Lipsit v. Leonard

Lipsit (plaintiff) was employed by Leonard (defendant). The written employment contract stated that a more permanent relationship between the two involving an equity interest in the business for Lipsit may be developed and put into effect later. Lipsit claimed that the contract came with an oral promise—which induced him to leave his previous job and then continue working for Leonard—that he would eventually be given that equity interest in consideration of his continued employment. Eventually, Leonard made a proposal to Lipsit that did not make economic sense for him. Lipsit rejected the proposal and soon after was fired. Lipsit brought a tort action based on fraud. Lipsit claimed that Leonard never intended to make good his promise of giving Lipsit an equity interest, which amounted to a misrepresentation and fraud in the inducement of Lipsit to continue working for him. Lipsit also brought suit for breach of contract. The trial court awarded summary judgment to Leonard, and the appellate court affirmed. Lipsit appealed to the Supreme Court of New Jersey. On appeal, the Supreme Court concluded that the lower court correctly dismissed Lipsit's contract cause of action because there was no enforceable contract involving the equity interest, as the parol-evidence rule barred the alleged oral promises Leonard made to Lipsit. The Supreme Court then considered whether the lower court correctly dismissed Lipsit's tort cause of action in fraud.