Riverisland: Inordinate Burdens or Leveling the Playing Field

By David J. Myers

There has always been a tension between written contract expectations and judicial economy, on the one hand, and the prevention of fraud on the other. Until Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Ass’n (2013) 55 Cal.4th 1169, resolution of that tension in California favored contract clarity and the minimization of litigation, even at the expense of truth and fairness. Now, however, as in most states, California courts must consider oral inducements that rise to the level of fraud, even if inconsistent with integrated written contract terms.

[Page 9]

Given the current economic backdrop, this shift in priorities was obviously of great importance to our Supreme Court, and may not create the unmanageable burdens that some may fear, due to the strict pleading and proof requirements applicable to fraud claims that the court highlighted in support of its decision. Indeed, a number of limitations are already being developed by our courts, or have been adopted in other states and may also find acceptance here.