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Table of Contents    Cover    MCLE Test

MCLE Article and Self-Assessment Test

Liar, Liar

Is a broken oral promise enough to trigger the fraud exception to the parol evidence rule? 

By Gary S. Raskin 

Gary S. Raskin is an attorney with the firm Plotkin, Marutani & Kyriacou. He specializes in business litigation and transactions. 

Most lawyers have little problem reciting the parol evidence rule: the terms of a writing intended to be the final expression of the parties' agreement may not be contradicted by evidence of any prior or contemporaneous oral agreement.1 However, Code of Civil Procedure Section 1856 provides that parol evidence is admissible under certain circumstances, including to establish fraud.2 The fraud exception to the parol evidence rule3 is one of the more confusing areas of the law. In disputes between contracting parties, a common misconception is that parol evidence is admissible whenever it is offered to establish fraud. But parol evidence is not admissible to prove fraud when the written agreement between the parties is intended to be the final and exclusive expression of their agreement-that is, the agreement is "fully integrated"-and the parol evidence contradicts the material terms of the fully integrated written agreement.4 

The fraud exception most commonly arises in the following scenarios: 

1) In an action for breach of contract, the defendant claims, either by affirmative defense or cross-complaint, that the plaintiff fraudulently induced the defendant to enter into the contract, thus voiding the contract and excusing the breach.5 

2) After the parties enter into a fully integrated agreement, the plaintiff claims that the defendant made additional promises-not expressed in the written agreement-that not only induced the plaintiff to enter into the agreement but were not performed by the defendant. The plaintiff cannot pursue a contract claim based upon the additional promises because evidence establishing the additional promises is barred by the parol evidence rule.6 Instead, the plaintiff sues the defendant for fraud, alleging that the additional promises fraudulently induced the plaintiff to enter into the contract. Since the plaintiff is seeking to prove fraud rather than an additional agreement or additional terms of the contract, the plaintiff will rely on the fraud exception to avoid enforcement of the parol evidence rule. 

Under either scenario, the party asserting the fraud claim has transformed the contractual relationship between the parties into a tort action, thereby undermining the fundamental purpose of a fully integrated contract-which is to state all the terms, rights, and obligations of the contracting parties-as well as potentially subjecting the other party to tort damages. The fraud exception not only causes the most confusion among the exceptions to the parol evidence rule but also threatens to eviscerate the rule by potentially converting every contract dispute into a tort action for fraud. 

When the fraudulent promise or representation contradicts the terms of the fully integrated agreement, the parol evidence rule and its fraud exception directly conflict with each other. One party will seek to rely on the contract and the parol evidence rule to defeat the fraud claim by asserting that the only enforceable promises and representations are those contained in the contract. The other party will rely on the fraud exception to the parol evidence rule to establish other promises or representations outside the contract and potentially defeat any contract claims. 

The determination of whether contracting parties should be limited to the terms of their written agreement and barred from asserting any extrinsic claims, or whether the parties should be allowed to pursue extrinsic claims at trial, including tort claims, is a difficult policy decision. For now, at least, California courts have held that the parol evidence rule bars the admission of parol evidence to prove fraud when that evidence contradicts the terms of a fully integrated agreement.7 However, if the parol evidence is consistent with or in addition to the terms of the fully integrated agreement, the evidence is admissible to prove fraud.8 

Since the parol evidence rule is only concerned with the admissibility of evidence with respect to a written contract, the fraud exception only relates to claims for fraud in the inducement (or fraudulent inducement).9 Fraud in the inducement occurs when a party knows what agreement the party is signing, but consent is induced by the actual fraud of another.10 

A party may be fraudulently induced to enter into a contract by another party's misrepresentation (intentional or negligent), false promise, or concealment.11 Intentional or negligent misrepresentation is actionable when a party makes a false representation, intentionally or negligently, and the other party justifiably and detrimentally relies on the misrepresentation.12 False promise, or promissory fraud, is actionable when a party makes a promise without the intent to perform and the other party justifiably and detrimentally relies on the promise.13 Concealment arises when a party, under a duty to disclose material facts, conceals or prevents the discovery of the material facts to the other party's detriment.14 

