Title: Hurst v. Nichols Research Corp.

State: alabama

Issuer: Alabama Supreme Court

Document:

621 So. 2d 964 (1993)
Noah Jerome HURST
v.
NICHOLS RESEARCH CORPORATION and Chris Horgen.
1920567.

Supreme Court of Alabama.
May 28, 1993.
David H. Marsh of Pittman, Hooks, Marsh, Dutton & Hollis, P.C., Birmingham, and Marc Sandlin, Huntsville, for appellant.
James E. Davis, Jr., John M. Heacock, Jr. and Jeffrey T. Kelly of Lanier Ford Shaver & Payne, P.C., Huntsville, for appellees.
HOUSTON, Justice.
The plaintiff, Noah Jerome Hurst, appeals from a summary judgment for the defendants, Nichols Research Corporation ("the corporation") and its chief executive officer, Chris Horgen, in this action seeking damages for breach of contract and fraud. We affirm.
The material facts in this case are undisputed. In the fall of 1983, Hurst, a mechanical engineer, entered into employment negotiations with Horgen for a management position with the corporation, a Huntsville-based company that provides advanced technical services to various government agencies. Those negotiations focused primarily on the subject of stock options that the corporation provided to management level employees. At some point during the negotiations Horgen showed Hurst a handwritten chart containing a breakdown as to the number of shares that could be purchased by employees at different management levels, based on the amount of business developed for the corporation.
After the negotiations were completed, Horgen presented a letter to Hurst, dated December 1, 1983, offering him employment on certain terms. That letter specified, among other things, the position that *965 Hurst would assume with the corporation, the salary that he would be paid, the date on which his employment would begin, the amount of a one-time bonus that he would receive to cover certain expenses, the name of the individual who would be his immediate supervisor, and the terms governing his purchase of the corporation's stock. Hurst asked Horgen to make certain changes to the letter with regard to the dates on which he could purchase the corporation's stock. Horgen made those requested changes. In its final form, the corporation's letter read as follows:
Hurst also received a typed version of the benefits chart that Horgen had shown him during the negotiations. The chart, which was entitled "NRC's Management Level Benefit Guidelines," specifically and clearly provided: "These are not hard rules or benefit packages at NRC." The chart was not attached to the letter offering employment. Instead, it was provided to Hurst along with a cover letter stating: "Enclosed please find a copy of the information we discussed." The back of the chart contained certain handwritten calculations that had been made by Horgen. Hurst accepted the corporation's offer of employment by letter dated December 7, 1983:
Hurst later sued the corporation and Horgen, alleging that Horgen had promised him during the negotiations that he would be eligible to purchase more stock than was specified in the December 1, 1983, letter and that Horgen had failed to keep that promise. The corporation and Horgen moved for a summary judgment, arguing that the parol evidence rule barred evidence with respect to the pre-contract negotiations and that they were entitled to a judgment as a matter of law as to the contract claim based on the evidence that would be admissible at trial. The defendants *966 maintained that a summary judgment as to the fraud claim would be proper because, they argued, Hurst could not have justifiably relied on any misrepresentation that might have been made by Horgen with regard to the stock options provided by the corporation. The defendants also argue that there was no evidence that Horgen intended to deceive Hurst, even assuming that he promised Hurst additional stock options. The trial court granted the defendants' motion, and this appeal followed.
With regard to the contract claim, the parties are at issue over whether the parol evidence rule applied so as to bar evidence that, Hurst says, would have established that Horgen made a promise during the contract negotiations to allow him to purchase more of the corporation's stock than was specified in the December 1 written offer. Hurst maintains that he and Horgen intended for the benefits chart, which on the back contained certain handwritten calculations made by Horgen as to the number of shares that Hurst claims he was eligible to purchase, to be a part of the corporation's offer. Hurst argues that these calculations support his claim that Horgen guaranteed him an absolute right to purchase additional stock in the corporation. Horgen testified that he made the calculations on the back of the chart to show Hurst the number of shares that he "might" be eligible to purchase after he had worked a certain number of years for the corporation and had generated sufficient business. Hurst takes the position that his written acceptance of the terms specified in the December 1 letter, which specifically stated that "[a]dditional stock options [would] be considered after [Hurst's] business base [grew] to above $500,000" (emphasis added), did not require application of the parol evidence rule so as to render the chart and his explanation of the pre-contract negotiations inadmissible. Quoting isolated portions of this Court's opinion in Hibbett Sporting Goods, Inc. v. Biernbaum, 375 So. 2d 431, 435 (Ala.1979), Hurst argues that "[t]o the extent ... that [a written contract] contradicts the actual agreement of the parties, it is simply untrue"; that "[p]aper and ink possess no inherent power to cause statements to be true when they are actually untrue"; that "[t]he parol evidence rule does not prevent the admission of contradictory evidence to establish the truth"; and that the parol evidence rule does not "prevent the enforcement of contracts actually made."
