Lead Opinion
{¶ 1} This case presents the question of whether the purchaser of an automobile may use parol evidence to contradict the terms of a final written purchase agreement in a Consumer Sales Practices Act action against an automobile dealer who allegedly failed to integrate an oral representation into the final written purchase agreement. Absent fraud, mistake, or other invalidating cause, a final written agreement may not be contradicted by evidence of a prior or contemporaneous oral agreement, and therefore a consumer may not use parol evidence to contradict the final written agreement to prove a violation of the Consumer Sales Practices Act. Accordingly, we reverse the judgment of the court of appeals.
{¶ 2} In October 2004, appellee Reynold Williams Jr. purchased a 2004 GMC Yukon SLT from appellant Spitzer Autoworld Canton, L.L.C. The purchase agreement specified that appellee would receive a trade-in allowance of $15,500 for his 2003 Ford Explorer and also contained a merger clause, providing that it comprised the entire agreement between the parties. Almost two years later, Williams filed this action in the common pleas court alleging, among other claims, that Spitzer violated the Consumer Sales Practices Act (“CSPA”), R.C. Chapter 1345, by not integrating a prior oral agreement — that he would receive a trade-in allowance of $16,500 for the Ford Explorer — into the purchase agreement. Although he admitted at trial that on the final written purchase agreement, the “trade allowance is about as bold of print there as anywhere on that form,” Williams explained that he did not notice that the contract provided a trade-in allowance of $15,500 rather than the promised $16,500 because he had focused on whether he could afford the monthly payment. According to Williams, he did not discover the discrepancy until weeks later, when the dealership informed him that his financing had been declined and that he owed an additional $2,000 to pay off the loan secured by the Explorer. However, even though he believed that he had received too little for his Explorer, he brought the dealership two separate checks for $1,000 each.
{¶ 3} At trial, Thomas Capozzi, the salesman who sold the Yukon to Williams, testified that he had not promised Williams a $16,500 trade-in allowance for the Explorer, and the finance manager who worked on the deal explained that he had gone over the information on the final purchase agreement with Williams, including the $15,500 trade-in allowance and the final purchase price of the Yukon. In rebuttal, Williams testified that no one went through the purchase agreement with him line by line and that he did not agree to a trade-in allowance of $15,500.
{¶ 4} The jury found that Spitzer knowingly violated the CSPA by orally promising Williams $1,000 more than it provided in the written purchase agreement, and it awarded him $2,500 in compensatory damages. The trial court entered a judgment in favor of Williams, imposed treble damages pursuant to R.C. 1345.09(B), and awarded attorney fees.
{¶ 5} Spitzer appealed, contending that the parol evidence rule barred introduction of evidence of a prior oral agreement relating to a trade-in allowance that contradicted the written purchase agreement for the Yukon. The Fifth District Court of Appeals rejected that argument and affirmed the judgment, holding that the parol evidence rule does not apply to a claim brought pursuant to the CSPA “ ‘ “because the claim is based not on the contract, but on oral or other misrepresentations.” ’ ” Williams v. Spitzer Auto World Canton L.L.C., Stark
{¶ 6} We accepted Spitzer’s discretionary appeal to determine whether the parol evidence rule applies to actions brought pursuant to the CSPA and precludes evidence of a prior oral agreement that contradicts a final written agreement. Williams v. Spitzer Autoworld Canton, L.L.C.,
Proposition of Law
{¶ 7} Spitzer contends that the parol evidence rule applies to CSPA claims arising out of contractual relationships and that it prohibits testimony regarding prior oral agreements that specifically contradict terms in the final written contract. It asserts that applying the parol evidence rule to Williams’s claim upholds the enforceability of written contracts and does not jeopardize the legislature’s purpose in enacting the CSPA because the exceptions to the parol evidence rule (to supply a missing term, to clarify an ambiguity, and to vitiate a contract when fraud is involved) adequately protect consumers.
{¶ 8} Williams maintains that he did not offer parol evidence to contradict or invalidate the contract; instead, he claims that he sought to prove that Spitzer committed an unfair or deceptive act when it failed to integrate a prior oral agreement regarding the trade-in allowance into the written purchase agreement. He argues that common law contract defenses do not apply to statutory causes of action such as the CSPA, and he emphasizes that regulations promulgated by the attorney general expressly make it a deceptive and unfair act for a dealer not to integrate all oral promises made to the consumer into the written contract. Further, Williams cites authority from other jurisdictions in support of the proposition that the parol evidence rule does not apply to claims brought pursuant to consumer protection statutes when an oral representation is the basis for the claim.
{¶ 9} We are therefore called upon to resolve the question whether the parol evidence rule applies to claims brought pursuant to the CSPA and bars testimony regarding prior oral representations that contradict a final written contract when the alleged unfair or deceptive act is the failure to integrate the oral representations into the signed writing.
{¶ 10} The CSPA prohibits unfair or deceptive acts and unconscionable acts or practices by suppliers in consumer transactions whether they occur before, during, or after the transaction. R.C. 1345.02(A) and 1345.03(A). The parties do not dispute that the sale of the Yukon involved a consumer transaction by a supplier regulated by the CSPA.
