On July 28, 2009, the Ohio Supreme Court held that the parol evidence rule -- which precludes evidence of terms contradicting those found within a final written contract -- applies to actions brought under the Ohio Consumer Sales Practices Act (CSPA).
Williams v. Spitzer Autoworld Canton, L.L.C., Slip Opinion No. 2009-Ohio-3554.
Plaintiff and consumer advocate amici groups argued that the parol evidence rule does not apply to CSPA claims, thereby allowing verbal statements to be used to trump contradictory terms in a signed written agreement. Defendant and amici, including the National Federation of Independent Businesses/Ohio, the American Tort Reform Association, and the Ohio Automobile Dealers Association argued that the parol evidence rule is applicable to CSPA claims and that a contrary result would completely undermine the predictability and finality of written contracts.
Reynold Williams Jr., purchased a vehicle from Spitzer Autoworld. The written sales contract, signed by Williams, provided that he would receive a trade-in allowance of $15,500.00 for his current vehicle. Williams filed suit two years later claiming that during negotiations preceding the contract's signing, Spitzer had promised him a higher trade-in allowance of $16,500.00. He sued Spitzer for violating the CSPA, basing his claim on a rule promulgated by the Ohio Attorney General under the CSPA (Ohio Administrative Code 109:4-3-16(B)(22)). This rule makes it a violation of the CSPA for a dealer in a consumer transaction to "fail to integrate into any written sales contract, all material statements, representations or promises, oral or written, made prior to obtaining the consumer's signature on the written contract with the dealer."
The jury awarded $2500 in compensatory damages. The trial court imposed treble damages and awarded attorney fees to Williams.
On appeal, Spitzer argued that evidence of the alleged pre-contractual oral promise was barred by the parol evidence rule which -- in order to protect the stability and enforceability of written contracts -- prohibits introduction into evidence of prior or contemporaneous oral agreements that contradict terms within the written agreement. Williams contended that the parol evidence rule did not apply because his claim alleged violation of the CSPA, not breach of contract. The Court of Appeals affirmed, finding that the parol evidence rule does not apply to CSPA claims.
The Supreme Court reversed the Court of Appeals and found in Spitzer's favor, holding that (1) the parol evidence rule applies to claims made under the CSPA, and (2) to the extent Ohio Administrative Code 109:4-3-16(B)(22) conflicts with the parol evidence rule, the former constitutes an unconstitutional usurpation of the Ohio General Assembly's legislative authority and is, therefore, invalid.
In a concurring opinion (written by Justice Cupp and joined by three other justices), the Court recognized that established exceptions to the parol evidence rule, offer adequate protection to consumers asserting CSPA claims. But, none of those exceptions applied here to alter a material term of the written contract signed by Williams.