Harrison v. Happy Day Ford
| Decision Date | 30 September 1988 |
| Docket Number | No. 87-3911,87-3911 |
| Parties | Unpublished Disposition NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. Susan E. HARRISON, Plaintiff-Appellant, v. HAPPY DAY FORD, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Before POOLE, CANBY and LEAVY, Circuit Judges.
In this diversity case, plaintiff-appellant Susan E. Harrison appeals from the order of the district court granting defendant-appellee Happy Day Ford's (HDF) motion for judgment notwithstanding the verdict (JNOV) and dismissing her complaint with prejudice. The jury returned a verdict against HDF for breach of an oral contract to provide temporary insurance and for negligently misrepresenting the existence of insurance coverage. The motion was granted on the grounds that (1) the contract was fatally indefinite as to subject matter, a material term; (2) the parol evidence rule barred proof of the oral promise; and (3) assuming arguendo that negligent misrepresentation is a cognizable cause of action in Idaho, proof of the misrepresentation was also barred by operation of the parol evidence rule. We affirm without reaching the question of definiteness.
We review the grant of a motion for JNOV de novo. JNOV is appropriate if the evidence permits but one reasonable conclusion--the one rejected by the jury. The evidence is examined in the light most favorable to the non-moving party to determine whether the record contains substantial evidence to support the verdict. Locricchio v. Legal Services Corp., 833 F.2d 1352, 1356 (9th Cir.1987). The district court's determinations of state law are also reviewed de novo. Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1423 (9th Cir.1986). We may affirm the district court on any basis supported by the record. City of Las Vegas v. Clark County, 755 F.2d 697, 701 (9th Cir.1985).
The evidence is summarized here in the light most favorable to Harrison. Harrison obtained a judgment against Dean Evans on her claim for physical injuries caused by his negligent operation of a vehicle, in which she was a passenger. Evans was judgment-proof; he therefore assigned to Harrison his claim against HDF stemming from its failure to provide insurance coverage.
Evans' claim was based on HDF's alleged oral promise to provide temporary liability insurance in consideration of his purchase of the vehicle, and its representation that he was covered by HDF's liability policy when he drove it away after completing the transaction. He purchased the vehicle at HDF's lot in Idaho, paying $1000 down and signing a Retail Installment Contract (the contract) to finance the remainder through BarclaysAmerican. 1
The front page of the contract provided, in large bold letters:
INSURANCE AGAINST LIABILITY FOR BODILY INJURY OR PROPERTY DAMAGE TO OTHERS IS NOT INCLUDED IN THIS TRANSACTION.
The sale was negotiated by HDF employees Dale Nordstrom, salesman, and John McCain, sales manager. During the negotiations, Evans and McCain discussed liability insurance. McCain advised that Evans' existing policy would cover him immediately. Evans explained that he was only insured against property damage on his other, stored vehicle. He therefore requested that HDF provide him with a temporary insurance binder to cover him for seven days until he could obtain liability insurance through his agent in Oregon. McCain agreed, stating that when Nordstrom placed a sticker in the vehicle window, he would be covered for seven days. Nordstrom placed the sticker in the window, Evans relied upon the representation of coverage, and he drove away. The sticker was actually a seven day registration permit. The accident occurred three days later. Evans then called HDF to determine the number of its policy and was told by McCain that he was not covered. 2 Upon learning of the destruction of its collateral, BarclaysAmerican rejected the financing agreement. HDF then called Evans and demanded he return and reapply for credit by filling out another contract. Evans refused, citing HDF's failure to provide coverage.
The jury returned a verdict for Harrison on her claims for breach of oral contract and negligent misrepresentation and the court entered judgment accordingly. HDF then successfully moved for JNOV and Harrison timely appealed.
Idaho Code section 28-2-202 provides:
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein, may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement, but may be explained or supplemented:
(a) by course of dealing or usage of trade (Sec. 28-1-205) or by course of performance (Sec. 28-2-208); and
(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
The Idaho Supreme Court has stated that
when a contract has been reduced to writing, which the parties intend to be a complete statement of their agreement, any other written or oral agreements or understandings ... made prior to or contemporaneously with the written "contract" and which relate to the same subject matter are not admissible to vary, contradict or enlarge the terms of the written contract.
