Clifford Crowell v. Campbell Soup Co.
264 F.3d 756 (2001)
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Rule of Law:
Under the parole evidence rule, a party's reliance on pre-contract oral promises is unreasonable as a matter of law when those promises plainly contradict the unambiguous terms of a fully integrated written agreement.
Facts:
- Beginning in 1987, several farmers (Growers) entered into broiler chicken production contracts with Herider Farms, Inc. (Herider).
- The contracts required the Growers to construct and equip poultry barns at a significant cost, approximately $250,000 each.
- Growers alleged that Herider made pre-contract oral promises, including that the contracts would only be terminated 'for cause' and that Herider was committed for the useful life of the barns.
- Each Grower signed a written 'Growing Agreement' and a 'Poultry House Financing Addendum.'
- The written agreements expressly stated that either party could terminate the agreement 'at any time that no flock is placed or scheduled to be placed' with the Grower.
- The addenda stipulated that if Herider terminated before placing a set number of flocks (35 or 40), it would reimburse the Growers for the 'reasonable cost of financing the construction of a poultry house.'
- The agreements also contained an integration clause stating they constituted the 'entire agreement between the parties.'
- On May 19, 1997, Herider sent letters to the Growers announcing it would cease placing chickens because its parent company, Campbell Soup, was closing a local processing plant.
Procedural Posture:
- The Growers filed suit against Herider Farms, Inc. in the U.S. District Court for the District of Minnesota.
- The Growers asserted claims for breach of contract, fraudulent inducement, misrepresentation, and violation of a Minnesota statute, among others.
- The district court granted summary judgment in favor of Herider on the claims for fraudulent inducement, misrepresentation, and wrongful termination.
- The district court ruled that parole evidence of the alleged oral promises was inadmissible because the written contracts were unambiguous and the promises contradicted their terms.
- The district court denied Herider's motion for summary judgment on the Growers' claims for payment under the premature termination clause and under Minnesota Statute § 17.92.
- Stipulated final judgments were entered, and both the Growers and Herider appealed the district court's rulings to the U.S. Court of Appeals for the Eighth Circuit.
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Issue:
Does a party's reliance on alleged pre-contract oral promises that a contract would only be terminated 'for cause' support a claim for breach of contract or fraudulent inducement when the integrated written agreement expressly permits termination without cause?
Opinions:
Majority - Hansen, Circuit Judge
No. A party's reliance on oral promises that plainly contradict the express terms of a written agreement is unreasonable as a matter of law, and therefore cannot support claims for breach of contract or fraud. The court found the written contracts to be clear and unambiguous, explicitly granting Herider the right to terminate without cause at any time between flocks. The alleged oral promises—that termination would only be 'for cause' and that the relationship was long-term—were in direct contradiction to these written provisions. Citing Minnesota's parole evidence rule, the court held that such evidence is inadmissible to vary or contradict a clear written agreement, especially one containing an integration clause. Therefore, the Growers' reliance on these oral promises was legally unreasonable, and their claims for wrongful termination, fraud, and misrepresentation were correctly dismissed.
Analysis:
This case strongly affirms the primacy of the written contract and the parole evidence rule. It establishes that when parties execute a clear, integrated written agreement, courts will not allow alleged prior oral statements to alter its terms, particularly when those statements are in direct opposition to the writing. The decision significantly limits the scope of fraudulent inducement claims by defining reliance on contradictory oral promises as 'unreasonable as a matter of law.' This provides a high degree of certainty for commercial parties, reinforcing the principle that all essential terms must be memorialized in the final written contract to be enforceable.
