N. Am. Brokers, LLC v. Howell Pub. Sch.
| Decision Date | 29 June 2018 |
| Docket Number | COA: 330126,SC: 155498 |
| Citation | 913 N.W.2d 638 (Mem) |
| Parties | NORTH AMERICAN BROKERS, LLC, and Mark Ratliff, Plaintiffs-Appellees, v. HOWELL PUBLIC SCHOOLS, Defendant-Appellant, and St. John Providence, Defendant. |
| Court | Michigan Supreme Court |
On April 12, 2018, the Court heard oral argument on the application for leave to appeal the February 9, 2017 judgment of the Court of Appeals. On order of the Court, the application is again considered, and it is DENIED, because we are not persuaded that the questions presented should be reviewed by this Court.
The equitable principle of estoppel is many centuries old. Under the doctrine, a promise that the promisor should reasonably expect to produce action or inaction from its recipient may be binding if justice so requires. See Restatement Contracts, 2d, § 90. Its age highlights its staying power. Over the years, it has been widely adopted, easily applied, and narrowly tailored. I agree with the Court that we should decline an invitation to disassemble it today.
The English Parliament adopted the first statute of frauds in 1677. Note, Statute of Frauds—The Doctrine of Equitable Estoppel and the Statute of Frauds , 66 Mich. L. Rev. 170, 170 (1967). The enactment of the statute was largely driven by concerns unique to the seventeenth century. As Sir William Holdsworth explains, at that time, tangible evidence of agreement was necessitated by the virtually unfettered discretion given to juries. 6 Holdsworth, A History of English Law (1924), p. 388. Nothing prevented juries from receiving independent information on cases, and motions for a directed verdict were relatively new and untested at the time. Id . Additionally, the witness testimony that juries could hear was tightly restricted, as neither the parties to an action nor any parties interested in the outcome of the action were considered competent witnesses. Id . Within this framework, the statute of frauds played the important role of ensuring that juries were not provided false information regarding contracts that had never been formed.1
From the very beginning of British jurisprudence relating to the statute of frauds, British courts have applied equitable rules to enforce promises that induced a party to act in reliance. Costigan, Jr., The Date and Authorship of the Statute of Frauds , 26 Harv. L. Rev. 329, 343 (1913). The British Court of Chancery would regularly apply these equitable rules, particularly equitable estoppel and specific performance, "if insistence on the letter of the statute would facilitate a fraud." 6 Holdsworth, p. 393. From its inception, then, there was agreement that exceptions to the statute of frauds were needed in order to prevent the statute itself from perpetuating frauds. The trend crossed the pond. Today, promissory estoppel is employed in every variety of United States court. See Comment Note.—Promissory estoppel , 48 A.L.R. 2d. 1069 (1956).
Michigan is no outlier. Our Legislature passed the first statute of frauds in 1838, just after statehood, 1838 RS, pt. 2, tit. vi, ch. 1, and before that, a statute of frauds could be found in Michigan’s territorial laws, 1 Territorial Laws, Act of December 7, 1819, § 10, p. 467. And this Court has applied the doctrine of equitable estoppel for nearly a century to prevent the statute from becoming "an instrument of fraud." Lyle v. Munson , 213 Mich. 250, 260, 181 N.W. 1002 (1921) ; see also Jones v. Pashby , 67 Mich. 459, 462, 35 N.W. 152 (1887) (). We have reaffirmed that principle time and time again. Brummel v. Brummel , 363 Mich. 447, 452, 109 N.W.2d 782 (1961) (citing cases). So too has the Legislature. Since 1921, the Legislature has amended the statute of frauds three times and never repudiated the statute’s estoppel-based exceptions. 1945 PA 261; 1974 PA 343; 1992 PA 245.2 When the Legislature reenacts a statute, we presume it did so with an understanding of the court’s interpretation of it. See Anzaldua v. Band , 457 Mich. 530, 544, 578 N.W.2d 306 (1998), citing Lorillard v. Pons , 434 U.S. 575, 581, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978). The doctrine has withstood the tests of time, and legislative and judicial scrutiny.
