly appear causes need not and do not even They face of the are not affected writing. “merger” clause.7. find, court,
Nevertheless, as did trial that the we and, us is its governed by progeny case before Bardwell and therefore, the offered in case is parol evidence inadmissi parties, In the all of whom were both ble. instant counsel, legal negotiated sophisticated represented integration clause.” 389 A.2d at See also Mancini v. Id. at *12 Morrow, (1983) LeDonne). (applying A.2d 580 Pa.Super. 458 Clearly parol the rule was crafted be- this formulation of evidence estate, especially unsophisti- buyers of real cause the court realized that estate, incapable buyers pragmatically are cated of residential real they ascertaining property buying. are fully physical the condition the hand, customarily posses- property, Sellers of such on the other are concerning of all the information the condition of the sion available Thus, property. to the court has refused enforce the evidence deny simply rule in so strict a manner as to relief who could entirely protect eventually from the suffers. himself harm he find We do not LeDonne instructive as to the instant which entirely presents clearly an factual LeDonne different scenario to which apply. was not intended to permit interpreted This section of the has Restatement the prove admission of fraud in the inducement. See evidence Betz, 408; Contracts, (3d § supra, Murray on 85A F.2d at ed. 1990). Lopatins’ parcels. the the sale of concerning length some of the subject whether concerning dispute no There is Although negotiations. of these part formed a Parcel CIGNA of the subject was said on as to what disagree parties specifical- parcel of that Parcel, that the fate agree all CIGNA agree- their committed parties discussed. Once ly was however, no writing, integrated fully a final and ment made, any provi- nor was Parcel was of the CIGNA mention Although to be included. intended parcel that regarding sion price a possible and of paid to be price subject acquired parcels later paid was on what adjustment based agreement agreement, addressed specifically was of the CIGNA acquisition provide did not simply agreement adjustment. such trigger Parcel would a price as to which parcels list of contains an exclusive is not Parcel and the CIGNA triggered adjustment might that it is Moreover, states of them. one are no repre- that there entire parties’ them. betwéen understandings sentations to do is seek Lopatins what the circumstances Under these rule forbids: evidence Pennsylvania parol, what the exactly fully integrated in a representation of a prior admit on what rely intended to Lopatins If agreement. written representation centrally important was a now contend they negotiations in the course Atlantic conveyed by Bell transaction, real estate commercial multimillion dollar over a representation insisted that should have Lopatins then the They agreement. integrated in their be set forth were parol evidence eliciting from now barred the contracts. entering into fraudulently induced affirmed. Judgment J., statement.
JOHNSON, concurring files a JOHNSON, Judge, concurring. colleague’s distinguished of my in so much readily
I concur validity continuing as finds Opinion fraudu- allegedly of evidence of rule’s preclusion *13 to during negotiations leading misrepresentations lent my with myself agree I find unable agreements. law should be modified Pennsylvania view that colleague’s in the inducement evidence of fraud permit admission of such evidence to fraud rather than limit the admission the execution. trial most recognizes, distinguished Beck Judge
As Inc., as a Properties, Bell Atlantic judgment court entered law, evidence rule alone. We upon matter of based its own being Atlantic shielded from are not faced with Bell required was not to reach since the trial court confront the required issue. Had the trial court issues, have found that might very it well credibility credible, in which case the was less than Lopatins’ testimony collapsed. of fraud would have allegation Moreover, that we would allude I am concerned (Second) § to which no mention Restatement of Contracts 214, this Court or been made either previously or citation has my colleague court. I do not understand supreme our state in this Opinion this Court’s through that section adopting nor a presented, I the facts have been and do not believe argument for such support that would developed, record adoption. Plauchak, Ann K. his wife PLAUCHAK and
Michael S. Boling, wife, Appellants. and Linda L. his W. BOLING Gerald Pennsylvania. Superior Court of Argued Nov. 1994.
Filed Jan.