While the fraud exception appears on its face to permit the admission of parol evidence whenever a party claims fraudulent inducement, California courts have limited the admission of parol evidence in these cases.15 

In 1935, in Bank of America National Trust and Savings Association v. Pendergrass,16 the California Supreme Court held that parol evidence is admissible under the fraud exception either to establish an independent fact or representation or to establish fraud in the inducement, but not to establish a promise or representation directly at variance with the terms of the writing.17 In Pendergrass, the bank sought to foreclose on the defendant's property pursuant to a promissory note and deed of trust securing the bank's loan to the defendant. The defendant claimed that he would not have entered into the loan agreement "but for" the oral representation by the bank that it would extend and postpone all payments due on the note for one year, in contradiction of the terms of the note.18 The court held that because the purported false promise was directly at variance with the terms of the writing, evidence of the oral promise was inadmissible.19 Thus, Pendergrass limited the fraud exception to parol evidence establishing a fraudulent inducement-the promise-that is not at variance with the terms of the written agreement.20 

The Pendergrass decision was adopted and slightly expanded in Bank of America v. Lamb Finance Company,21 in which an individual defendant sought to invalidate a personal guaranty to the bank on the grounds that a bank representative had orally promised, contemporaneous to the signing of the guaranty, that the guaranty was only a corporate note and that the defendant's personal property would not be at risk. Because the purported oral promise directly contradicted the terms of the guaranty, the court held that the oral promise was inadmissible.22 

The court specifically noted the distinction between a fraudulent inducing promise that is independent of the written agreement and one that is covered by the written agreement. The court held that: 

[I]f, to induce one to enter into an agreement, a party makes an independent promise without the intention of performing it, the separate false promise constitutes fraud which may be proven to nullify the main agreement, but if the false promise relates to the matter covered by the main agreement and contradicts or varies the terms thereof, any evidence of the false promise directly violates the parol evidence rule and is inadmissible.23 

Both Pendergrass and Lamb Finance were criticized in subsequent cases and by scholars.24 In Coast Bank v. Holmes,25 the court questioned the rationale of these cases and their continued vitality in light of the California Supreme Court's liberalization of the parol evidence rule in 1968 in Masterson v. Sine26 and Pacific Gas & Electric Co. v. G. W. Thomas Drayage & Rigging Company, Inc.27 The Coast Bank court, siding with the scholarly critics of Pendergrass, specifically noted that: 

[I]t is inconsistent to have a rule that promissory fraud may invalidate an agreement but exclude proof of such fraud when the false promise is at variance with the terms of the writing. The significance of the distinction should not be admissibility of the evidence but rather its credibility[,] which in turn depends on the facts and circumstances of the particular case.28 

Similarly, in 1976 the Restatement (Second) of Torts adopted the position that parol evidence is admissible whenever a party is seeking to prove fraud. Section 530 of the Restatement states that a representation of intention is fraudulent when the maker of the representation does not have that intention. Comment (c) to Section 530 provides: 

The rule stated in this [s]ection finds common application when the maker misrepresents his intention to perform an agreement made with the recipient.& Since a promise necessarily carries with it the implied assertion of an intention to perform[,] it follows that a promise made without such an intention is fraudulent and actionable in deceit.& If the agreement is not enforceable as a contract, as when it is without consideration, the recipient still has, as his only remedy, the action in deceit.& The same is true when the agreement is oral and made unenforceable by the statute of frauds, or when it is unprovable and so unenforceable under the parol evidence rule.29 

Despite the contrary views, there was no indication from the supreme court that Pendergrass and Lamb Finance were on the verge of becoming obsolete until 1985, when the supreme court decided Tenzer v. Superscope.30 Although the Tenzer case did not involve either a written contract or the parol evidence rule, the reasoning of the case and the public policy considerations cited by the court arguably affect the viability of Pendergrass and Lamb Finance. 

