Parol evidence rule nixes breach of contract claim

Court concludes that the parol evidence rule barred the introduction of the evidence on which Edascio based its breach of contract claim and on which the jury awarded Edascio damages and, thus, that the trial court did not err in granting NextiraOne judgment notwithstanding the verdict.

Edascio, LLC v. NextiraOne, LLC (Tex.App.- Houston [1st Dist.] May 22, 2008)(Jennings)
(commercial law, breach of contract, JNOV, parol evidence rule precludes consideration of evidence to support claim)

Parol Evidence

In its first cross-issue, NextiraOne contends that the parol evidence rule barred evidence of the purported oral agreement on which Edascio based its breach of contract claim. NextiraOne asserts that the oral agreement Edascio sought to enforce at trial, which obligated NextiraOne to assign Edascio a specific category and number of accounts (approximately 45,000 accounts described during trial as NextiraOne's small and medium sized customers with fewer than 200 ports and the GBS and Staples accounts) on the effective date of the SOA, contradicted, varied, and supplemented the express terms of the SOA. NextiraOne further asserts that the alleged oral agreement violated the SOA's merger clause, in which the parties objectively manifested their intent to conclude a complete agreement and to bar any oral agreements. Edascio responds that the term "Territory" in the SOA was ambiguous, and it argues that the SOA was incomplete because it failed to identify the customers to be assigned. Thus, Edascio asserts that parol evidence was permissible to resolve the ambiguity and complete the SOA. Edascio also asserts that the existence of a merger clause does not eliminate the "facial ambiguity and incompleteness exceptions to the parol evidence rule."The parol evidence rule is a rule of substantive contract law, and we review parol evidence questions de novo. Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex. App.--Houston [1st Dist.] 2005, pet. denied); City of Pasadena v. Gennedy, 125 S.W.3d 687, 691 (Tex. App.--Houston [1st Dist.] 2003, pet. denied).

When the parties have concluded a valid, integrated agreement, the parol evidence rule precludes enforcement of a prior or contemporaneous inconsistent agreement. Ledig v. Duke Energy Corp., 193 S.W.3d 167, 178 (Tex. App.--Houston [1st Dist.] 2006, pet. denied); Baroid Equip., Inc.,184 S.W.3d at 13. A written instrument presumes that all prior agreements relating to the transaction have been merged into it and will be enforced as written and cannot be added to, varied, or contradicted by parol testimony. Baroid Equip.,184 S.W.3d at 13. The parol evidence rule "is particularly applicable when the written contract contains a recital that it contains the entire agreement between the parties or a similarly-worded merger provision." Id.

When parol evidence is determined to be inadmissible, it has no legal effect and merely constitutes proof of facts that are immaterial and inoperative. Id.However, parol evidence is admissible to show the parties' true intentions if the writing is ambiguous. Ledig, 193 S.W.3d at 178-79; Gonzalez v. United Bhd. of Carpenters and Joiners of America, Local 551, 93 S.W.3d 208, 211 (Tex. App.--Houston [14th Dist.] 2002, no pet.). The determination of whether the terms of a contract are ambiguous is a question of law, which we review de novo. Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 705 (Tex. 2008); Standard Constructors, Inc. v. Chevron Chemical Co., 101 S.W.3d 619, 622 (Tex. App.--Houston [1st Dist.] 2003, pet. denied).

To determine whether a contract is ambiguous, we look at the agreement as a whole in light of the circumstances present when the parties entered into the contract. Enter. Leasing Co. of Houston v. Barrios, 156 S.W.3d 547, 549 (Tex. 2004). We examine and consider the entire writing in an effort to harmonize and to give effect to all the provisions of the contract so that none will be rendered meaningless. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006).Our primary concern in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument. Id. If a written contract is worded in such a way that it can be given a definite or certain legal meaning, then the contract is not ambiguous. SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005). A contract will become ambiguous only if its meaning is uncertain or if it is subject to two or more reasonable interpretations. Seagull Energy, 207 S.W.3d at 345. An ambiguity does not arise simply because the parties advance conflicting interpretations of the contract. Tex. Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123, 126 (Tex. 2004). Moreover, we may not consider extrinsic evidence to contradict or to vary the meaning of unambiguous language in a written contract in order to create an ambiguity. See Fiess v. State Farm Lloyds, 202 S.W.3d 744, 747 (Tex. 2006).
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Excerpt from Opinion by Justice Terry Jennings
Before Chief Justice Radack, Justices Jennings and Bland
No. 01-07-00362-CV Edascio, L.L.C. v. NextiraOne, L.L.C.
Appeal from 281st District Court of Harris County
Trial Court Judge: Hon. David J. Bernal
Attorneys: Stephen G. Tipps, James J. Ormiston, D. Scott Funk, Jennifer Kingaard
Sean Gorman, James E. Doyle