The defendants do not disagree with these particular statements from Hibbett; they argue, instead, that the statements must be read in the proper context and with a full understanding of the holding in Hibbett. Hibbett, the defendants say, is direct authority for upholding the trial court's application of the parol evidence rule in the present case and, thus, its judgment with respect to Hurst's contract claim. We agree with the defendants' interpretation of Hibbett and with the trial court's disposition of the contract claim.
The following excerpts from Hibbett are applicable to the present case:
375 So. 2d  at 434-36.
The record in the present case indicates that the trial court found that the corporation's December 1 written offer of employment was mutually assented to by Hurst and Horgen as the complete and accurate integration of Hurst's employment *968 contract and, therefore, that the negotiations leading up to that offer were discharged and nullified by the parties themselves. The evidence supports that finding. The December 1 letter, which followed extensive negotiations between Hurst and Horgen, is specific and clear with regard to the subject of stock options. Horgen stated in the letter that Hurst could raise any questions that he had concerning the terms of the offer, and Hurst sought and obtained a modification as to the time frame within which he could purchase the corporation's stock. Given the ease with which the letter could have been further modified, the trial court was justified in concluding that Hurst and Horgen intended for it to completely and accurately reflect their agreement.
We note that Hurst's reliance on Hibbett is misplaced. In Hibbett, as the defendants correctly point out, the parties to the contract stipulated that the written document evidencing their agreement was not a true and complete expression of their agreement. Simply put, the parol evidence rule was held to be inapplicable in Hibbett because the undisputed evidence showed that the parties had agreed that the written document they had signed did not reflect the truth. This Court reversed the judgment because the evidence clearly did not support the trial court's finding that the parties had mutually assented to the written contract as a complete and accurate integration of their agreement. It was in this context that this Court made the statements previously quoted and relied on by Hurst. Contrary to the facts presented in Hibbett, the facts here present the classic case for application of the parol evidence rule. As this Court noted in Hibbett:
375 So. 2d  at 435.
Because the defendants made a prima facie showing that there was no genuine issue of material fact and that they were entitled to a judgment as a matter of law, and because Hurst did not present evidence creating a factual issue for resolution by a jury, the summary judgment for the defendants was proper as to the contract claim. Knight v. Alabama Power Co., 580 So. 2d 576 (Ala.1991).
Hurst's fraud claim is based on allegations that Horgen induced him to accept employment with the corporation by promising him that he would be allowed to purchase more of the corporation's stock than was specified in the December 1 letter. This Court has held that the parol evidence rule does not apply to a claim based on allegations of fraud in the inducement, see Dixon v. SouthTrust Bank of Dothan, N.A., 574 So. 2d 706 (Ala.1990); therefore, under our standard for reviewing summary judgments, see Knight v. Alabama Power Co., supra, we must assume that Horgen promised Hurst additional stock options. However, even if that assumption is made, Hurst's claim alleging promissory fraud cannot be sustained without a showing of justifiable reliance. This reliance is defined as follows:
"Withers v. Mobile Gas Service Corp., 567 So. 2d 253, 255 (Ala.1990), quoting Southern States Ford, Inc. v. Proctor, 541 So. 2d 1081, 1091-92 (Ala.1989) (Hornsby, C.J., concurring specially).
The undisputed evidence shows that Horgen presented Hurst with a clear and specific letter offering him employment with the corporation on certain terms. That offer did not grant Hurst the absolute right to purchase additional shares. To the contrary, the letter stated that "[a]dditional stock options [would] be considered after [Hurst's] business base [grew] to above $500,000." (Emphasis added.) Hurst read the letter and even had Horgen make certain modifications with respect to when he could purchase shares from the corporation. Hurst specifically accepted the terms set out in the corporation's written offer of employment:
(Emphasis added.) Other than by closing his eyes to avoid discovering the truth, Hurst could not have failed to realize that Horgen's alleged absolute promise of additional stock was entirely different from the terms stated by Horgen in the December 1 letter. The terms set out in the letter with respect to Hurst's right to purchase more than 12,000 shares of the corporation's stock were open-ended and clearly contemplated a future evaluation as to Hurst's eligibility to purchase that additional stock. As a matter of law, Hurst did not justifiably rely on any promise that Horgen may have made with respect to the issuance of stock options. See Parsons v. Maine Fidelity Life Ins. Co., 604 So. 2d 342 (Ala. 1992); Boland v. Fort Rucker National Bank, 599 So. 2d 595 (Ala.1992); Harrington v. Johnson-Rast & Hayes Co., 577 So. 2d 437 (Ala.1991); and Withers v. Mobile Gas Service Corp., supra.
Because Hurst failed to rebut the defendants' prima facie showing that there was no genuine issue of material fact with regard to Hurst's allegation that he justifiably relied on a promise to provide him additional stock options, and that the defendants were entitled to a judgment as a matter of law, the trial court properly entered the summary judgment as to the fraud claim. Knight v. Alabama Power Co., supra. Therefore, we need not determine if a jury question was presented as to whether Horgen had a present intent to deceive Hurst at the time he allegedly made the promise to provide additional stock options. See Centon Electronics, Inc. v. Bonar, 614 So. 2d 999 (Ala.1993).
AFFIRMED.
HORNSBY, C.J., and MADDOX, ALMON and SHORES, JJ., concur.