Sound Techniques, Inc. v. Hoffman

Brief Fact Summary.

Sound Techniques, Inc. (Sound) sued Hoffman on negligent misrepresentation claims after the noise from the first floor of the office space caused Sound to lose business.

Synopsis of Rule of Law.

The parol evidence rule prohibits the use of negligent misrepresentation as evidence that contradicts the term of fully-integrated agreements.

Facts.

Sound Techniques, Inc. (Sound) leased space on the second floor of an office building from Hoffman. Sound wanted to use the second floor as a recording studio and asked the leasing agent about the expansion of a bar on the first floor. The leasing agent informed sound that the expanded area would be a dining room and only background music would be played in that area. Sound entered into a lease where he disclaimed reliance on representations not in the lease agreements. The bar ended up having an upgraded sound system and the noise from the bar caused Sound to lose business. Sound sued Hoffman for negligent misrepresentation, fraud, and breach of contract. Judgment was granted to Sound on the negligent misrepresentation claim.

Issue.

Whether the parol evidence rule prohibits the use of negligent misrepresentation as evidence that contradicts the terms of fully-integrated agreements?

Held.

Yes. The judgment of the trial court is reversed. The leasing agent’s representation was not intentionally fraudulent despite the representations being false. Because the leasing agent was negligent in making the representation and no fraud existed, the parol-evidence rule prohibits the introduction of the leasing agent’s statement.

Discussion.

The parol-evidence rule can’t be relied upon to protect against fraud. Without fraud, the parol-evidence rule applies and the contract should govern.