The plaintiff in Tenzer, a member of the board of directors of the defendant corporation, sued the corporation after it refused to pay him a finder's fee for finding a buyer for real property owned by the corporation. Claiming breach of contract and promissory fraud, the plaintiff alleged that the corporate president/chairman of the board had orally promised to pay him a 10 percent finder's fee if he found a buyer for the property and that the president/chairman had made the promise without the intent to perform. The corporation brought a motion for summary judgment based upon Kroger v. Baur,31 which held that an oral promise in violation of the statute of frauds cannot form the basis of a fraud claim.32 The motion for summary judgment was granted by the trial court and affirmed by the appellate court. 

Tenzer reversed the decisions of the lower courts and expressly overruled the Kroger case.33 The court reasoned that the statute of frauds should not bar a fraud claim because: 

  • The statute of frauds was enacted to prevent fraud, not to facilitate or shield it.     
  • A party may be estopped from asserting the statute of frauds to prevent a fraud.     
  • The validity of the fraud action is a question of credibility that should be determined by the trier of fact.     
  • Juries can distinguish between honest promises that are not performed and fraudulent promises.     
  • To prove fraud, the party will have to prove more than nonperformance to establish an intent to deceive.     
  • Restatement (Second) of Torts Section 530, comment (c) states a better rule of law.     
  • The Kroger rule was spawned from agreements among real estate brokers, who are held to a different standard than lay persons.34
Indeed, the Tenzer court specifically quoted the language from the Restatement regarding the parol evidence rule: fraud is actionable even "when the agreement& is unprovable and unenforceable under the parol evidence rule."35

Many of the pronouncements set forth in Tenzer appear to apply equally to fraud claims that would be precluded by the parol evidence rule pursuant to Pendergrass and Lamb Finance. If the Restatement states a better rule, so that fraud claims should not be barred by either the statute of frauds or the parol evidence rule and the validity of a fraud claim should be a credibility determination entrusted to the trier of fact, it would follow that Tenzer should be extended to the parol evidence rule. However, since there was no written agreement between the parties in Tenzer, the court did not specifically address the parol evidence rule or discuss Pendergrass or Lamb Finance. Additionally, while Tenzer relied on the Restatement, it did not expressly adopt the Restatement rule, at least with respect to the parol evidence rule. 

As a result of the Tenzer court's passing and unexplained reference to the viability of claims for fraud despite the parol evidence rule, the intent and effect of the supreme court's decision in this area is unclear. Thirteen years after Tenzer was published, questions persist as to the continued validity of the Pendergrass and Lamb Finance decisions. As Professor Bernard Witkin noted, Pendergrass and Lamb Finance appear to have survived Tenzer but, in light of the reversal of Kroger by Tenzer, the Pendergrass rule may not apply under circumstances in which a party is seeking damages for the fraud rather than attempting to void the written agreement.36 

Despite the doubts raised by the reasoning in Tenzer, courts have continued to apply the holdings of Pendergrass and Lamb Finance in fraud cases. Indeed, while Pendergrass has met criticism and has been cited with uncertainty by courts of appeal since Tenzer,37 it has been relied upon nonetheless and consistently followed.38 

For example, shortly after Tenzer was decided, two appellate courts were faced with the issue of the admissibility of parol evidence to establish a false promise directly at variance with the terms of a fully integrated agreement. These courts were in essence having to determine whether Pendergrass and Lamb Finance survived Tenzer. 

In Price v. Wells Fargo Bank,39 a First District case, the trial court granted summary judgment in favor of the defendant bank with respect to the plaintiffs' claims for fraudulent inducement (promissory fraud). The plaintiffs had defaulted on promissory notes and sued the bank after it had foreclosed on the property used as collateral for the notes. According to the plaintiffs, the bank had induced them to enter into the promissory notes by its false promise that the bank would not strictly follow the default terms of the notes but, instead, would "work with" the plaintiffs regarding their repayment obligations.40 

In ruling on the promissory fraud claims, the Price court held that since the purported false promises were directly at variance with the terms of the written contract, the false promises were barred by the parol evidence rule, as established in Pendergrass and Lamb Finance.41 In reaching this decision, the Price court specifically noted the criticism of the Pendergrass and Lamb Finance decisions42 but nevertheless held that the holdings of these cases, which had not been overruled by the California Supreme Court, were still governing law.43 

