Home Elec. Co. of Lenoir, Inc. v. Hall and Underdown Heating and Air Conditioning Co.

• Decision Date: 04 August 1987
• Docket Number: No. 8625SC1189,8625SC1189
• Citation: 358 S.E.2d 539,86 N.C.App. 540
• Court: North Carolina Court of Appeals
• Parties: HOME ELECTRIC CO. OF LENOIR, INC., a North Carolina Corporation v. HALL AND UNDERDOWN HEATING AND AIR CONDITIONING COMPANY, a North Carolina Partnership.

Page 539

358 S.E.2d 539

86 N.C.App. 540

HOME ELECTRIC CO. OF LENOIR, INC., a North Carolina Corporation v. HALL AND UNDERDOWN HEATING AND AIR CONDITIONING COMPANY, a North Carolina Partnership.

No. 8625SC1189.

Court of Appeals of North Carolina.

Aug. 4, 1987.

Delk, Swanson & Einstein by Joseph C. Delk, III, David A. Swanson and Edwin S. Hartshorn, III, Lenoir, for plaintiff-appellant.

Whisnant, Simmons, Groome, Tuttle & Pike by H. Houston Groome, Jr. and Vanessa Barlow, Lenoir, for defendant-appellee.

ORR, Judge.

Plaintiff argues that the trial court erred in dismissing its contractual claim on the grounds of a failure of consideration. It is contended by the plaintiff that the doctrine of promissory estoppel should apply in the case sub judice so as to serve as a substitute for consideration. We decline to expand the use of the doctrine of promissory estoppel in cases such as this one and affirm the trial court's decision for the reasons set forth below.

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint, Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970), which will be dismissed if it is completely without merit. Lee v. Paragon Group Contractors, 78 N.C.App. 334, 337 S.E.2d 132 (1985). A complaint is without merit if (1) there is an absence of law to support a claim of the sort made; (2) there is an absence of fact sufficient to make a good claim; or (3) there is the disclosure of some fact which will defeat a claim. Id. at 337, 337 S.E.2d at 134. In the case sub judice, there is an absence of law to support the plaintiff's claim.

Plaintiff's complaint alleges the existence of a contract between plaintiff and defendant. However, the complaint fails to allege the existence of any consideration for defendant's promise to perform the duct work for $29,400. A contract, to be enforceable, must be supported by adequate consideration. Matthews v. Matthews, 2 N.C.App. 143, 162 S.E.2d 697 (1968). Consideration which is sufficient to support a contract "consists of 'any benefit, right, or interest bestowed upon the promisor, or any forbearance, detriment, or loss undertaken by the promisee.' " Lee v. Paragon Group Contractors, 78 N.C.App. at 338, 337 S.E.2d at 134 (citation omitted).

Plaintiff, however, asserts the doctrine of promissory estoppel and argues that it serves as a substitute for consideration.

The Restatement of Contracts states the following:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.

Restatement (Second) of Contracts § 90 (1979). The comment to this section states that this section is often referred to in terms of "promissory estoppel."

However, there are differing interpretations of § 90.

It [§ 90] appears to be intended as a substantive rule of law to be used as a sword under which a promisee can bring an action and, if he proves the elements set out in § 90, enforce the promise. By supplying the missing elements to the contract it appears to give the promisee an enforceable right of action in contract against his promisor. In effect, if a complaint is patterned after § 90, it anticipates the defenses of lack of assent and lack of consideration, and thus precludes, at least as a matter of law, the promisor's reliance on such defenses.

Apparently not all legal scholars equate promissory estoppel with § 90 of the Restatement. The position has been taken that promissory estoppel applies only in cases where there is a promise or representation as to an intended abandonment by the promisor of a legal right which he holds or will hold against the promisee.

Annot. "Statute of Frauds--Promissory Estoppel," 56 A.L.R.3d 1047 (1974).

The North Carolina Courts have recognized to a limited extent the doctrine of promissory estoppel, but have not expressly recognized it in all situations. Furthermore, our Courts have never recognized it as a substitute for consideration, either in construction bidding, or in any other context. The North Carolina cases which have applied the doctrine have only done so in a defensive situation, where there has been an intended abandonment of an existing right by the promisee. North Carolina case law has not approved the doctrine for affirmative relief.

In Clement v. Clement, 230 N.C. 636, 55 S.E.2d 459 (1949), the Supreme Court recognized the doctrine of promissory estoppel in the limited context of a judicial waiver. In that case defendant asserted the doctrine to prevent plaintiff from charging interest when plaintiff had previously agreed not to charge it. The Court stated that promissory estoppel would apply to the waiver situation, but refused to apply the doctrine on these facts. It stated that the waiver of interest on a loan was an extra-judicial waiver and also that there was no detrimental reliance by the promisee in that case.

The most recent and definitive discussion of promissory estoppel occurred in the case of Wachovia Bank v. Rubish, 306 N.C. 417, 293 S.E.2d 749, reh. denied, 306 N.C. 753, 302 S.E.2d 884 (1982), where defendant relied on his landlord's promise not to require a written notice to renew his lease. After the landlord died, defendant failed to give written notice of renewal and the landlord's executors cancelled his lease and sued for summary ejectment. The Court held that defendant could assert promissory estoppel as a defense to the summary ejectment action by proving an express or implied promise to waive the written notice provision and by proving his...