A. Kemp Fisheries, Inc. v. Castle & Cooke, Inc

Brief Fact Summary. A. Kemp Fisheries, Inc. (Plaintiff) sued Castle & Cooke, Inc. (Defendant) for damage resulting from the breakdown of freezer engines on the fishing vessel it had chartered from the Defendant. Defendant appeals from a judgment for the Plaintiff holding the Defendant liable for all the damages suffered by the Plaintiff.

Synopsis of Rule of Law. The test of admissibility of extrinsic evidence is whether it is relevant to prove a meaning to which the language of the contract is reasonably susceptible.

Facts. Plaintiff and Defendant agree that Plaintiff would charter a fishing vessel with an option to purchase. Plaintiff needed the vessel to fish for herring and salmon. After Plaintiff’s attorney reviewed the contract, Defendant sent the contract to the Plaintiff. Plaintiff then discovered that the contract differed from his understanding of the arrangement. He understood that Defendant’s machines would be in good working order and that the freezing system would meet his specific needs. However, the agreement contained no such provisions and Plaintiff signed the agreement. He then took out a vessel to sea where two of the engines that control the freezing system broke down. Plaintiff sold the herring he caught for a lower price than that for frozen herring. Plaintiff then repaired the machines but it still ruined the herring. Plaintiff then sued the Defendant for breach of the Charter Agreement, intentional misrepresentation, estoppel and rescission claiming that Defendant agreed t
o provide the engines in good working order and that the system would meet his basic needs. The trial court found that the agreement was ambiguous and admitted parol evidence to clarify the parties’ intent. Thus, the court held the Defendant liable for all of the Plaintiff’s damages. Defendant appeals.

Issue. Whether the court properly admitted parol evidence to determine the terms of the Charter Agreement between Plaintiff and a subsidiary of the Defendant?

Held. Judgment is reversed and is rendered for the Defendant.
The test of admissibility of extrinsic evidence is whether it is relevant to prove a meaning to which the language of the contract is reasonably susceptible. The plain meaning rule is used when the parties are sophisticated.
Here, the court found that the contract was fully integrated by using the plain meaning rule. The parties here are sophisticated. The Plaintiff should have spoken up before signing the contract, instead of waiting for a problem to arise. The trial judge was wrong to admit parol evidence to explain a conflict between an express warranty of seaworthiness and a waiver of that warranty. Rather the warranties that Plaintiff’s acceptance of the delivery terms releases Defendant from responsibility of the vessel’s condition and cannot be interpreted reasonably to warrant seaworthiness. Therefore, the Charter Agreement is an integrated contact and contained all of the parties’ agreements. It was not ambiguous and thus the trial court erred in admitted the parol evidence on the warranty of seaworthiness, the capacity of the freezing system, and the engines.

Discussion. This case demonstrates limitation on Pacific Gas and Electric Co. v. G.W. Thomas Drayage & Rigging Co., 69 Cal.2d 33 (1968), which explains that if the parties are sophisticated then the court will use the plain meaning rule to determine the admissibility of extrinsic evidence.