{¶ 11} The General Assembly has delegated authority to the attorney general to “[a]dopt, amend, and repeal substantive rules defining with reasonable specificity acts or practices that violate sections 1345.02 [and] 1345.03 * * * of the Revised Code.” R.C. 1345.05(B)(2). Pursuant to this authority, the attorney general has promulgated Ohio Adm.Code 109:4-3-16(B)(22), which makes it a violation of the CSPA for a “dealer * * * in connection with the advertisement or sale of a motor vehicle, to * * * [flail to integrate into any written sales contract, all material statements, representations or promises, oral or written, made prior to obtaining the consumer’s signature on the written contract with the dealer.”
{¶ 12} However, Williams relies on parol evidence to' establish his claim that Spitzer failed to integrate an oral agreement relating to the trade-in allowance into the written purchase agreement. The parol evidence rule provides that “ ‘absent fraud, mistake or other invalidating cause, the parties’ final written integration of their agreement may not be varied, contradicted or supplemented by evidence of prior or contemporaneous oral agreements, or prior written agreements.’ ” Galmish v. Cicchini (2000),
{¶ 13} This transaction also falls under the Uniform Commercial Code (“UCC”), which regulates the sale of goods. The UCC’s parol evidence rule provides, “Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement * * *.” R.C. 1302.05. In addition, “[t]he Code does not displace pre-Code law governing evidence in general, nor the admissibility of parol evidence in particular.” (Footnotes omitted.) 1A Anderson on the Uniform Commercial Code (3d Ed.1996) 765, Section 2-106:7; see also 11 Williston on Contracts at 581 (“Cases interpreting the Code’s parol evidence provisions indicate that, except to the extent the admissibility of evidence of a course of dealing, usage of trade and course of performance are concerned, they
{¶ 14} As we have explained, “[t]he parol evidence rule is a rule of substantive law that prohibits a party who has entered into a written contract from contradicting the terms of the contract with evidence of alleged or actual agreements. ‘When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.’ ” (Citation omitted.) Ed Schory & Sons, Inc. v. Soc. Natl. Bank (1996),
{¶ 15} Courts have taken the view that as the prohibitions of the parol evidence rule are a matter “ ‘of substantive law and not a mere rule of evidence, testimony introduced in violation of the rule, even in the absence of objection thereto, can be given no legal effect.’ ” 11 Williston on Contracts at 581, quoting Natl. Sur. Corp. v. Curators of Univ. of Missouri ex rel. Paul Mueller Co. (C.A.8,1959),
{¶ 16} Further, we have previously recognized that the parol evidence rule has application to claims beyond those sounding in contract. In Ed Schory & Sons,
{¶ 17} The court of appeals, relying on a decision of the Second District Court of Appeals, concluded that the parol evidence rule has no application in the context of an action alleging a violation of the CSPA. Williams,
{¶ 18} Nor has the General Assembly delegated authority to the attorney general to abrogate the parol evidence rule. “ ‘Rules promulgated by administrative agencies are valid and enforceable unless unreasonable or in conflict with statutory enactments covering the same subject matter.’ ” Hoffman v. State Med. Bd. of Ohio,
{¶ 19} Here, Ohio Adm.Code 109:4-3-16(B)(22) provides that an automobile dealer violates the CSPA if it fails to integrate all oral representations and promises made prior to obtaining the consumer’s signature on the written contract into that contract. To the extent that Ohio Adm.Code 109:4-3-16(B)(22) conflicts with the parol evidence rule as codified by R.C. 1302.05 and allows parol evidence contradicting the final written contract, Ohio Adm.Code 109:4-3-16(B)(22) constitutes an unconstitutional usurpation of the General Assembly’s legislative function and is therefore invalid.
{¶ 20} The parol evidence rule applies to actions brought pursuant to the CSPA, and absent proof of fraud, mistake, or other invalidating cause, a consumer may not present extrinsic evidence contradicting the parties’ final written contract to prove a violation of that act. Here, Williams testified that Spitzer
Conclusion
{¶ 21} Like the common law parol evidence rule, the parol evidence rule codified by R.C. 1302.05 serves to ensure the stability, predictability, and enforceability of finalized written contracts. The rule promulgated by the attorney general in Ohio Adm.Code 109:4 — 3—16(B)(22) seeks to protect consumers from unscrupulous sales practices and to prevent sellers from making oral promises secure in the knowledge that the parol evidence rule would render those promises unenforceable. However, it is the role of the General Assembly, rather than the attorney general or this court, to declare the policy of the state of Ohio. See State ex rel. Curtis v. DeCorps (1938),
{¶ 22} Thus, the administrative rule promulgated by the attorney general is not enforceable because it is in conflict with a statute, and the parol evidence rule applies to claims alleging violations of the CSPA. Accordingly, we reverse the judgment of the court of appeals.
Judgment reversed.
Concurrence Opinion
concurring.
