Opinion ID: 773732
Heading Depth: 2
Heading Rank: 3

Heading: Watkins's Claims Of Fraud and Promissory Estoppel

Text: 20 The district court granted Iams's motion for summary judgment on Watkins's claims of fraud and promissory estoppel. We review summary judgments de novo. Peck v. Bridgeport Machs., Inc., 237 F.3d 614, 617 (6th Cir. 2001). Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id. 21 Reasonable reliance is an element of both promissory estoppel and fraud. See Nilvar v. Osborn, 127 Ohio App.3d 1, 16, 711 N.E.2d 726, 736 (1998) (promissory estoppel); Daup v. Tower Cellular, Inc., 136 Ohio App.3d 555, 568, 737 N.E.2d 128, 138 (2000) (fraud). On the facts of this case, we find that Watkins's reliance on Iams's representations was unreasonable as a matter of law. Therefore, we find no error in the district court's decision to grant summary judgment on the two claims. 22 In this case, the reasonableness of Watkins's reliance depends upon the effect of the integration clause. When a written contract is the final and complete statement of the parties' agreement -- when, that is, it is a complete integration -- the parol evidence rule prohibits the parties from introducing extrinsic evidence of the terms of their agreement. 4 The rule is not a rule of evidence, but of substantive contract law. In other words, the parol evidence rule does not operate to prohibit proof of terms of the agreement; instead, it provides that parol terms are not terms of the agreement at all. Galmish v. Cicchini, 90 Ohio St.3d 22, 27, 734 N.E.2d 782, 788-89 (2000). If a written contract is completely integrated, it is unreasonable as a matter of law to rely on parol representations or promises within the scope of the contract made prior to its execution.Bollinger, Inc. v. Mayerson, 116 Ohio App.3d 702, 712-13, 689 N.E.2d 62, 69 (1996) (fraud); Harris v. Equilon Enters., L.L.C., 107 F.Supp.2d 921, 936 (S.D. Ohio 2000) (promissory estoppel). 23 We find that the written agreement at issue here was a complete integration. Under Ohio law, the court determines whether a sales contract is completely integrated by considering the four corners of the document and evidence extrinsic to the writing. Cincinnati Bell, Inc. v. Anixter Bros., Inc., 69 F.Supp.2d 982, 992 (S.D. Ohio 1999) (citing Carmargo Cadillac Co. v. Garfield Enters., Inc., 3 Ohio App.3d 435, 445 N.E.2d 1141, 1142 (1982)). Here, § 16 of the agreement, quoted above, provides strong evidence that the parties intended their written agreement to be a complete integration. Watkins does not present extrinsic evidence to show otherwise. Instead, it merely argues that the renewal provision in the written agreement does not contain the terms of the proposed renewal, and that therefore the contract is only a partial integration-final, but not complete. 24 Watkins's argument is without merit. It is clear from the text of the renewal clause that the parties meant to make a final agreement and to leave the terms of a future agreement for later negotiation. This conclusion is made even clearer when one considers the integration clause. As we note in our discussion of Watkins's claim for breach of the duty of good faith, infra,clauses such as the renewal clause in this contract may sometimes create a duty to negotiate the renewal in good faith. But a clause leaving open the possibility of a future agreement affects neither the completeness nor the finality of the present agreement. 25 Since the written agreement between Watkins and Iams is a complete integration, the parol evidence rule applies. There are, however, exceptions to the rule. The exception on which Watkins most heavily relies is the rule that evidence of fraud in the inducement is not barred by the parol evidence rule. Coal Resources, Inc. v. Gulf & W. Indus., Inc., 756 F.2d 443, 447 n. 2 (6th Cir. 1985); accord Galmish, supra at 28-29, 734 N.E.2d at 789-90. But fraud in the inducement, in the sense intended in Coal Resources and Galmish, is a fraudulent misstatement of fact that induces a party to enter a contract, not a fraudulent promise of future performance that is within the scope of the subject matter of the written contract but that was not included in it. 26 [T]he parol evidence rule does apply to . . . promissory fraud if the evidence in question is offered to show a promise which contradicts an integrated written agreement. Unless the false promise is either independent of or consistent with the written instrument, evidence thereof is inadmissible. 27 Galmish, supra at 30, 734 N.E.2d at 791 (citation and internal quotation marks omitted). There is no evidence in the record sufficient to bring this case within the rule of Williams v. Edwards, 129 Ohio App.3d 116, 124, 717 N.E.2d 368, 374 (1997), which permits claims of fraud despite the parol evidence rule when the promisor had no intention of honoring his promise and thus had actual fraudulent intent. 5 28 Watkins's argument that Iams continued to make fraudulent representations after the execution of the agreement avoids the parol evidence rule, which relates only to prior representations. But because the contract is for the sale of goods that provides that modifications must be in writing, Watkins's argument runs up against Ohio Rev. Code § 1302.12(B), which provides: A signed agreement which excludes modification or recission except by a signed writing cannot be otherwise modified or rescinded. 29 Finally, Watkins's argument that Iams's representations are not within the scope of the statutory U.C.C. parol evidence rule is without merit. The statute allows proof of course of dealing, course of performance, or usage of trade to explain or supplement the written agreement. But Watkins's evidence -- evidence of parol promises of an exclusive territory and of renewal -- does not explain or supplement the agreement; it contradicts the agreement. As noted above, the written contract explicitly permits Iams to appoint any other distributor to sell Products within the Territory, and it explicitly provides for expiration of the contract on January31, 1994, leaving renewal to future agreement of the parties. 30 For the foregoing reasons, we find that Watkins's reliance on Iams's representations was unreasonable as a matter of law, and therefore, that the district court properly granted summary judgment on Watkins's claims for fraud and promissory estoppel.