In reviewing the criticisms of Pendergrass, the court reasoned that the parol evidence rule and fraudulent inducement could coexist, provided that one is given limited priority over the other: 

The policy considerations underlying promissory fraud apply fully when the promise relates to the main terms of the agreement. By limiting promissory fraud to promises relating to collateral matters, not at variance with the principal obligations, Pendergrass compromises the objectives of tort law in a manner that is not strictly necessary to give effect to the parol evidence rule. On the other hand, if loosely construed, the concept of promissory fraud may encourage attempts to convert contractual disputes into litigation over alleged fraud.& In short, Pendergrass compromises the policies of tort law, but a contrary rule would compromise those of the parol evidence rule.& In Pendergrass, the [California] Supreme Court gave priority to the policies of the parol evidence rule. While the decision was by no means logically inevitable, it represents a rational policy choice that should be reconsidered only by the [California] Supreme Court itself.44 

Thus the Price court determined that the policy reasons underlying Pendergrass and Lamb Finance remain viable. 

In Continental Airlines, Inc. v. McDonnell Douglas Corporation,45 a Second District case, the plaintiff Continental Airlines sued an airplane manufacturer for fraud, alleging that it had relied upon precontract oral representations and promotional brochures as inducement to enter into the contract to purchase airplanes from McDonnell Douglas.46 During trial, the court admitted the representations into evidence based upon the fraud exception to the parol evidence rule.47 On appeal, McDonnell Douglas argued that the trial court erred in admitting this evidence because the precontract representations were at variance with the terms of the fully integrated written contract and were therefore inadmissible pursuant to the parol evidence rule.48 

The appellate court agreed with McDonnell Douglas and held that it was error to admit the parol evidence because the fraud exception is not applicable unless the purported false representations are independent of, or consistent with, the written agreement.49 The court expressly rejected the argument that "parol evidence is always admissible to prove fraud"50 and applied the traditional rule set forth in Pendergrass. Although noting the criticisms of Pendergrass and Lamb Finance and making a footnote reference to Tenzer, the Continental Airlines court, in an echo of Price, stated that "while the Pendergrass rule may be subject to criticism, and even questioned, it is still the law and we are bound by it."51 A petition for review by the supreme court was sought in Price and Continental Airlines and was denied in both cases,52 and thus the supreme court declined to act on these opportunities to expressly overrule Pendergrass and Lamb Finance as a result of Tenzer.53 

In several subsequent cases, the courts of appeal have continued to consistently apply the rule developed in Pendergrass and Lamb Finance. In West v. Henderson,54 Alling v. Universal Manufacturing Corporation,55 and Banco Do Brasil, S.A. v. Latian, Inc.,56 the courts held that the fraud exception to the parol evidence rule does not extend to claims of promissory fraud when the promise directly varies or contradicts the terms of the integrated contract. Thus, since Tenzer, the First, Second, and Third Districts (three out of the six appellate districts) have reviewed the traditional rule espoused in Pendergrass and Lamb Finance and each has upheld it-Tenzer notwithstanding. Thus, for now at least, Tenzer's reference to the parol evidence rule is dicta, and Tenzer's rationale for overruling Kroger has not created a basis for the courts of appeal to depart from the holdings in Pendergrass and Lamb Finance. 

While it may be impossible to reconcile Pendergrass and Lamb Finance with the rationale of Tenzer and its reliance on the Restatement rule, it is possible to harmonize the competing policies and narrow holdings of these cases. The statute of frauds is a legal principle that is not well known among nonlawyers and, therefore, public policy allows a party to reasonably rely upon an oral promise that violates the statute of frauds. Indeed, as the supreme court noted in Tenzer, the statute of frauds was created to prevent fraud, so it should not be used as a trap or a shield to perpetuate fraud.57 On the other hand, allowing a party to rely on an oral promise that is directly at variance with the terms of a fully integrated agreement is unreasonable and not good public policy. Each person should be responsible for reading and understanding the terms of the agreements he or she signs and should be held to the terms of those agreements, unless some other exception applies, such as mistake or illegality. Additionally, when parties memorialize their agreement in writing, there is an expectation that the written agreement will govern their rights and obligations. Thus a written contract together with the parol evidence rule provide much-needed commercial predictability. 