{¶ 23} I join the majority opinion in all respects. I write separately to explain why I believe that the facts in this case distinguish it from some other situations in which the parol evidence rule does not bar the admission of certain evidence to support claims made under the Consumer Sales Practices Act (“CSPA”). In
{¶24} In essence, the court of appeals resolved the issue of this case by holding, with minimal analysis, that the parol evidence rule is inapplicable to all claims brought under the CSPA. Williams v. Spitzer Auto World Canton L.L.C., Stark App. No. 2007 CA 00187,
{¶ 25} As the majority notes, the parol evidence rule states that “ ‘absent fraud, mistake or other invalidating cause, the parties’ final written integration of their agreement may not be varied, contradicted or supplemented by evidence of prior or contemporaneous oral agreements, or prior written agreements.’ ” Galmish v. Cicchini (2000),
{¶ 26} The parol evidence rule is a principle of substantive law providing that “ ‘a writing intended by the parties to be a final embodiment of their agreement cannot be modified by evidence of earlier or contemporaneous agreements that might add to, vary, or contradict the writing.’ * * * The rule ‘operates to prevent a party from introducing extrinsic evidence of negotiations that occurred before or while the agreement was being reduced to its final written form,’ * * *and it ‘assumes that the formal writing reflects the parties’ minds at a point of maximum resolution and, hence, that duties and restrictions that do not appear in the written document * * * were not intended by the parties to survive.’ ” Bellman v. Am. Internatl. Group,
{¶ 27} Galmish sets out the primary situations in which the parol evidence rule does not apply. These include occurrences involving fraud or mistake and a contract that is not truly a “ ‘final written integration of [the parties’] agreement.’ ” Galmish,
{¶ 28} An “integration” for these purposes is “[t]he full expression of the parties’ agreement, so that all earlier agreements are superseded, the effect being that neither party may later contradict or add to the contractual terms.”
{¶ 29} This case specifically involves a contract that the parties intended to be a final and complete integration of their agreement, and Williams is attempting to contradict an express term of that contract. His only support for his position is his allegation that an oral agreement regarding the trade-in value of his vehicle reached prior to the execution of the final contract is different from the trade-in value term that appears in the final contract.
{¶ 30} In some cases, an exception to the parol evidence rule will apply when it is asserted that the final contract is only a partial integration of the parties’ agreement and that a term that should have been included in the contract was not included. In certain situations of this type, the plaintiff is permitted to offer extrinsic evidence regarding the alleged missing term. See, e.g., Patrick v. Ressler, 10th Dist. No. 04AP-149,
{¶ 32} The situation in this case is fundamentally different from the situation considered by the Second District Court of Appeals in Wall,
{¶ 33} In Wall, the plaintiff claimed that the auto dealership from which she had purchased her vehicle promised to pay off her home-equity line of credit that she had taken out to finance the vehicle she was trading in to the dealership. Id. at ¶ 20, 22. This alleged promise was not reduced to writing, and the purchase agreement did not mention anything about such a payoff. Id. at ¶ 23-24.
{¶ 34} Wall states that “[u]nder her CSPA claims, Wall is not attempting to enforce the oral representations made by Planet Ford as part of her contract, but is claiming that Planet Ford’s representations amounted to an unfair, deceptive, and unconscionable act in connection with a consumer transaction, in violation of the CSPA. The parol evidence rule is irrelevant in this sense.” Id. at ¶ 26. Even though it expressed some skepticism about Wall’s version of the facts, the appellate court concluded that the trial court had improperly awarded Planet Ford summary judgment because Wall’s CSPA claim raised a genuine issue of material fact. Id. at ¶ 27.
{¶ 35} Regardless of whether Wall was correctly decided, Wall does not support the sweeping proposition, asserted by the court of appeals herein, that
{¶ 36} The first paragraph of the syllabus of the majority opinion accurately states the holding that Ohio Adm.Code 109:4-3-16(B)(22) can have no effect to the extent that it is susceptible of the interpretation that the administrative rule authorizes an automobile purchaser to present parol evidence expressly contradicting the parties’ final written contract. However, this holding does not make the administrative rule ineffective in other contexts. The administrative rule is designed to avert disagreements concerning a particular term that had been discussed by the parties during negotiations but is missing from the parties’ final written sales contract by specifying that “all material statements, representations or promises” should be integrated into the final contract. To the extent that Ohio Adm.Code 109:4-3-16(B)(22) clarifies that the final sales contract should not omit “material” terms that induced the consumer to sign it, it serves a salutary purpose that is not affected by the holding of paragraph one of the syllabus.
{¶ 37} Finally, today’s decision does not vitiate the principle that the CSPA is a remedial act that must be liberally construed. See Einhorn v. Ford Motor Co. (1990),
Notes
. As the majority’s statement of the facts details, the final written purchase agreement clearly displayed a trade-in allowance of $15,500. In addition, Williams’s actions after he claims he discovered the discrepancy regarding that allowance were inconsistent with his allegation that a discrepancy exists, in that he later tendered two separate checks for $1,000 to provide the additional money to pay off the loan secured by the trade-in vehicle without mentioning any problem either time.