Today (January 14, 2013), in Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association, No. S190518, 2013 Cal. LEXIS 253 (Cal. Jan. 14, 2013), the California Supreme Court overruled a 78-year old precedent regarding the use of parol evidence to demonstrate fraud.   

California Code of Civil Procedure section 1856 subdivision (g) sets forth a fraud exception to the parol evidence rule, stating: "This section does not exclude other evidence . . . to establish . . . fraud."  In 1935, the California Supreme Court, adopted a limitation on this fraud exception in Bank of America etc. Assn. v. Pendergrass, 4 Cal. 2d 258 (1935).  Specifically, the Pendergrass court held that evidence offered to prove fraud "must tend to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing." Pendergrass, 4 Cal. 2d at 263.  As observed by the Riverisland court, the Pendergrass rule has been criticized but followed by California courts "albeit with varying degrees of fidelity."

 In overruling Pendergrass, the California Supreme Court observed that the Pendergrass limitation found no support in the language of the statute codifying the parol evidence rule and the exception for evidence of fraud (i.e., California Code of Civil Procedure sections 1856 and 1856(g).)  The Riverisland court also observed that Pendergrass was difficult to apply, conflicted with doctrine of the Restatements, most treatises, and the majority of other states.  Thus, with Pendergrass having been overruled, California law regarding the use of parol evidence to demonstrate fraud is now consistent with a majority of other states.  The California Supreme Court did leave open the issue of how a party's failure to read a contract would affect the introduction of parol evidence of alleged misrepresentations. 

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