Court Opinion

ID: 9698770
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:59:39.212529+00
Date Added: 2024-06-11T12:30:04.092833
License: Public Domain

MURRAY, Justice.
I respectfully dissent. I view this case as both a definitive textbook instance in which the parol-evidence rule does not apply and one in which summary judgment should not have been granted.
The parol-evidence rule states that “‘in the absence of fraud or mistake, parol evidence of prior or contemporaneous agreements is generally inadmissible for the purpose of varying, altering or contradicting a written agreement.’ ” (Emphasis added.) Inleasing Corp. v. Jessup, 475 A.2d 989, 993 (R.I.1984). The language of the rule explicitly states that its myrmidonlike qualities do not apply where there is fraud, mistake, or misrepresentation. In fact, Inleasing states that “[i]t would be impossible to prove fraud or mistake if the only admissible contract is the final one; the fraud would not be apparent from the face of the instrument.” Id.
“[I]t is in no case denied that oral testimony is admissible to prove fraud, illegality, accident or mistake. This is so, even though the testimony contradicts the terms of a complete integration in writing.” (Emphasis added.) 3 A. Corbin, Corbin on Contracts, § 580 at 431 (1960).
“[Pjroof of fraud, whether in the execution of the writing or in the inducement to make it, whether it consists in the making of a fraudulent promise or in a fraudulent representation of some fact other than intention, should never be excluded by the ‘parol evidence rule.’” Id. § 580 at 581 (1993 Supp.) (analyzing J. Sweet, Promissory Fraud and the Parol Evidence Rule, 49 Cal. L.Rev. 877 (1961)).
This court has held that a misrepresentation “occurs when there is a ‘manifestation by words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts.’ ” Dudzik v. Leesona Corp., 473 A.2d 762, 766 (R.I.1984) (quoting Halpert v. Rosenthal, 107 R.I. 406, 413, 267 A.2d 730, 734 (1970)). This court has said that an “innocent misrepresentation of a material fact may be actionable if it induces reliance.” Dudzik, 473 A.2d at 766. A material fact is one that “is likely to affect the conduct of a reasonable person with reference to a transaction with another person.” Id. at 766-67.
The parol-evidence rule has no application in this instance. The testimony regarding the alleged misrepresentations of Chase should have been considered by the trial justice. My review of the appropriate materials before this court persuades me that there are genuine issues of fact concerning whether a misrepresentation was made and relied upon.
When deciding a motion for summary judgment, a trial justice must be reminded that it “ ‘is a drastic remedy and should be cautiously applied.’” Rustigian v. Celona, 478 A.2d 187, 189 (R.I.1984). A trial justice should search for issues of fact but should not determine them. Id. The trial justice’s examination of the pleadings, depositions, answers to interrogatories, admissions, and affidavits must determine if a genuine issue of material fact exists and, if not, whether the moving party is entitled to judgment as a matter of law. Ludwig v. Kowal, 419 A.2d 297, 301 (R.I.1980). “[A]ll favorable inferences which can be drawn from matters properly before the court accrue to the benefit of the party against whom the motion is made.” Warren Education Association v. Lapan, 103 R.I. 163, 169, 235 A.2d 866, 870 (1967). The entire record must be scrutinized closely, and the materials under examination filed by the nonmoving party are “viewed indulgently by the court.” Id. Summary judgment is proper when there are *1302no material facts in dispute. Richard v. Blue Cross & Blue Shield, 604 A.2d 1260, 1261 (R.I.1992). Our review in this instance must be taken in the light most favorable to the Russos. I believe that in undertaking this review, issues of material fact exist.
I share with the majority what my review of the appropriate materials disclosed. The Russos’ answer to the complaint explicitly stated the affirmative defense of misrepresentation, alleging that “the defendants were misled by [St. Paul] and its agents as to the circumstances, terms and conditions of the indemnity arrangements in question.” In an interrogatory St. Paul specifically asked the Russos to “state each and every fact upon which the defendants] rel[y]” upon in support of their allegation of misrepresentation. The Russos answered that Chase specifically informed them that St. Paul would not renew the bond _ unless the Russos signed the indemnity agreement as individuals. Additionally the Russos also responded that Chase allegedly informed them that the personal-indemnity agreement would be in effect for only one year. These allegations were also contained in Mr. Russo’s affidavit. The Russos’ memorandum in opposition to St. Paul’s motion for summary judgment specifically stated that the “Russos were induced into executing the [a]greement by [Chase’s] false representations.” (Emphasis added.) Unlike the majority, I am not persuaded that the Russos’ position is based upon mere allegations.
In his deposition Mr. Russo testified that he “repeatedly” asked whether the personal-indemnity agreement covered one year only. It is my conclusion that repeatedly asking this important question would lead a reasonable person to believe that it was a factor relied upon in reaching a final decision. Inducement or reliance can be inferred from the record. In fact the motion justice noted that inference and then appeared to disregard it.
In dissent, I do not premise my position on the allegation of misrepresentation alone. St. Paul described the tax bond as “a continuing bond for an indefinite period, not to expire until cancelled.” Except for increases in dollar-coverage amounts, the bond was extended without any changes from 1975 until 1982. The Russos assert that in 1982 Chase informed them that the bond would not be renewed unless they signed the indemnity agreement as individuals. They also allege that Chase represented that the personal-indemnity agreement would be in effect for one year only and would not be required in the following year if the financial condition of Russo Bros, improved. In his affidavit Mr. Russo asserted that financial statements for the fiscal years 1982 and 1983 were forwarded to St. Paul, and it renewed the bond in 1983 and 1984 without reference to the personal-indemnity agreement and without inquiry into the personal financial condition of the Russos. Furthermore Mr. Russo asserted that in 1985, after Russo Bros, experienced a poor financial year, St. Paul asked the Russos to sign another personal-indemnity agreement. Yet paragraph 6 of the St. Paul indemnity agreement provides that St. Paul may extend, alter, or modify the bond and the Russos as indemnitors would remain liable according to the conditions of the extended, altered, or modified bond. I am curious about why St. Paul would ask the Russos to sign another personal-indemnity agreement if the tax bond was for an indefinite period not to expire until canceled, and in fact had not been canceled or expired at the time of the request. In other words why ask for a new agreement when your position is that the old agreement is still in effect?
