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Boroff v. Salerno Duane, Inc.

A-993-03T3 (N.J. Super. App. Div. 2004) (Unpublished)

LEASES; VEHICLES—A vehicle lease would ordinarily cover any agreement concerning leasing costs for a prior leased vehicle; therefore, if it is silent, parol evidence cannot be used to prove that the parties to the new lease had agreed to eliminate termination charges for that other vehicle under its prior lease.

A customer put 78,000 miles on a leased vehicle over three years. The lease allowed fifteen thousand miles per year before excess mileage charges were triggered. A few weeks before the end of the lease, the customer returned to the dealer to discuss his options. He wad told he could either pay the excess mileage fee or purchase the vehicle. Preferring to have a new vehicle, he asked the dealer to find a buyer. According to the customer, the dealer told him “[his] problems [were] solved ... [because it found] a buyer for [his] car.” He then chose a replacement vehicle to lease and left the old one with the dealer. His new lease did not make reference to sale of the old car.

The old car was never sold and the customer was billed for the excess mileage charges. According to the customer, when he asked the leasing company about the bill, he was told that it was going out of business and that the invoice was a mistake. He also alleged that the dealer’s employee also told him that he was obtaining a “letter of release” saying that no money was owed. The employee avoided the customer’s phone calls from that point, and the customer began to pay the mileage charges.

He then brought suit against the leasing company, alleging that he was fraudulently induced to enter into the new lease by the dealer’s promise to sell the old vehicle. The leasing company moved for summary judgment, arguing that its customer was barred by the parol evidence rule from introducing the alleged oral agreement to sell the old vehicle. The lower court agreed, finding that any alleged oral agreement was part of the same transaction as the new lease, and the lease, by its terms, integrated the terms of all agreements between the parties. The customer appealed, alleging that he should not have been prohibited from introducing the parol evidence. He argued that the rule did not apply because he was not seeking to modify the new lease agreement. Instead, he was attempting to prove that he would not have entered into the new lease but for the dealer’s promise to sell his old vehicle. He also contended the parol evidence rule did not apply because the oral agreement was a collateral agreement to sell the car separate from the new lease.

The Appellate Division held that the oral agreement did not fall within the fraud exception to the parol evidence rule because the customer was not attempting to void the new lease agreement, but rather was seeking to avoid the excess mileage charges. It found that the customer was essentially attempting to modify the new lease to include a provision requiring the dealer to sell the old vehicle to avoid the mileage charges. The parol evidence rule does not allow the introduction of extrinsic evidence for this purpose. Further, the Court believed this was an attempt to modify the lease, masked as a claim of fraud in the inducement.

The Court further held that the cause of action for fraud in the inducement was misguided. The customer failed to seek the proper remedy, which would have been to invalidate the new lease. Instead, he sought an impermissible remedy for a fraud in the inducement claim by admitting that he was satisfied with the new agreement and only seeking to recover the excess mileage charges.

As to the lower court’s finding that the alleged oral agreement and the new lease were part of the same transaction, the Court agreed. It rejected the customer’s argument that an agreement about the old lease would not normally be included within the new lease. If the new lease was in fact offered as consideration for the sale of the old vehicle, it naturally would have referenced that sale in the new lease. The customer’s admission that he would not have leased the new vehicle without the promise to sell the old one further refuted his claim that the two agreements were distinct from each other.

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