Lovely v. Dierkes

• Court: Court of Appeal of Michigan
• Writing for the Court: Before DANHOF; DANHOF; BRONSON; PETERSON
• Citation: Lovely v. Dierkes, 132 Mich.App. 485, 347 N.W.2d 752 (Mich. App. 1984)
• Decision Date: 04 May 1984
• Docket Number: Docket No. 67776
• Parties: Steven LOVELY, Plaintiff-Appellant, v. J. Michael DIERKES and the Real Food Company, a Michigan corporation, Defendants-Appellees. 132 Mich.App. 485, 347 N.W.2d 752

Page 752

347 N.W.2d 752

Steven LOVELY, Plaintiff-Appellant, v. J. Michael DIERKES and the Real Food Company, a Michigan corporation, Defendants-Appellees.

Docket No. 67776.

132 Mich.App. 485, 347 N.W.2d 752

Court of Appeals of Michigan.

Submitted Oct. 12, 1983.

Decided March 5, 1984.

Released for Publication May 4, 1984.

[132 MICHAPP 487] Rappleye, Wilkins & Arcaro by Viola A. Kaminski, Jackson, for plaintiff-appellant.

[132 MICHAPP 488] Curtis, Davidson & Curtis, P.C. by Ronald J. Fabian, Jackson, for defendants-appellees.

Before DANHOF, C.J., and BRONSON and PETERSON, ^* JJ.

DANHOF, Chief Judge.

Plaintiff herein filed a complaint against defendants alleging breach of an employment contract. Plaintiff alleged that he had two jobs in Ann Arbor, Michigan, providing him with a net average income of $600 per week, which he quit in order to work for defendant Real Food Company. Plaintiff's complaint states that defendant Dierkes promised plaintiff a three year employment contract, a salary of $400 per week, and a percentage interest in defendant corporation that would increase with each year of employment. The agreement also provided that plaintiff would not be discharged without good cause. Plaintiff relocated his family to Jackson, Michigan, in reliance upon defendant Dierkes' promise. While performing under the agreement, plaintiff requested several times that defendant reduce the contract to writing. Defendant allegedly assured plaintiff that a writing was forthcoming. After two months of employment, plaintiff was discharged. Defendants' motion for summary judgment pursuant to GCR 1963, 117.2(1) was granted by the trial court, which found a violation of the statute of frauds. M.C.L. Sec. 566.132; M.S.A. Sec. 26.922. Plaintiff presently appeals as of right.

Plaintiff alleges on appeal that the trial court erred by granting defendants' motion for summary judgment, because defendants should have been equitably estopped from pleading the statute of frauds as a defense to plaintiff's complaint. We [132 MICHAPP 489] agree and reverse the trial court's grant of summary judgment to defendants.

The Michigan statute of frauds, M.C.L. Sec. 566.132; M.S.A. Sec. 26.922, provides in pertinent part:

"In the following cases an agreement, contract or promise shall be void, unless that agreement, contract, or promise, or a note or memorandum thereof is in writing and signed by the party to be charged therewith, or by a person authorized by him:

"(a) An agreement that, by its terms, is not be be performed within 1 year from the making thereof."

Since plaintiff's alleged contract for employment with defendant was for three years, the above-quoted statute requires that the contract be in writing to be enforceable.

Under certain circumstances, where it would be inequitable to apply the statute of frauds, a party may be estopped from pleading the statute of frauds as a defense. Promissory estoppel arises where the following elements are present:

"(1) a promise, (2) that the promisor should reasonably have expected to induce action of a definite and substantial character on the part of the promisee, (3) which in fact produced reliance or forbearance of that nature, (4) in circumstances such that the promise must be enforced if injustice is to be avoided." McMath v. Ford Motor Co., 77 Mich.App. 721, 725, 259 N.W.2d 140 (1977).

We find that plaintiff has sufficiently alleged all of the elements of promissory estoppel. If the evidence at trial supports plaintiff's allegations, the reliance by plaintiff on defendants' promise would be sufficient to estop defendants from raising the statute of frauds as a defense to plaintiff's action.

Plaintiff here alleged a promise by defendants to [132 MICHAPP 490] employ plaintiff for three years at a salary of $400 per week, with an interest in defendant corporation, such interest to increase with each year of employment. This promise was definite and clear, as is required to support an estoppel. McMath, supra. Defendants' promise to employ plaintiff was for a specific period, three years, at a fixed sum, $400 per week, and included additional compensation in the form of an interest in the corporation, which was to increase with time. This promise does not suffer from the same indefiniteness as the promise in McMath, relied upon by defendants. In McMath, plaintiff alleged that he resigned his rank of Brigadier General in the Air National Guard because of assurances from defendant that he need not worry about the income he would lose by leaving the Guard because defendant would take care of him and he would have no future economic worries. The promise here was much more specific, and was apparently intended to induce plaintiff to leave his current employment and work for defendants.

