The National Groups, LLC v. Nardi
For a claim of negligent misrepresentation, even if the misrepresentation forms part of a binding agreement, a plaintiff cannot reasonably rely on a contractual term he knows to be false and an attorney's knowledge regarding the falsity of a statement prevents his client from claiming he reasonably relied on that statement in an action for negligent misrepresentation. The National Groups, LLC, entered into a lease agreement and option to buy an office building from Charles and Marie Nardi, ground lessees, after their attorneys discussed ongoing litigation the Nardis were engaged in, regarding the amount of available parking under the ground lease. Nevertheless, the agreement between National and the Nardis inadvertently provided that the Nardis had no knowledge of any pending or threatened litigation. The misstatement escaped both parties' attorneys' notice. When the litigation concluded, the Nardis were entitled to use only 48 of the 88 available parking spaces, leaving National with insufficient parking for its employees. National filed this action, alleging, relevantly, negligent misrepresentation from the no pending litigation provision. Following a court trial, the court concluded that the plaintiff did not prove that it actually or justifiably relied on the defendants' admitted misstatement. The plaintiff appealed, contending that the court improperly determined that the plaintiff did not actually or reasonably rely on the terms of the parties' contract. The Appellate Court affirmed the judgment. The parol evidence rule did not bar, as claimed, the trial court from using a communication between the parties' attorneys to determine whether the plaintiff's reliance was reasonable. The rule prevents parties from using extrinsic evidence to vary the terms of an otherwise clear and unambiguous contract. It does not bar extrinsic evidence from being used for other purposes. Parties may introduce evidence extrinsic to the contract to disprove the elements of negligent misrepresentation. The court did not misapply established legal rules, including the principle that knowledge of the contract terms is imputed to the contracting parties. The principle may justify enforcing the contract, but in a tort a party's knowledge does not automatically result in reasonable reliance. Further, it was not clearly erroneous for the court to find that the plaintiff's attorney had knowledge of the pending litigation and that this knowledge prevented the plaintiff from reasonably relying on the contract provision.