U.S. Leasing Corp. v. Janicare, Inc.

• Citation: 364 S.E.2d 202,294 S.C. 312
• Decision Date: 11 January 1988
• Docket Number: No. 1075,1075
• Court: Court of Appeals of South Carolina
• Parties: UNITED STATES LEASING CORPORATION, Respondent, v. JANICARE, INC., Appellant.

Page 202

364 S.E.2d 202

294 S.C. 312

UNITED STATES LEASING CORPORATION, Respondent, v. JANICARE, INC., Appellant.

No. 1075.

Court of Appeals of South Carolina.

Submitted Dec. 9, 1987.

Decided Jan. 11, 1988.

G. Trenholm Walker, of Wise & Cole, P.A., Charleston, for appellant.

Jeffrey M. Butler, Walterboro, for respondent.

GOOLSBY, Judge:

United States Leasing Corporation ("USLC") brought this action against Janicare, Inc., for breach of a written equipment lease agreement. The trial court granted USLC's motion for summary judgment and awarded it damages, attorney fees, and costs. Janicare appeals. The basic question on appeal concerns whether the trial court properly granted summary judgment in USLC's favor. We affirm.

USLC's complaint alleges that the parties entered into a lease agreement by which Janicare agreed to lease from USLC two forklifts for 39 months at a monthly rental of $871.27 and that the defendant failed to pay all the monthly payments due under the lease.

Janicare's verified answer admits that it entered into the lease agreement but denies that it owes USLC any amount thereunder.

In a second defense, Janicare alleges that USLC represented to Janicare that "the buy-out of the lease was ... to be four monthly payments of [$837.76] or [$3,351.04]," that "at the time of purchase [Janicare] was to receive an investment tax credit," and that USLC "never sent the documentation necessary to provide [Janicare] with this."

Janicare alleges in its third defense, which is a counterclaim, that USLC's district sales manager "represented to [Janicare] that [Janicare] would receive an investment tax credit should [it] sign the lease agreement," that Janicare signed the lease agreement in reliance on this representation, that the representation constituted a "fraudulent act[ ]," that USLC "well knew ... the representation was false" and "would be relied upon by [Janicare]," that Janicare "had reason to rely on the representation," that USLC failed "to provide [Janicare] with an investment tax credit," and that it was damaged "as ... a direct and approximate [sic] result of ... USLC's failure ... to provide [Janicare] with [the] investment tax credit...." The counterclaim further alleges that the fraudulent representation regarding the investment tax credit "accompan[ied] the breach" of the lease agreement as did a fraudulent representation by Janicare "that the buy-out was four monthly payments of [$837.76]," an amount less than the buy-out price alleged in USLC's complaint and arrived at by USLC only after Janicare "complained about not receiving its investment tax credit."

After engaging in limited discovery, USLC moved for summary judgment on the ground that there was no genuine issue of material fact and that it was entitled to judgment as a matter of law.

Following argument by the parties on the issues raised by the pleadings, the trial court granted USLC summary judgment. It awarded USLC $10,796 in damages, $1,619.40 in attorney fees, and costs, while allowing Janicare the option of returning the equipment and thereby receiving a reduction in the judgment in the amount of $3,397.95. Janicare conceded that USLC was entitled to summary judgment on Janicare's second defense.

Janicare, relying on certain parol or extrinsic evidence that the trial court refused to consider, contends that genuine issues of material fact exist regarding whether USLC made a representation to and breached an agreement with Janicare concerning the assignment to Janicare by USLC of an investment tax credit and regarding whether USLC made a representation to Janicare concerning the buy-out price for the leased equipment.

Summary judgment should be granted when it is clear that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Huckaby v. Confederate Motor Speedway, Inc., 276 S.C. 629, 281 S.E.2d 223 (1981).

No provision in the lease agreement refers to an investment tax credit being given by USLC to Janicare. It also does not contain a buy-out provision. An integration clause in the lease agreement declares that "[t]his instrument constitutes the entire agreement between [USLC] and [Janicare], and it shall not be amended, altered or changed except by a written agreement signed by the parties hereto." The record contains no evidence of a subsequent written agreement signed by both parties.

An answer that Janicare gave to one of USLC's interrogatories, however, states that "[b]efore, during, and after the signing of the lease agreement," an agent of USLC "assured [Janicare] that upon purchase a tax credit would be given ... and furthermore assured [Janicare] that the buy-out provision would be four ... months of payments." Another answer states that the same agent "assured" Janicare that the "tax credit and buy-out provision[s]" were "part of the agreement." Janicare's verified pleading asserts that USLC refused to provide it with an investment tax credit and raised the buy-out price for the leased equipment.

Janicare contended before the trial court that parol evidence regarding USLC's alleged promise to assign Janicare an investment tax credit was admissible because of USLC's alleged fraud and that parol evidence of the terms of the parties' alleged agreement to assign Janicare the investment tax credit was admissible because of the lease agreement's alleged ambiguity arising out of its failure to "speak to the investment tax credit at all." Janicare based its contention concerning the admissibility of parol evidence regarding USLC's alleged representation to accept a particular sum as a buy-out price solely upon USLC's alleged fraud.

Janicare agreed that it never attempted to pay any buy-out price to USLC and that USLC was therefore entitled to summary judgment on Janicare's defense that USLC breached the parties' alleged agreement concerning a buy-out price; thus, it did not argue that parol evidence of the terms of an alleged agreement by USLC to accept a particular sum from Janicare as a buy-out price was admissible for any reason.

The trial court refused to consider extrinsic evidence of the alleged representations made by USLC regarding the investment tax credit and buy-out price and of the alleged oral agreement regarding the investment tax credit.

We hold that the trial court correctly held, based on the record before it and the arguments made, that extrinsic evidence of the alleged representations and of the alleged oral agreement was inadmissible.

In so holding, we recognize that the parol evidence rule does not preclude the admission of parol or extrinsic evidence to prove fraud in the inducement of a written contract. Palmetto Bank & Trust Co. v. Grimsley, 134 S.C. 493, 133 S.E. 437 (1926). Although Janicare appeared initially to base its argument for the admission of parol evidence on this ground, Janicare seemed to agree with the trial court that its pleading did not "allege fraud at the inception of the contract" and appeared to seek the admission of parol evidence on the ground that "there was a breach of contract with fraudulent elements present...." We are unaware, however, of any such exception to the parol evidence rule.

The fraud exception to the parol evidence rule refers to "fraud either in the execution...