Chapman v. Haney Seed Co., 102 Idaho 26, 624 P.2d 408, 410 (1981).
The threshold question is whether the contract, which disclaims the provision of any liability coverage, was an integration--the complete and final statement of the parties agreement on the subject. The answer Nysingh v. Warren, 94 Idaho 384, 488 P.2d 355, 356 (1971) (footnote omitted). If the document contains a merger clause, however, it raises a rebuttable presumption of integration. Anderson & Nafziger v. G.T. Newcomb Co., 100 Idaho 175, 595 P.2d 709, 714 (1979). See also Tusch Enters. v. Coffin, 113 Idaho 37, 740 P.2d 1022, 1029 (1987) ().
The contract contains a merger clause. The second page of the document states that "NO CHANGE IN THIS CONTRACT SHALL BE BINDING UNLESS IN WRITING AND NO AGREEMENT, REPRESENTATION OR WARRANTY SHALL BE BINDING ON YOU UNLESS EXPRESSLY CONTAINED HEREIN. Therefore, a rebuttable presumption of merger arose which, in the absence of substantial contrary evidence, becomes conclusive. Our review of the record reveals no substantial evidence that the parties did not intend the contract to be the embodiment of their complete and final expression on the subject of the provision of liability insurance. See Nysingh, 488 P.2d at 356. Therefore, the jury could not properly find that the contract was not an integration. 3
The question thus becomes whether the terms of the alleged oral agreement are inconsistent with those of the contract. We think it self-evident that "insurance against liability for bodily injury or property damage to others is not included in this transaction" is inconsistent with a promise to include insurance against liability in the transaction. We conclude that the evidence admits of no conclusion other than that the parties intended the contract to be the final expression of their agreement as to liability insurance coverage, and that the terms of the alleged oral promise contradict those in the contract. We therefore hold that proof of the oral agreement was barred by the parol evidence rule. We affirm the grant of JNOV as to Harrison's contract claim.
The trial court granted JNOV on the claim for negligent misrepresentation on the ground that, assuming arguendo the existence of such a cause of action in Idaho, 4 the parol evidence rule barred proof of any negligent promissory misrepresentations. We make that same assumption here, and we reach the same conclusion.
In discharging its Erie obligation to ascertain and apply state substantive law, the district court is ordinarily bound by the decisions and dicta of the highest state court on the question. Dimidowich v. Bell & Howell, 803 F.2d 1473, 1482 (9th Cir.1986). Where, as here, the state court of last resort has offered no guidance, the district court must look to other sources, including published opinions from other jurisdictions. Cunha, 804 F.2d at 1424; Dimidowich, 803 F.2d at 1482. The district court failed to explain the basis for its conclusion that Idaho would apply the parol evidence rule to a claim for negligent misrepresentation. Again, however, we agree with the court's conclusion and affirm nevertheless.
The question whether the parol evidence rule can operate to bar proof of a promissory misrepresentation is a source of considerable division among the states. Compare Geosearch, Inc. v. Howell Petroleum Corp., 819 F.2d 521, 525-26 (5th Cir.1987) (Texas law) (by implication); APLications, Inc. v. Hewlett-Packard Co., 501 F.Supp. 129, 134, 136 (S.D.N.Y.1980), aff'd 672 F.2d 1076 (2d Cir.1982) (California and New York law); Formento v. Encanto Business Park, 154 Ariz. 495, 744 P.2d 22, 25-26 (Ct.App.1987); Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115, 1117-20 (Ct.App.1986); Martens Chevrolet, Inc. v. Seney, 292 Md. 328, 439 A.2d 534, 539-40 n. 7 (1982); Brown v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 197 Mont. 1, 640 P.2d 453, 456-57 (1982); Brungard v. Caprice Records, Inc., 608 S.W.2d 585, 588 (Tenn.Ct.App.1980); Haynes v. Cumberland...
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