More recently, this Court affirmed promissory estoppel in Opdyke Investment Co. v. Norris Grain Co. , 413 Mich. 354, 320 N.W.2d 836 (1982). There we declined to adopt "narrow and rigid rules for compliance with the statute of frauds." Id . at 367, 320 N.W.2d 836. Instead, we unanimously held that "recovery based on a noncontractual promise falls outside the scope of the statute of frauds" and that the plaintiff’s claim of promissory estoppel required the denial of the defendant’s summary disposition motion. Id . at 370, 320 N.W.2d 836. This conclusion was necessary to "avoid the arbitrary and unjust results required by an overly mechanistic application of the rule." Id . at 365, 320 N.W.2d 836.3
We have considerable company. Three-fifths of the states apply promissory estoppel in some fashion despite the statute of frauds.4 And only a handful of states have explicitly forbidden the use of promissory estoppel as an exception to the statute of frauds. The dissent’s canvass of the several states makes the case that abandoning promissory estoppel remains a distinctly minority position.
And even the cases the dissent cites do not uniformly support its position. The dissent cites Tiffany Inc. v. WMK Transit Mix, Inc. , 16 Ariz. App. 415, 421, 493 P.2d 1220 (1972), for the proposition that promissory estoppel would nullify the statute of frauds. Tiffany is an intermediate court decision from Arizona, but the Arizona Supreme Court has held promissory estoppel may be applied to defeat the statute of frauds where "there is a second promise not to rely on the statute." Mullins v. Southern Pacific Transp. Co. , 174 Ariz. 540, 542, 851 P.2d 839 (1992). The cases the dissent cites from Maine and Washington are also unhelpful: Stearns v. Emery–Waterhouse Co. , 596 A.2d 72 (Me., 1991) and Greaves v. Med. Imaging Sys., Inc. , 124 Wash. 2d 389, 879 P.2d 276 (1994). Although each case is evidence that promissory estoppel is not an immutable exception to the statute of frauds in those jurisdictions, neither has done away with the doctrine altogether (as the dissent would have us do here). Harvey v. Dow , 962 A.2d 322, 327 (Me., 2008) (); Klinke v. Famous Recipe Fried Chicken, Inc. , 94 Wash. 2d 255, 260, 616 P.2d 644 (1980) (). If there is any wisdom to be found in majorities, we should not rush to abandon promissory estoppel.
And then there’s stare decisis.5 We don’t overrule precedent lightly. Our test for determining whether to overrule Opdyke has us consider these factors: (1) "whether the earlier decision was wrongly decided," (2) "whether the decision at issue defies practical workability," (3) "whether reliance interests would work an undue hardship," and (4) "whether changes in the law or facts no longer justify the questioned decision." Robinson v. Detroit , 462 Mich. 439, 464, 613 N.W.2d 307 (2000) (cleaned up).
As the brief tour of the statute’s history, our relevant jurisprudence and that of our sister states demonstrates, Opdyke was correctly decided. Confronted with this same problem over the years and across jurisdictions, courts have repeatedly permitted parties to rely on promissory estoppel to enforce noncontractual promises in the right circumstances. This is unsurprising, as the doctrine exemplifies practical workability by setting out a straightforward legal rule for courts to follow. The Court of Appeals opinion in this case proves the point: for all its grousing about the result, the panel had no trouble reaching it.6
To overrule Opdyke and reject equitable exceptions to the statute of frauds would contravene core principles of stare decisis. Stability in the law is usually preferred, as it prevents arbitrary discretion by courts. McCormick v. Carrier , 487 Mich. 180, 210, 795 N.W.2d 517 (2010). Considerations in favor of stability are strongest in "cases involving property and contract rights, where reliance interests are involved ...." Payne v. Tennessee , 501 U.S. 808, 828, 111 S.Ct. 2597, 115 L.Ed.2d 720 (1991). And overruling a 35-year-old unanimous opinion would be especially noteworthy. See Garner et al., The Law of Judicial Precedent (St. Paul: Thomson/West, 2016), p. 182 ( ).
But there’s more. To abandon all equitable exceptions to the statute of frauds, as the dissent advocates, implicates not only Opdyke , but also more than a century of our Court’s precedent (not to mention centuries of English common law before that). While the dissent believes that this result is warranted by the plain language of the text and by principles of judicial restraint, in fact overruling, in one fell swoop, centuries of well-settled precedent tilts in the other direction. "[T]he longer a rule has continued, the more thoroughly has it inevitably become interwoven with the business and property interests of the community at large; and, therefore, the more disastrous must be a change, especially a sudden change." Wells, A Treatise on the Doctrines of Res Judicata and Stare Decisis (1878), pp. 544–545. The dissent has this characterization backwards; the majority’s decision today is compelled by principles of stability and judicial modesty.7
The rule has not, moreover, declared open...
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