BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                        AB 824|
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          Bill No:  AB 824
          Author:   Jones (R)
          Amended:  As introduced
          Vote:     21

           SENATE JUDICIARY COMMITTEE  : 7-0, 06/11/13
          AYES: Evans, Walters, Anderson, Corbett, Jackson, Leno, Monning

           ASSEMBLY FLOOR  :  75-0, 5/13/13 (Consent) - See last page for  

           SUBJECT  :    Written agreements:  exclusion of evidence

           SOURCE  :     Conference of California Bar Associations

           DIGEST  :    This bill adds trust instruments to the list of  
          agreements that are covered by the statute codifying the parol  
          evidence rule.

           ANALYSIS  :    

          Existing law:

          1. Provides that the terms set forth in a writing intended by  
             the parties as a final expression of their agreement as are  
             included therein may not be contradicted by evidence of any  
             prior agreement or of a contemporaneous oral agreement. 

          2. Provides that the terms set forth in a writing described  
             above may be explained or supplemented by evidence of  


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             consistent additional terms unless the writing is intended  
             also as a complete and exclusive statement of the terms of  
             the agreement.  

          3. Requires that the court determine whether the writing is  
             intended by the parties as a final expression of their  
             agreement with respect to such terms as are included therein  
             and whether the writing is intended also as a complete and  
             exclusive statement of the terms of the agreement.

          4. Specifies circumstances under which evidence is not excluded,  
             including, among other things, evidence of a mistake or  
             imperfection in the writing that is put in issue by the  
             pleadings, or where the validity of the agreement is in  

          5. Defines "agreement" to include deeds and wills, as well as  
             contracts between parties. 

          This bill amends the definition above to include "trust  
          instruments" and makes other technical changes.

          Codified the Code of Civil Procedure, Section 1856, the parol  
          evidence rule, with certain exceptions, operates to bar the  
          introduction of any extrinsic evidence (oral or written) to vary  
          or add to the terms of a complete and final written agreement.   
          This rule is not merely a rule of evidence; rather, it is a rule  
          of substantive law which holds that the act of embodying the  
          complete terms of an agreement in writing becomes the contract  
          of the parties.  In other words, as a matter of law, the writing  
          is the agreement and extrinsic evidence is excluded because it  
          cannot serve to prove what the agreement was when the agreement  
          has already been determined to be the writing itself.  (2 Witkin  
          Cal. Evid. Documentary Evidence Secs. 59, 62.)

          A writing constitutes an integration when it is intended to be a  
          final expression of one or more terms of the parties' agreement.  
           (Code of Civil Procedure [CCP] Section 1856(a).)  The existence  
          of integration, which triggers the application of the parol  
          evidence rule, is a question of law for the judge, as opposed to  
          a question of fact for the jury.  The judge must also decide  
          whether the writing is intended also as a complete and exclusive  



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          statement of the terms of the agreement-in other words, if the  
          agreement was completely integrated.  (CCP Section 1856(d).)  If  
          it is a completely integrated agreement, then, generally, no  
          extrinsic evidence may be introduced (exceptions are made in  
          some circumstances, such as where a mistake or imperfection in  
          the writing is put at issue in the pleadings.)   If not, then  
          evidence of a consistent collateral term would not necessarily  
          be barred by the parol evidence rule.  

          To help illustrate this distinction, a written contract between  
          an inventor and an entity may provide that royalties received  
          from a license of the inventor's invention should be paid to the  
          entity.  While the contract may, in fact, constitute an  
          integrated agreement as to the form of payment and thereby bar  
          any introduction of extrinsic evidence as to that agreement,  
          other evidence may still be relevant and introduced in court to  
          establish an agreement as to the use of that money-such as where  
          it is alleged that the entity had agreed use those royalties to  
          conduct research in the inventor's particular field.  (Simmons  
          v. California Institute of Technology (1949) 34 Cal.2d 264.)    
          In such an instance, the introduction of the evidence is not  
          permitted in order to contradict the writing, but rather,  
          operates to prove a consistent additional agreed upon term that  
          is either agreed to for separate consideration or is such a term  
          as in the circumstances might naturally be omitted from the  
          writing.  (2 Witkin Cal Evid., Documentary Evidence, Sections  
          65, 68, 86-87.)

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  

           SUPPORT  :   (Verified  6/12/13)

          Conference of California Bar Associations (source)

           ARGUMENTS IN SUPPORT  :    According to the author: 

            Code of Civil Procedure [Section] 1856 sets forth  
            California's statutory "parol evidence rule," which states,  
            in effect, that if a contract (or other similar document) is  
            intended to be final and complete, its terms cannot be  
            contracted by evidence of an earlier agreement or  
            contemporaneous oral agreement.  The section specifically  



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            refers to deeds, wills, and contracts between the parties,  
            but not trust instruments. 

            It is completely logical and good policy for trust  
            instruments to be included within the parol evidence rule.   
            Courts have recognized this fact, and there is an abundance  
            of case law holding that trust instruments are indeed within  
            the rule's scope.  (See Miller v. Security-First National  
            Bank of Los Angeles (1933) 219 Cal. 120, 128-129, Lonely  
            Maiden Productions, LCC v. Goldentree Asset Mgmt., LP (2011)  
            201 Cal.App.4th 447, 453, Wells Fargo Bank v. Marhsall  
            (1993) 20 Cal.App.4th 447, 453; Levy v. Crocker-Citizens  
            National Bank (1971) 14 Cal.App.3d 102, 104, Kr[o]pp v.  
            Sterling Savings and Loan Assoc. (1970) 9 Cal.App.3d 1033,  

            Case law notwithstanding, the fact is that the statute does  
            not include trust instruments in the list of agreements  
            subject to the parol evidence rule.  By adding trust  
            instruments to the list, AB 824 would promote clarity and  
            predictability in probate and trust litigation by codifying  
            existing case law.  It also would reduce unnecessary  
            litigation and cost to the extent the change would  
            discourage (obviously futile) attempts to litigate the issue  
            of whether the parol evidence rule applies in these cases. 

           ASSEMBLY FLOOR  :  75-0, 5/13/13
          AYES:  Achadjian, Alejo, Atkins, Bigelow, Bloom, Blumenfield,  
            Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian  
            Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel  
            Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,  
            Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Allen, Ammiano, Holden, Lowenthal, Vacancy

          AL:d  6/12/13   Senate Floor Analyses 



                                                                     AB 824

                           SUPPORT/OPPOSITION:  SEE ABOVE

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