In Mr. Russo’s affidavit he asserts that St. Paul had extended the bond in the two years previous to the 1985 request without requiring or requesting a new personal-indemnity agreement. In fact this case is before us as a direct consequence of the 1982 agreement because that is the only agreement in which the Russos assumed personal liability. It is my conviction that St. Paul’s request for a new personal-indemnity agreement lends credence to the Russos’ position that Chase represented that the personal-indemnity agreement would be in effect for a one-year term.
Of consequence in reaching my dissent is the case of Nashua Trust Co. v. Weisman, 122 N.H. 397, 445 A.2d 1101 (1982). In Nashua a bank brought suit on a guarantee *1303agreement and a promissory note. The defendants in Nashua alleged fraud in the inducement. Id. at 400, 445 A.2d at 1103. In reviewing a denial of a motion for summary judgment, the Nashua court specifically stated that fraud in the inducement was a valid defense and may be asserted “if the facts are available to support it.” Id. The Nashua cóurt explicitly stated that “[t]he parol evidence rule does not preclude the use of testimony to prove fraud or misrepresentation.” Id. “Since these defenses raise factual questions, the denial of summary judgment on the guarantee action was proper.” (Emphasis added.) Id. It is my view that the rationale of the Nashua court is persuasive in our review of the instant case.
The record before us yields conflicting evidence regarding the “players” involved in the meeting where the indemnity agreement was allegedly signed. During his deposition Mr. Russo testified that Chase had brought the indemnity agreement to Russo Bros, for its execution. Mr. Russo stated that Chase explained that the personal-indemnity agreement would be in effect only for one year. Mr. Russo testified that although Robert J. Lamendola (Lamendola) signed the agreement on behalf of St. Paul, Lamendola was not present at the meeting with Chase when the Russos executed the agreement. Mr. Russo further asserted that he had never met Lamendola.
During her deposition Mrs. Russo testified that only Chase and Mr. Russo were present when she was called into the meeting in order to sign the personal-indemnity agreement. She stated that she did not recall meeting with any other person from Chase’s insurance agency. Mrs. Russo had met Chase approximately ten times on the occasions that Chase would come to Russo Bros, for general business insurance purposes. She stated that Mr. Russo, in Chase’s presence, explained to her that Chase was at the business to have both her and her husband sign the agreement that would be in effect for only a one-year period.
During his deposition Chase testified that he might have spoken about the indemnity agreement in “general” terms. He could not recall if he told the Russos that the agreement would be in effect for only one year but specifically denied stating that in the event that the financial condition of the business improved, the indemnity agreement would not be needed. Chase testified that his only involvement with the bond was his delivery of it to Russo Bros, and that Lamendola was responsible for the execution of the bonds.
In his deposition Lamendola testified that he secured the signatures of the Russos on the indemnity agreement. He specifically testified that both he and the Russos signed the agreement on June 30, 1982, during a meeting at Russo Bros. He stated that this was the first time that he had met with the Russos. Lamendola did not recall any “specifics” about his discussions regarding the indemnity agreement. He did admit, however, that he may have said that the personal-indemnity agreement might be released if the financial condition of Russo Bros, improved.
The discrepancies with regard to the parties present and the discrepancies surrounding the representations made at the meeting at which the personal-indemnity agreement was executed convince me that a material issue of fact exists. It is fair to conclude that the Russos would know what Chase looked like after having dealt with him for more than ten years'. The state of the record poses the questions who was at the meeting and what representations were made?
The Nashua court stated that fraud in the inducement is a valid defense and may be asserted if the facts support the allegation. The instant case suggests that the reasonable inferences drawn from the record disclose issues of material fact concerning whether a misrepresentation was made. My dissent is premised upon three important factors. First, both the Russos allege that Chase, a man with whom they had dealt in excess of ten years, made the representation that the personal-indemnity agreement would be in effect for one year only. Second, St. Paul’s request for a new personal-indemnity agreement supports the inference that a representation was made regarding the one-year term of the agreement. Finally, the conflicting deposition testimony regarding who was present at and the representations *1304made during the meeting to execute the agreement contribute to any inference of misrepresentation that may be drawn. These factors, taken in their totality, indicate that summary judgment is inappropriate in the instant case, and consequently I would reverse the granting of summary judgment.3

. Is it not the charm and the genius of the law that an identical record can persuade appellate judges to render different conclusions? The very liberty of our citizenry is based on similar foundations. My review of the record convinces me that the Russos have asserted sufficient issues of material fact to defeat a summary judgment motion. Not only do I not believe that there is "no evidence” (see majority opinion at note 2) that the Russos relied upon Chase’s misrepresentations regarding a present fact but the record I reviewed represented a tapestry of evidence sufficient to support the Russos’ assertion of inducement. In fact, I would conclude that it is inescapable that the Russos were misled.