Hinkel v. Sataria Distribution & Packaging, Inc.
2010 Ind. App. LEXIS 93, 2010 WL 343146, 920 N.E.2d 766 (2010)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under the parol evidence rule, a prior or contemporaneous oral agreement is inadmissible to vary the terms of a written contract that is deemed to be a complete integration of the parties' agreement. A written employment contract that specifies key terms like salary and benefits but omits a severance package is considered a complete integration regarding compensation, especially when a severance term would naturally and normally be included in such a writing.
Facts:
- John Jacobs, the owner of Sataria Distribution and Packaging, Inc., discussed a potential job with Mark Hinkel.
- During discussions, Jacobs orally promised Hinkel one year's salary and insurance coverage if his employment were ever involuntarily terminated.
- Subsequently, Jacobs sent Hinkel a written employment offer detailing annual compensation, position, start date, and health insurance, but it made no mention of a severance package.
- The written offer stated that the terms for paid vacation were 'To be determined.'
- Hinkel signed the written offer, resigned from his previous jobs, and began working for Sataria in September 2005.
- Hinkel alleges that Jacobs reiterated the oral severance promise in November and December 2005, after he had already started working.
- On January 23, 2006, Sataria involuntarily terminated Hinkel's employment.
Procedural Posture:
- Mark Hinkel sued Sataria Distribution and Packaging, Inc. in a state trial court for breach of contract and promissory estoppel.
- Sataria filed a motion for summary judgment.
- The trial court granted summary judgment in favor of Sataria.
- Hinkel, as the appellant, appealed the trial court's grant of summary judgment to the Court of Appeals of Indiana, with Sataria as the appellee.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is an alleged prior oral promise for a severance package enforceable when a subsequent written employment agreement covers compensation and benefits but is silent on severance?
Opinions:
Majority - Vaidik, J.
No. The alleged prior oral promise is not enforceable because the subsequent written employment agreement is a completely integrated contract that supersedes any prior negotiations. The parol evidence rule bars the admission of the oral promise because a significant term like a lucrative severance package would 'naturally and normally' be included in the final written agreement if the parties had intended for it to be part of their contract. Furthermore, any promises made after the contract was signed are unenforceable modifications because they were not supported by new consideration from Hinkel, as his continued employment was an obligation under the original agreement. Hinkel's promissory estoppel claim also fails because he did not suffer an injustice so severe that enforcement of the promise is required.
Dissenting - Crone, J.
Yes. The enforceability of the oral promise should be considered because a genuine issue of material fact exists as to whether the written contract was completely integrated. The fact that the document explicitly left vacation terms 'to be determined' and lacked a formal integration clause suggests it may have been only a partial integration of their agreement. Even if the contract were fully integrated, the parol evidence rule should not bar the promise because the severance term does not contradict the written terms but merely supplements them by addressing a subject the writing omitted. Therefore, summary judgment was inappropriate, and the case should have been remanded for further proceedings.
Analysis:
This decision reinforces a strict application of the parol evidence rule in the employment context, emphasizing that courts will find a written agreement to be fully integrated regarding subjects it addresses, even without a specific integration clause. It sets a precedent that significant, valuable terms like severance pay are presumed to be included in a final writing if agreed upon, making it difficult for employees to enforce prior oral promises omitted from the text. The case also underscores the distinct requirement of new consideration for post-contract modifications, preventing employees from using continued service as consideration for subsequent promises.
