Riverisland Parol Evidence Holding Applied.

The parties entered into a restaurant lease agreement which contained an integration clause.  When they did a walk-through, the lessor told the lessee “if anything was not working, he would fix it,” according to the lessee. There were significant problems with the equipment and plumbing and the restaurant closed after several months. The parties sued each other. The trial court permitted the introduction of terms and promises which allegedly induced the lessee to sign the lease. A jury awarded damages for negligent misrepresentation which the appellate court affirmed, following the California Supreme Court’s recent decision in Riverisland Cold Storage v. Fresno Madera Production (2013) 55 Cal.4th 1169, [291 P.3d 316, 151 Cal.Rptr.3d 93], and stating:  “Our conclusion that parol evidence is admissible as to fraud claims involving sophisticated parties does not create any injustice. A party claiming fraud in the inducement is still required to prove they relied on the parol evidence and that their reliance was reasonable. In the present case, the burden was on plaintiffs to prove that, notwithstanding both the Lease’s integration clause and the ―“as is” language with respect to the restaurant equipment, they reasonably relied on Payne’s prior oral assurances in entering into the agreements. The jury concluded they met this burden, and substantial evidence supports the jury’s findings.” Julius Castle Restaurant, Inc. v. Payne (Cal. App. First Dist., Div. 1;  June 10, 2013) 216 Cal.App.4th 1423, [157 Cal.Rptr.3d 839].