The open issue that remains, then, is determining what terms are "at variance" with the terms of the written agreement. In any particular case, this determination is, of course, dependent upon the terms of the contract. What is clear, however, is that an integration clause does not operate as an all-purpose bar to claims for fraudulent inducement. 

Integration clauses generally state that the written agreement contains all terms, conditions, representations, and warranties of the parties and, in entering into the written agreement, the parties have not relied upon any representations, warranties, or promises not expressly contained in the written agreement.58 This type of integration clause has led to the argument that the admission of any purported false and inducing promise not expressly stated in the contract, whether offered to establish fraud or to vary the contract, is barred by the parol evidence rule because any parol promise is directly at variance with the integration clause. California courts have routinely rejected this argument.59 

Most recently, in Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Development Corporation,60 the court flatly rejected the defendant's argument that an integration clause established, as a matter of law, that the party claiming fraudulent inducement (promissory fraud) could not rely on representations outside the contract.61 The court drew a distinction between the "substantive terms" in the contract and a "standard" contract term such as an integration clause.62 The Greenspan court explained that a party cannot absolve itself from fraud simply by inserting a contract provision that all representations made by the parties are contained in the agreement.63 

The future vitality of Pendergrass and Lamb Finance remains unclear. Indeed, as noted by Witkin, after Tenzer, the rule in Pendergrass may not apply when a party seeking to admit the parol evidence is pursuing fraud damages rather than attempting to avoid or nullify a written agreement.64 This distinction, however, conflicts with the policy reasons underlying Pendergrass which, as noted in Price, weighed the conflicting considerations between the parol evidence rule and tort law and gave priority to the parol evidence rule. In doing so, Pendergrass limited fraud claims to prevent every purported broken oral promise from turning into actionable fraud.65 While this policy may have been eroded, it remains standing. For now, the rights of contracting parties can be determined by the four corners of their integrated written agreement. 

1 Code Civ. Proc. §1856(a): "Terms 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."

2 Code Civ. Proc. §1856(b)-(g). The fraud exception is contained in §1856(g). The other exceptions include: 

  • To explain or supplement the written agreement with consistent additional terms, unless the agreement is fully integrated.      
  • To explain or supplement the terms of the agreement by course of dealing or performance, or trade usage.      
  • To prove mistake or imperfection in the writing, when this issue has been raised by the pleadings.      
  • To establish the validity of the agreement.      
  • To establish the circumstances under which the agreement was made or to which it relates.      
  • To explain an extrinsic ambiguity or otherwise interpret the terms of the agreement.      
  • To establish illegality.

3 The parol evidence rule generally prohibits the admission of evidence of any prior or contemporaneous oral agreement that contradicts the written agreement between the parties. Code Civ. Proc. §1856(a). However, parol evidence is generally admissible to prove fraud. Code Civ. Proc. §1856(g). 

4 Bank of America Nat. Trust & Savings Ass'n v. Pendergrass, 4 Cal. 2d 258 (1935); Bank of America v. Lamb Finance Co., 179 Cal. App. 2d 498 (1960). 

5 The traditional remedy for fraud in the inducement is to rescind the contract and put the injured party in the position that party would have been in but for the other party's fraud. See Civ. Code §§3333, 3343; see also BAJI §§12.56-12.57 (8th ed. 1994). 

6 Code Civ. Proc. §1856(a). 

7 Pendergrass, 4 Cal. 2d at 263; Lamb Finance Co., 179 Cal. App. 2d at 501-02. 

8 Code Civ. Proc. §1856(a). See Pendergrass, 4 Cal. 2d at 263; Lamb Finance Co., 179 Cal. App. 2d at 501-02. 

9 Fraud in the inducement occurs when a party detrimentally relies and is induced to enter into a contract based on the fraud (e.g., false promise or misrepresentation) of another. Rosenthal v. Great Western Fin. Sec. Corp., 14 Cal. 4th 394, 415-23 (1996). Fraud in the inducement is related to, but different from, fraud in the inception, which occurs when the party does not know what he or she is signing, such as when a party is illiterate. C.I.T. Corp. v. Panac, 25 Cal. 2d 547, 548-49 (1944). Parol evidence is admissible to prove fraud in the inception pursuant to the mistake exception codified at Code Civ. Proc. §1856(e). 

