Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association
Supreme Court of California
291 P.3d 316 (2013)
The Workmans (plaintiffs), who ran Riverisland Cold Storage, Inc., fell behind on loan payments to Fresno-Madera Production Credit Association (defendant), which restructured the debt and required additional collateral. The Workmans claimed a Fresno-Madera executive verbally promised, two weeks before signing, that the loan would be extended for two years in exchange for just two ranches as extra collateral -- but the written agreement pledged eight parcels instead. When they defaulted, Fresno-Madera moved to foreclose; the Workmans eventually repaid the loan and then sued for fraud, rescission, and reformation, relying on the earlier oral promise. The trial court granted summary judgment for Fresno-Madera based on an older case barring such evidence, and the court of appeal reversed.
Whether, as an exception to the parol-evidence rule, a plaintiff may introduce any evidence -- including a prior oral agreement -- to prove that a defendant committed fraud in a contract.