Crouse v. Cyclops Industries

• Decision Date: 28 January 2000
• Parties: Ronald E. CROUSE, Sr. and Aliquippa Forge, Inc., Appellants, v. CYCLOPS INDUSTRIES and Combined Cytemp Specialty Steel Division of Cyclops Industries, Appellees.
• Court: Pennsylvania Supreme Court

745 A.2d 606

560 Pa. 394

Ronald E. CROUSE, Sr. and Aliquippa Forge, Inc., Appellants, v. CYCLOPS INDUSTRIES and Combined Cytemp Specialty Steel Division of Cyclops Industries, Appellees.

Supreme Court of Pennsylvania.

Argued March 9, 1999.

Decided January 28, 2000.

Linda C. Plum, McKeesport, Christopher M. DeVito, for Ronald Crouse, Sr. and Aliquippa Forge, Inc. Brian T. Himmel, Paul H. Titus, Titus & McConomy, Pittsburgh, for Cyclops Industries and Combined Cytemp Specialty Steel.

Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.

OPINION

NIGRO, Justice.

The issue presently before this Court is whether the Superior Court erred in finding that appellants' complaint was untimely filed. At the conclusion of a three-day trial, the jury returned a verdict for appellants on their claim for promissory estoppel which the Superior Court reversed as barred by the statute of limitations. For the reasons stated below we find that the statute of limitations on an action sounding in promissory estoppel is four years and that, under the facts of this case, the question of when the appellants knew or should have known of a breach by the appellees is a question of fact which should have been submitted to the jury. We therefore affirm the Superior Court as to the applicable statute of limitations but reverse and remand to the trial court for a new trial on the singular issue of promissory estoppel, including a jury determination as to when the statute of limitations period began to run.

A careful review of the record reveals the following.¹ In 1986, appellant Ronald Crouse (Crouse) expressed an interest in purchasing a dormant steel forge in Aliquippa Pennsylvania, Aliquippa Forge, Inc. (Aliquippa), owned by appellees Cyclops Industries and Combined Cytemp Specialty Steel Division of Cyclops Industries (collectively, Cyclops). Following negotiations, Crouse and Cyclops agreed to a price, subject to Crouse's ability to secure financing within a six-month window. During the buy-sell negotiations, Crouse and Cyclops also entertained the idea that Crouse would fill some of Cyclops's forging needs, but came to no firm understanding. While in search of financing, Crouse included in his business plan² the possibility of doing business with Cyclops but found that potential lenders required a firmer commitment from Cyclops that it would outsource some of its steel conversion work to Aliquippa. Crouse told then-Cyclops president, John Buser (Buser) what the financiers required and Buser responded with a commitment letter. In the letter to Crouse dated January 12, 1987 Buser wrote:

* * * *

[Cyclops] is willing to commit to have Aliquippa Forge Inc. forge an average of 3 to 4 hundred thousand pounds per month on the Aliquippa facility provided price and delivery are comparative and the quality meets our requirements. Please be aware that we can not, and do not, guarantee a uniform flow in either quantity or type of forging to be done.

We look forward to working with you in developing a mutually beneficial business relationship and hope to be sending you our first lot of material in the near future.

N.T., January 30, 1996, at 51.

With this letter, Crouse obtained the necessary financing and entered into an agreement of sale with Cyclops for the land and the buildings and a separate agreement for the equipment and machinery.³ These agreements of sale for the property did not mention the steel forging work referenced in Buser's letter. Furthermore, each of the agreements provided:

* * * *

This Agreement and the exhibits attached hereto represent the entire understanding of the parties and supersede all prior written or oral agreements or understandings between the parties with respect to the transaction contemplated hereby. This agreement may be amended only in writing signed by both parties hereto.

N.T., January 30, 1996, at 60.

Aliquippa began operation in June 1987. Beginning in July 1987, Cyclops ordered and Aliquippa executed 334,871 pounds of steel conversion work.⁴ On August 3, 1987, Crouse received a letter from Roger A. Hill, a quality engineer for Cyclops, informing Crouse that Aliquippa had been placed on Cyclops's "approved vendor list as a conversion source for Press Work." Exhibit 15.

