Monday, January 14, 2013

Riverisland Cold Storage v. Fresno-Madera Prod. Credit Ass'n (Cal. Supreme Ct. - Jan. 14, 2013)

Wow.  The California Supreme Court today unanimously overrules longstanding precedent -- first articulated in 1935 -- and holds that parties can indeed make fraud claims even if those claims are inconsistent with the express terms of a written contract.

In short, Pendergrass bites the dust.

This will make fraud claims -- as well as recission claims based on fraud -- a lot, lot easier to assert.  The Court is persuaded that the result will be a net decrease in fraud, since now you won't be able to defraud people and then write a contract that effectively covers your fraud.

But there's a different view as well.  Before, a party couldn't get out of a contract by claiming that the other side orally told them something different.  Now they can.  And as long as you have your own testimony, you get past summary judgment as well.  So you get a trial and/or a settlement.

Not bad.  Not bad at all.  Which may in turn give you a pretty large incentive to "remember" alleged oral statements that the other side purportedly told you that were inconsistent with a contract that did not turn out as favorably as you had hoped.

It's a big day for civil litigation in California.  For better or worse.