Court allows oral testimony in interpreting real estate contracts

By Rebecca S. Izsak

Oral testimony, which the parol evidence rule ordinarily prohibits, was admissible to interpret a fully integrated written agreement for the purchase of real property, the Washington Supreme Court recently held.

In Brogan & Anensen v. Lamphiear, no. 81825-8 (Mar. 12, 2009), Kenny Brogan and Garry Anensen offered to buy acreage from Wayne Lamphiear for later development. The parties signed a real estate purchase and sale agreement, and the sale closed. Brogan and Anensen were not able to rezone the property for their desired development and listed the property for sale. Lamphiear was still living on the property, and Brogan and Anensen filed an action to enforce possession under the agreement.

Lamphiear claimed that Brogan and Anensen had agreed during their negotiations to let him stay on the property for up to one year after the closing of the sale to give Lamphiear time to move his manufactured home to another location. Lamphiear offered several people as witnesses to the negotiation of the agreement, all of whom supposedly overheard the parties’ negotiations at a local diner, in support of this defense.

Brogan and Anensen moved for summary judgment and argued that such oral testimony is not admissible, where the written, signed agreement recites that it is fully integrated. Both the trial court and the Court of Appeals agreed, excluding the testimony of these witnesses. Those courts held that the agreement was a fully integrated contract, because it provided that it constituted the entire understanding between the parties. The agreement provided that Lamphiear was to deliver the keys to Brogan and Anensen “on the closing date or the possession date,” whichever occurred first. The trial court and Court of Appeals held that witness testimony was inadmissible under the parol evidence rule, which prohibits extrinsic evidence to add to, subtract from, modify, or contradict the terms of a fully integrated written contract.