Wednesday, December 25, 2013

Lipsit v. Leonard case brief

Lipsit v. Leonard case brief summary
315 A.2d 25 (N.J. 1974)

Appellant former employee sought review of the judgement of the Appellate Division (New Jersey), which had affirmed the lower court's dismissal of appellant's complaint and awarded appellee employers summary judgement on both causes of action.

Appellant former employee had an employment arrangement with appellant employers (formerly a sole proprietor then a corporation) consisting of a series of annual letter agreements and an alleged oral promise that he would be given an equity interest in the business. After a few years, appellees offered him an equity interest that was not acceptable to him. He was terminated and filed suit on a breach of contract based on the oral promises and a tort claim based on fraud. He claimed that appellees never intended to keep the oral promises, which amounted to a misrepresentation of an existing fact, and therefore fraud in the inducement to enter into the employment agreements. New York law governed the case.


  • Appellees were granted summary judgement on both claims, which the appellate court affirmed. 
  • The court held that the lower court erred with regard to the tort claim. 
  • It held that the claim was not barred by the parol evidence rule because under New York law an action in tort for money damages, based upon fraudulent promises and misrepresentations that induced a written agreement, permitted parol evidence to establish the contract. 
  • It modified the order and remanded.
The court affirmed the order dismissing appellant former employee's cause of action based on breach of contract, but held that the trial court should not have granted appellee employers' summary judgment on the tort cause of action in fraud. The court held that the claim was not barred by the parol evidence rule, and modified the judgments of the appellate division and the trial court and remanded the case.

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