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End Line Investors, Ltd v. Wells Fargo Bank, N.A. - 2018 U.S. Dist. LEXIS 111706


Three conditions must be met for evidence of a collateral contract to be admitted: (1) the agreement must in form be a collateral one; (2) it must not contradict express or implied provisions of the written contract, and; (3) it must be one that parties would not ordinarily be expected to embody in the writing.


In 2013, a law firm ("Firm") sought to perform debt collection services for defendant Wells Fargo Bank, N.A., in New York and New Jersey. The Firm's small New Jersey office did not meet Wells Fargo's audit standards, and according to the Firm, Wells Fargo agreed to place all existing and future New Jersey accounts with the Firm, as well as future New York accounts, if the Firm opened a suitable office in New Jersey. The Firm did so, and at Wells Fargo's request, signed a Wells Fargo standard form retainer agreement. Wells Fargo did not place all the New Jersey accounts with the Firm, however. Plaintiff End Line Investors, Ltd., as the assignee of the Firm's claims against Wells Fargo, filed a complaint against Wells Fargo in New York state court, alleging, breach of contract related to the alleged oral agreement; promissory estoppel; negligent misrepresentation; and breach of the implied covenant of good faith and fair dealing. Wells Fargo removed the action to federal district court and thereafter filed a motion for judgment on the pleadings as to all of End Line's claims.


Did End Line have a viable cause of action against Wells Fargo?




The court granted Wells Fargo's motion for judgment on the pleadings. The court ruled, inter alia, that the written retainer agreement between Wells Fargo and the Firm embodied the entire understanding and agreement between the parties with respect to its subject matter and superseded any and all prior agreements, arrangements and understandings, whether oral or written, with respect to its subject matter. Moreover, the court ruled, the alleged oral agreement was not collateral to the written agreement, and thus parol evidence regarding the alleged oral agreement was not admissible to vary the terms of the written agreement. As such, the breach of contract claim failed. As to End Line's other claims, the court ruled: (1) the parties' written agreement covered the same subject matter as the oral agreement and contained an integration clause, and thus End Line's promissory estoppel claim failed. (2) The negligent misrepresentation claim failed because, inter alia, the alleged misrepresentations related to future conduct, which could not form the basis of a negligent misrepresentation claim. (3) The parties' written agreement said nothing about placing all existing and future New Jersey accounts with the Firm, and the implied covenant of good faith and fair dealing could not be used to shoehorn such a requirement into the written agreement.

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