On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Michels, O'Brien and Havey. The opinion of the court was delivered by Michels, P.J.A.D.
Plaintiffs Filmlife, Inc. (Filmlife) and Marvin Bernard (Bernard) appeal from orders of the Law Division that dismissed their complaint against the defendants Mal "Z" Ena, Inc., a New Jersey Corporation, t/a Leaseworks; Tenafly Foreign/Domestic Cars; William Bresnan (Bresnan); Capital Cities Broadcasting, Inc. and Capital Cities Broadcasting Inc., t/a WABC 77AM (Capital Cities); Janvier Smith; Donna Butler, and Z. Szymanski for failure to state a claim upon which relief can be granted.
Filmlife entered into a written lease for a 1989 Lincoln Town Car. Bernard, the president and chief operating officer of Filmlife, signed the lease as the guarantor. At the time the lease was signed Bernard traded in a 1984 Cadillac for a $6,000 allowance. The lease provided that the $6,000 trade-in was a capitalized cost reduction applied as the down payment to reduce the costs of the lease. The effect of this, of course, was to reduce plaintiff's monthly lease payments. The lease further provided that the "Lease contains the entire agreement between the Lessor and Lessee and may not be modified, amended or changed in any way except in writing, signed by the party to be charged thereby."
Notwithstanding the clear and explicit terms of the written lease agreement to the contrary, plaintiff Bernard contends that the $6,000 trade-in was to be paid to him in cash. When defendants refused to pay the $6,000 in cash, plaintiffs instituted this action against defendants, seeking to recover compensatory and punitive damages on theories of common law fraud, consumer fraud under N.J.S.A. 56:8-2, conversion, theft by deception, conspiracy and misrepresentation. Defendants
moved to dismiss the complaint on the ground that it failed to state a claim against them upon which relief can be granted. Judge Simon in the Law Division agreed and dismissed the complaint against all defendants. The trial court held that plaintiffs could not prove their claim because the parol evidence rule barred the admission of any extrinsic evidence that would vary the express terms of the written lease agreement that the trade-in was a capitalized cost reduction applied as a down payment against the cost of the lease.
We are thoroughly satisfied from our study of the record, despite plaintiffs' contentions to the contrary, that the trial court correctly concluded that plaintiffs cannot overcome the substantive barrier of the parol evidence rule to vary the clear and explicit terms of the written lease agreement that the $6,000 trade-in was to be applied as a capitalized cost reduction in the calculation of plaintiff's monthly lease payments. The parol evidence rule may be explained generally as follows:
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. [3 Corbin on Contracts § 573 (1960)].
See also 30 AM.JUR. 2D Evidence § 1016 (1967).
"[T]he parol evidence rule operates to prohibit the introduction of oral promises to alter or vary an integrated written instrument. . . ." Ocean Cape Hotel Corp. v. Masefield Corp., 63 N.J. Super. 369, 378, 164 A.2d 607 (App.Div.1960) (citing Naumberg v. Young, 44 N.J.L. 331 (Sup.Ct.1882)). Introduction of extrinsic evidence to prove fraud in the inducement, however, is a well recognized exception to the parol evidence rule. "It is well settled that a party to an agreement cannot, simply by means of a provision in a written instrument, create an absolute defense or prevent the introduction of parol evidence in an action based on fraud in the inducement to contract." Ocean Cape, supra, 63 N.J. Super. at 377-78, 164 A.2d 607. Extrinsic evidence to prove fraud is admitted because
it is not offered to alter or vary express terms of a contract, but rather, to avoid the contract or "to prosecute a separate action predicated upon the fraud." Id. at 378, 164 A.2d 607. See also Harker v. McKissock, 12 N.J. 310, 323, 96 A.2d 660 (1953); Dover Shopping Center, Inc. v. Cushman's Sons, Inc., 63 N.J. Super. 384, 390, 164 A.2d 785 (App.Div.1960); Schlossman's, Inc. v. Niewinski, 12 N.J. Super. 500, 506, 79 A.2d 870 (App.Div.1951); The Timken Silent Automatic Corp. v. Vetrovec, 119 N.J.L. 500, 503, 197 A. 265 (Sup.Ct.1938).
However, the fraud exception to the parol evidence rule is not without its limits. There is a distinction between fraud regarding matters expressly addressed in the integrated writing and fraud regarding matters wholly extraneous to the writing. See for example Winoka Village v. Tate, 16 N.J. Super. 330, 84 A.2d 626 (App.Div.1951). See also 9 Wigmore on Evidence § 2431(c), at 104 (Chadbourn Rev.1981). In Winoka, supra, the plaintiff landlord sued to recover rents due on two three-year leases and defendant-tenant defended on the ground that he was fraudulently induced into entering said leases. The defendant contended that he informed the plaintiff's superintendent of a reluctance to enter a three-year lease due to his uncertain employment situation. According to the defendant, the plaintiff's superintendent informed him that if a tenant had to move before the lease terms expired, it was plaintiff's policy to retain the tenant's one month's rent ...