Marshall's Law

State, Federal cases grapple with promissory estoppel cases

"Never promise more than you can perform."
-- Roman philosopher Publilius Syrus, 1st century, B.C

By Marshall H. Tanick, Attorney at Law

Promissory estoppel is one of those monstrous legal doctrines that look like a mad scientist created it. It contains elements of various different types of causes of action, stitched together into a separate claim.

The tenet consists of several elements: the making of a clear and definite promise with intent that it be relied upon; reasonable and detrimental reliance by a third party; and damages that call for the promise to be enforced in order to avoid "injustice." These components have contractual elements, yet the doctrine cannot be invoked if a contract exists. Conversely, it also has elements of fraud and forms of misrepresentation, too.

Although infrequently invoked, the doctrine of promissory estoppel was the focal point of five recent cases decided by the Minnesota Court of Appeals, which reached different outcomes in the quintet of actions.

Promissory Police

A police officer who was given a guarantee of 16 hours of part-time work per week was not wrongfully terminated for poor performance in Stiehm v. City of Dundas, 2008 WL 2574974 (Minn. App. July 1, 2008) (unpublished). The officer's claim that he was entitled to some type of permanent position on grounds of promissory estoppel was rejected by the Rice County District Court, and the Appellate Court affirmed.

Promissory estoppel was inapplicable because there was no evidence that the city "made any promises...of permanent employment or that [the claimant] could only be terminated for cause." He was hired on an at-will basis, and the city only promised that "he could work 16 hours per week for an indefinite period of time," which was "fulfilled" until the time of termination. Even if there was some type of "cause" requirement, the city had "ample grounds to terminate" the officer's employment because of a number of incidents of poor performance.

The employee's other claims of whistleblower and failure to write enough tickets to meet a "quota" in violation of the Peace Officer Discipline Procedures Act, Minn. Stat. § 629.897, subd. 5 also were rejected. The whistleblower assertion was not actionable because he did not report any illegal behavior and his claim that he was "perceived" as a whistleblower was not covered by the statute. The officer's statutory claim also was insufficient because there was no evidence that he was "retaliated for exercising his rights under the statute."

Contract Considerations

Both the lack of contractor terms and the existence of a contract were considerations in a pair of appellate court actions rejected promissory estoppel claims.

A promissory estoppel claim failed in Hoyt v. Piper Jaffrey & Co., 2008 WL 3289722 (Minn. App. Aug. 12, 2008) (unpublished). The claimant sought a loan based upon a letter stating it constituted a "preliminary" proposal that was not a "commitment" but must be approved in writing by a loan company. When the loan was not made, the prospective borrower sued for breach of contract and promissory estoppel.

The Hennepin County District Court granted Summary Judgment on both claims, and the Court of Appeals affirmed. After disposing of the contract claim on grounds that "no contract was found." The Court also upheld dismissal of the estoppel contention because there was no "definite promise" that could reasonably be relied upon by the borrower, who was an "experienced real estate developer and investor." The letter proposal was too "equivocal" for reliance by a "person of [such] experience."

Promissory estoppel also was inapplicable, but for a different reason, the existence of a contract, in City College Leasing, LLC v. River Valley Truck Centers, Inc., 2008 WL 3290759 (Minn. App. Aug. 12, 2008) (unpublished). The dispute revolved around indemnification between a manufacturer of semi-trailers and a distribution for defense costs in warranty litigation. The manufacturer told the distributor it would "take care of" the matter.

The Dakota County District court rejected statutory, common law, and promissory estoppel claims for indemnification, and the Appellate Court affirmed. Because "[t]here is a contract here" between the parties, the doctrine of promissory estoppel is inapplicable since it "implies" a contract when one does not exist." Further, the "take care of" statement was "not a clear promise intended to induce detrimental reliance."

Federal Features

Promissory estoppel also was featured in a pair of cases decided by the Federal court in Minnesota.

In Facet Technology Corp. v. Tele Atlas North America, Inc., 2008 WL 2439804 (D. Minn. June 12, 2008), Judge Donovan Frank denied a motion to dismiss a promissory estoppel claim based upon a $1 million promise to engage in an arrangement. The case revolved around a letter of intent issued by a multi-state mapping business to a Minnesota company that produces precision mapping and property imaging. The document stated that there would be a "minimum" of $1 million of imaging done by the Minnesota company that would be licensed by the out-of-state mapping business, when the deal failed to transpire.

The Minnesota business sued for breach of contract and promissory estoppel. Judge Frank rejected the mapping company's argument that the requirement of a "clear and definite" promise could not be established. The language did not support a breach of contract claim because it constituted "simply an agreement to agree in the future." But the terminology was "clear and definite promise capable of enforcement" under the promissory estoppel doctrine. Therefore, while the breach of contract claim was dismissed, a parallel estoppel claim survived.

But Judge Patrick Schlitz rejected a promissory estoppel claim along with other causes of action in Woods v. Xcel Energy, 2008 WL 2885983 (D. Minn. July 22, 2008). An African-American woman who alleged discrimination, sex harassment and a number of other claims arising out of her discharge brought the case.

Expressing his belief that the claimant provided "false testimony," accompanied by her counsel's assertions that were "unsupported or flatly contradicted by the record," Judge Schlitz dismissed all of the "kitchen-sink" claims, except the harassment charge. The promissory estoppel claim was among the dismissed counts because it could not be maintained on the sole basis that her employer violated Federal and state discrimination laws.

These cases show the contours of the concept of promissory estoppel. As these five cases reflect, it is a hydra-headed principle that has elements of many different causes of action, coupled with equitable considerations.