10 Rosenthal, 14 Cal. 4th 394, 415-23. 

11 See Civ. Code §§1709-10; BAJI §§12.30-12.45 (8th ed. 1994); 5 B.E. Witkin, Summary of California Law §§674 et seq. (9th ed. 1987). 

12 See Civ. Code §1710; BAJI §§12.31, 12.45 (8th ed. 1994); 5 B.E. Witkin, Summary of California Law §677, at 778-79 (9th ed. 1988 and Supp. 1997). 

13 See Civ. Code §1710; BAJI §12.40 (8th ed. 1994); 5 B.E. Witkin, Summary of California Law §§685-86, at 786-88 (9th ed. 1988). 

14 See Civ. Code §1710; BAJI §12.35 (8th ed. 1994); 5 B.E. Witkin, Summary of California Law §697, at 799-800 (9th ed. 1988). 

15 Bank of America Nat. Trust & Savings Ass'n v. Pendergrass, 4 Cal. 2d 258, 263 (1935); Bank of America v. Lamb Finance Co., 179 Cal. App. 2d 498, 501-02 (1960). Additionally, in cases involving the fraud exception, California courts have generally referred to the fraudulent inducement claims as "promissory fraud," even in cases in which the purported fraud was a misrepresentation of fact, as opposed to a false promise. See Continental Airlines, Inc. v. McDonnell Douglas Corp., 216 Cal. App. 3d 388 (1989). Regardless of the label, the analysis of the fraud exception is the same. 

16 Pendergrass, 4 Cal. 2d 258. 

17 Id. at 263. 

18 Id. 

19 Id. 

20 See id: "Our conception of the rule which permits parol evidence of fraud to establish the invalidity of the instrument is that it must tend to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise in writing." 

21 Bank of America v. Lamb Finance Co., 179 Cal. App. 2d 498 (1960). 

22 Id. at 501-02. 

23 Id. at 502 (relying on Newmark v. H & H Products Mfg. Co., 128 Cal. App. 2d 35 (1954); Abbott v. Stevens, 133 Cal. App. 2d 242 (1955); W. Ross Campbell Co. v. Sears, Roebuck & Co., 136 Cal. App. 765 (1955); Shaw v. McCaslin, 50 Cal. App. 2d 467 (1942); Simmons v. California Institute of Technology, 34 Cal. 2d 264 (1949)). 

24 See Coast Bank v. Holmes, 19 Cal. App. 3d 581, 591-93 (1971); Note, Parol Evidence: Admissibility to Show That a Promise Was Made without Intention to Perform It, 38 Cal. L. Rev. 535-39 (1950); Sweet, Promissory Fraud and the Parol Evidence Rule, 59 Cal. L. Rev. 877-907 (1961). 

25 Coast Bank, 19 Cal. App. 3d 581. 

26 Masterson v. Sine, 66 Cal. 2d 222, 225-26 (1968) (parties to a contract are not exclusively bound to the four corners of the contract; instead, extrinsic evidence may be offered when it can be shown that the parties did not intend the writing to be the "exclusive embodiment of their agreement"). Masterson overruled long-standing California law that the issue of integration is a legal question to be determined from the face of the agreement alone. Id. at 226. 

27 Pacific Gas & Electric Co. v. G. W. Thomas Drayage & Rigging Company, Inc., 69 Cal. 2d 33 (1968). Drayage, published about five months after Masterson, held that extrinsic evidence is admissible to determine "the circumstances surrounding the making of the agreement" in order to determine the intent of the parties, provided the parol evidence does not contradict the terms of the agreement. Id. at 38-40. Code Civ. Proc. §1856 is essentially the codification of the Masterson and Drayage cases. 