We agree with defendants' contention that plaintiff's termination of his employment in Ann Arbor was insufficient alone to bar application of the statute of frauds. Some additional reliance is necessary. See Rowe v. Noren Pattern & Foundry Co., 91 Mich.App. 254, 283 N.W.2d 713 (1979), lv. den. 409 Mich. 880 (1980); Schipani v. Ford Motor Co., 102 Mich.App. 606, 615, 302 N.W.2d 307 (1981); Pursell v. Wolverine-Petronix, Inc., 44 Mich.App. 416, 205 N.W.2d 504 (1973). We find, however, that the additional factors present are sufficient to estop defendants from asserting the statute of frauds as a defense. Here plaintiff's complaint alleges relinquishment of two other jobs and relocation of his family the promise of a definite [132 MICHAPP 491] salary for a definite time, plus a percentage ownership in defendant corporation and the representation by defendants that the contract would be reduced to writing. We find these allegations to be sufficient for the application of promissory estoppel. The trial court erred by granting summary judgment to defendants.

Reversed and remanded. Plaintiff may tax costs.

BRONSON, J., concurred.

PETERSON, Judge, dissenting:

I would affirm, finding the well-written opinion of the trial judge to be a correct application of the law. I however, feel that I must voice my view that recent opinions of this Court reflect a casual deviation, not only from the intent of the statute of frauds but also from the requirements of the promissory estoppel exception thereto.

The statute of frauds is not only designed to forestall the litigation of certain kinds of claims that are easy to assert and hard to disprove, but also is designed to insure certainty as to contracts of important nature and to foreclose the risk of error in resolving controversies as to what the various terms of an alleged oral contract might be. It adds nothing to justice or jurisprudence to allow ill-defined claims to be submitted under ill-defined rules on the notion that everyone ought to have his day in court. There are limited exceptions to the statute of frauds, but this case does not fall within the scope of those exceptions.

The pleaded allegations, ¹ to be taken as true for [132 MICHAPP 492] purposes of defendant's motion for summary judgment, were that:

1. Defendant made the following promises to plaintiff:

a. Plaintiff would have a three year employment contract.

b. Plaintiff would be paid $400 per week.

c. Plaintiff would receive a percentage of ownership of defendant corporation, such percentage to increase during each year of employment.

2. Plaintiff took the job.

3. Plaintiff gave up two part-time jobs which were providing a total net income of $600 per week.

4. Plaintiff moved himself and his family from Ann Arbor to Jackson, where defendants' business was located.

5. Plaintiff was wrongfully discharged after two months on the job.

The opinion of my brethren herein correctly recites the four elements of promissory estoppel noted in McMath v. Ford Motor Co., 77 Mich.App. 721, 725, 259 N.W.2d 140 (1977), ² and finds that the lack of certainty ³ in the promise which was fatal to McMath's claim is not present in this case. I do not understand the certainty, or see the enforceability,[132 MICHAPP 493] of plaintiff's claim of a promise to give him "a percentage of ownership * * * [which] would increase during each year", though evidence of such a promise would be admissible at trial, because of its relevancy to the questions of inducement and reliance.

My principal quarrel with the opinion of the majority herein, and with the recent precedents on which that opinion relies, involves a fourth element of promissory estoppel; viz., that the circumstances of a case must be such that the promise must be enforced if injustice is to be averted. We start any discussion of the statute of frauds with the posit that its application may result in substantial injustice. Real and honest contracts will not be enforced because of the statute of frauds; honest men will lose the benefits of their bargains because they neglected to reduce them to writing. The exceptions to the enforcement of the statute of frauds turn upon something more than the injustice of the loss of the bargain--they exist either because the enforcement of the statute would result in an unjust enrichment to the party asserting the statute as a bar ⁴ or in an unconscionable injury to the party seeking to enforce the contract.

In Oxley v. Ralston Purina Co., 349 F.2d 328 (CA6, 1965), the plaintiff entered into an oral contract to fatten hogs for the defendant. To meet defendant's standards for the pig-leasing contract, plaintiff was required to make a capital investment of approximately $40,000 for specialized equipment and buildings on his farm. The investment was made under the defendant's direction, but the [132 MICHAPP 494] defendant then refused to perform the contract. Plaintiff was thus faced not merely with the loss of anticipated profits from performance of the contract, but with the loss of his capital investment required to enable him to perform the contract. Finding no Michigan precedent, the federal court concluded that...