Under pressure from his lenders, Crouse met with Mike Sullivan, Vice President of Operations at Cyclops's Cytemp Division, on September 23, 1987 to discuss the low volume of conversion work from Cyclops to date. Crouse memorialized the meeting in a letter to Sullivan on November 24, 1987, in which Crouse recapped Sullivan's remarks that Aliquippa should have been considered for outsourced conversion work which may have been going to other companies and that Aliquippa would now be given first priority on such work. Further, Crouse's confirming letter reiterated his inquiry as to whether there were any problems with Aliquippa's performance, any drop in Cyclops's requirements or any reason at all why, in the course of the first six months of operation, the quantities weren't closer to what Buser's commitment letter specified. In addition, Crouse reminded Sullivan that, pursuant to an earlier discussion between Crouse, Sullivan and Buser, and in an effort to develop the mutually beneficial business relationship referenced in the commitment letter, Crouse had seen to it that Aliquippa's sister company, American Specialty Metals, (American Specialty) was purchasing nearly all its tool steel from Cyclops.⁵

Sullivan did not reply to this letter and so Crouse followed up with numerous phone calls. When he called over the next several months, Crouse discovered that there had been shifts in personnel, different authorities were in charge and new people were handling the placement of outsourced conversion.⁶ Finally, on August 31, 1988, Crouse arranged to meet with Cyclops again. In his follow-up letter of September 1, 1988, to Alan Echko, Cyclops's Vice President and Controller at Cytemp and Mike Sullivan, now Vice President of Operations, Planning and Engineering, Crouse recapped the August 31, 1988 meeting in which Sullivan suggested that Aliquippa could forge Cytemp's UT718 20-inch round 8500 pound ingot in the future. Furthermore, Crouse memorialized his own offer to hold his prices on Cyclops's specific forging needs to the end of 1988 and to discount each invoice by 50%.⁷ Again, there was no reply to this letter.

Aliquippa ceased operations in February 1991, never having received another order from Cyclops, yet never having been told that the agreement was terminated, or that orders would not be forthcoming. On September 5, 1992, Crouse filed suit in the Court of Common Pleas of Allegheny County against Cyclops for breach of contract, fraud and promissory estoppel. The fraud count was dismissed and the jury returned a verdict for Crouse on the count of promissory estoppel only, in the amount of $210,000. On appeal, the Superior Court reversed, finding that Crouse's complaint was barred as untimely filed beyond the expiration of the four-year statute of limitations.

We granted allocatur to determine first, whether an action sounding in promissory estoppel is governed by a four-year statute of limitations or a six-year statute of limitations and, second, whether, pursuant to the proper period, Crouse's action was timely filed.

Crouse claims that promissory estoppel is not governed by the four-year limitations period articulated in 42 Pa.C.S. § 5525 because, while this section enumerates several contract actions under its aegis, promissory estoppel is not among them.⁸ Instead, Crouse argues, promissory estoppel is an equitable doctrine and that, as such, it is properly governed by the "catch-all" statute of limitations under § 5527, which states:

Six Year Limitation

Any civil action or proceeding which is neither subject to another limitation specified in this subchapter nor excluded from the application of a period of limitation by section 5531 (relating to no limitation) must be commenced within six years.

42 Pa.C.S. § 5527.

Because an action in promissory estoppel is not specifically provided for under any of the statute of limitations provisions in § 5525 or elsewhere, we must examine the nature of the doctrine to determine which statutory subsection applies. Where there is no enforceable agreement between the parties because the agreement is not supported by consideration, the doctrine of promissory estoppel is invoked to avoid injustice by making enforceable a promise made by one party to the other when the promisee relies on the promise and therefore changes his position to his own detriment. RESTATEMENT (SECOND) CONTRACTS § 90; see, e.g., Shoemaker v. Commonwealth Bank, 700 A.2d 1003, 1006 (Pa.Super.1997). In order to maintain an action in promissory estoppel, the aggrieved party must show that 1) the promisor made a promise that he should have reasonably expected to induce action or forbearance on the part of the promisee; 2) the promisee actually took action or refrained from taking action in reliance on the promise; and 3) injustice can be avoided only by enforcing the promise. Id. As promissory estoppel is invoked in order to avoid injustice, it permits an equitable remedy to a contract dispute. Thus, as promissory estoppel makes otherwise unenforceable agreements binding, the doctrine sounds in contract law and we hold that, like other contract actions, the statute of limitations for a cause of action in promissory estoppel is governed by § 5525. Therefore, the Superior Court properly held that the limitations period where an agreement is enforceable under the doctrine of promissory estoppel is four years.

However, our inquiry does not end here. Applying the four-year statute of limitations, Cyclops claims that Crouse's September 5, 1992 complaint was not timely filed. Specifically, Cyclops argues that, by the end of 1987, Crouse knew or should have known of its alleged breach...