28 Coast Bank, 19 Cal. App. 3d at 591-92. 

29 Restatement (Second) of Torts §530, cmt. c (1976) (emphasis added). 

30 Tenzer v. Superscope, 39 Cal. 3d 18 (1985). 

31 Kroger v. Baur, 46 Cal. App. 2d 801 (1941). 

32 Id. at 803-04. 

33 Tenzer, 39 Cal. 3d at 29-30. 

34 Id. at 29-31. 

35 Id. at 29. 

36 2 B.E. Witkin, California Evidence §1000, at 945-47 (3d ed. 1986); see note 24, supra. 

37 See Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 484-85 (1st Dist. 1989); Banco Do Brasil, S.A. v. Latian, Inc., 234 Cal. App. 3d 973, 1010 (2d Dist. 1991). 

38 See Price, 213 Cal. App. 3d at 484-85; Banco Do Brasil, S.A., 234 Cal. App. 3d at 1009-10; Continental Airlines, Inc. v. McDonnell Douglas Corp., 216 Cal. App. 3d 388 (1989); West v. Henderson, 227 Cal. App. 3d 1578 (1991); Alling v. Universal Mfg. Corp., 5 Cal. App. 4th 1412 (1992). 

39 Price, 213 Cal. App. 3d 465. 

40 Id. at 479-80. 

41 Id. at 484-86. 

42 Id. at 484 (citing Coast Bank v. Holmes, 19 Cal. App. 3d 581, 591 (1971) and Glendale Fed. Sav. & Loan Ass'n v. Marina View Heights Dev. Co., 66 Cal. App. 3d 101, 161 (1977)). 

43 Price, 213 Cal. App. 3d at 484-85. 

44 Id. at 485-86. 

45 Continental Airlines, Inc. v. McDonnell Douglas Corp., 216 Cal. App. 3d 388 (1989). 

46 Id. at 416. 

47 Id. at 417. 

48 Id. at 416-17. 

49 Id. at 419. The plaintiff in Continental Airlines, claiming it was fraudulently induced to enter into the purchase agreement for the airplanes based upon alleged misrepresentations in McDonnell Douglas's promotional materials, alleged a claim for fraudulent misrepresentation, not promissory fraud. Nevertheless, the court used the terms interchangeably and followed the holdings of Pendergrass and Lamb Finance, which involved promissory fraud claims. 

50 Id. at 420. 

51 Id. at 421. 

52 Id. at 435; Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 487 (1989). 

53 The supreme court also denied petition for review in two other cases following the rule in Pendergrass: Alling v. Universal Mfg. Corp., 5 Cal. App. 4th 1412, 1444 (1992), and Banco Do Brasil, S.A. v. Latian, Inc., 234 Cal. App. 3d 973, 1018 (1991). 

54 West v. Henderson, 227 Cal. App. 3d 1578 (1991). 

55 Alling v. Universal Mfg. Corp., 5 Cal. App. 4th 1412 (1992). 

56 Banco Do Brasil, S.A., 234 Cal. App. 3d 973. 

57 Tenzer v. Superscope, 39 Cal. 3d 18, 30 (1985). 

58 2 B.E. Witkin, California Evidence §972, at 918-19 (3d ed. 1986). 

59 See Simmons v. Ratterree Land Co., 217 Cal. 201 (1932); Herzog v. Capital Co., 27 Cal. 2d 349 (1945); Vai v. Bank of America, 56 Cal. 2d 329 (1961); Buist v. C. Dudley DeVelbiss Corp., 182 Cal. App. 2d 325 (1960). But see Fisher v. Pennsylvania Life Co., 69 Cal. App. 3d 506 (1977). 

60 Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Dev. Corp., 32 Cal. App. 4th 985 (1995). 

61 Id. at 987. The Greenspan court expressly rejected the contrary holding in Fisher, 69 Cal. App. 3d 506. Greenspan, 32 Cal. App. 4th at 990-96. 

62 Ron Greenspan Volkswagen, Inc., 32 Cal. App. 4th at 992. 

63 Id. at 992-94. 

64 2 B.E. Witkin, California Evidence §1000, at 945-47 (3d ed. 1986). 

65 Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 485-86 (1989). 


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