Tour Costa Rica v. Country Walkers, Inc.

• Decision Date: 28 July 2000
• Docket Number: No. 98-421.,98-421.
• Parties: TOUR COSTA RICA v. COUNTRY WALKERS, INC., et al.
• Court: Vermont Supreme Court

758 A.2d 795

TOUR COSTA RICA v. COUNTRY WALKERS, INC., et al.

No. 98-421.

Supreme Court of Vermont.

July 28, 2000.

John L. Pacht and Kerin E. Stackpole of Hoff, Curtis, Pacht, Cassidy and Frame, P.C., Burlington, for Plaintiff-Appellee.

Erik B. FitzPatrick and Robert F. O'Neill of Gravel and Shea, Burlington, for Defendants-Appellants.

PRESENT: DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ., and GIBSON, J. (Ret.), Specially Assigned.

SKOGLUND, J.

Defendants Country Walkers, Inc. (CW) and Robert Maynard (Maynard)¹ appeal from the superior court's denial of their V.R.C.P. 50(b) motion for judgment as a matter of law, following a jury verdict for plaintiff, Tour Costa Rica (TCR), on its promissory estoppel claim. The jury awarded plaintiff, a company that runs tours in Costa Rica, damages after finding that defendant had breached a promise of a two-year commitment to use TCR to develop, organize and operate Costa Rican walking tours for defendant during that period. We affirm.

Because this is an appeal from a denial of a motion for judgment as a matter of law, we view the evidence in the light most favorable to plaintiff. See Brueckner v. Norwich Univ., 169 Vt. 118, 120-21, 730 A.2d 1086, 1089 (1999).

CW is a Vermont business, owned by Maynard and his wife, that sells guided tours at locations around the world. In 1994, Leigh Monahan, owner of TCR, contacted Maynard and offered to design, arrange and lead walking tours in Costa Rica for defendant. During negotiations, Monahan explained to Maynard that she had just incorporated the tour company and, because the company had limited resources, she could not afford to develop specialized tours for defendant unless she had a two-year commitment from CW to run its Costa Rican tours through TCR. In the summer of 1994, the parties entered into a verbal agreement under which plaintiff was to design, arrange and lead customized walking tours in Costa Rica for CW from 1995 through 1997. Pursuant to this agreement, Monahan designed a customized tour for CW, a task that included investigating and testing walking tours, investigating and booking hotels, making transportation arrangements, conducting research, checking medical facilities, writing and editing copy for CW's brochures and drafting itineraries for clients.

In March and April 1995, plaintiff conducted two walking tours for CW. Although other tours had been scheduled for 1995, both defendant and plaintiff canceled some for various reasons. Between the end of April and June of 1995, the parties discussed the details of, and scheduled the dates for, approximately eighteen walking tours for 1996 and 1997. Due to limited resources, plaintiff could not conduct tours for anyone else while working with defendant and, therefore, stopped advertising and promoting its business, did not pursue other business opportunities and, in fact, turned down other business during this period.

In August 1995, a few weeks before the next tour was to occur, defendant informed plaintiff that it would be using another company for all of its future tours in Costa Rica. When challenged by plaintiff with its promised commitment, Maynard responded: "If I did and I certainly may have promised you a two year commitment, I apologize for not honoring it." Notwithstanding this apology, defendant went on to operate tours in Costa Rica using a rival company. Plaintiff was forced to cancel transportation arrangements and hotel and restaurant reservations it had made on defendant's behalf. Due to the suddenness of the break with CW, plaintiff was left without tours to run during a prime tourist season, and without sufficient time to market any new tours of its own.

Plaintiff filed suit against defendant, alleging breach of contract, promissory estoppel, unjust enrichment, conversion, fraud, and breach of covenant of good faith and fair dealing. Plaintiff dismissed the conversion count at the beginning of trial. At the close of plaintiff's evidence, defendant moved for a directed verdict on the remaining counts. The court granted defendant's motion with respect to the fraud claim, but denied it with respect to the other claims. Defendant renewed its motion at the close of all the evidence, and the court denied it. At that time, defendant also requested a directed verdict with regard to damages, arguing that there was insufficient evidence to support a damage award. The court denied this motion, as well. Subsequently, the court presented the parties with its proposed jury instructions, which included the following: "As to the claims of breach of contract and promissory estoppel, plaintiff would be entitled to damages which would put it in the same position as if the contract or promise had been fulfilled by Country Walkers." The court then held a jury charge conference, during which both plaintiff and defendant objected to portions of the court's proposed instructions. Defendant, however, did not object to the above-quoted portion.

The case went to the jury, and the jury found for defendant on the breach of contract, unjust enrichment, and breach of covenant of good faith and fair dealing claims, but found for plaintiff on the promissory estoppel claim, and awarded expectation damages in the amount of $22,520.00. Defendant then filed a motion for judgment as a matter of law, alleging, as it had in its previous motions, that plaintiff had failed to prove promissory estoppel and that there was insufficient evidence to support the jury's damage award. Defendant also argued, for the first time, that, as a matter of law, expectation damages are not available in a promissory estoppel action. The court denied defendant's motion. This appeal followed.

Pursuant to V.R.C.P. 50, a court may grant judgment as a matter of law where "there is no legally sufficient evidentiary basis for a reasonable jury to find for [the nonmoving] party." V.R.C.P. 50(a)(1). When reviewing a motion for judgment as a matter of law, we view the evidence in the light most favorable to the nonmoving party, excluding the effect of any modifying evidence, in order to determine whether the result reached by the jury is sound in law on the evidence produced. See Haynes v. Golub Corp., 166 Vt. 228, 233, 692 A.2d 377, 380 (1997); Foote v. Simmonds Precision Prods. Co., 158 Vt. 566, 570, 613 A.2d 1277, 1279 (1992). The trial court's denial of such motion will be upheld "if any evidence fairly or reasonably supports a lawful theory of the plaintiff." Haynes, 166 Vt. at 233, 692 A.2d at 380. In this case, there was substantial evidence supporting plaintiff's claims, and the trial court did not err in denying defendant's motion for judgment as a matter of law.

I.

Defendant first argues that plaintiff failed to make out a prima facie case of promissory estoppel. Under the doctrine of promissory estoppel:

"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."

Foote, 158 Vt. at 573,613 A.2d at 1281 (quoting Restatement (Second) of Contracts § 90(1) (1981)). The action or inaction taken in reliance on the promise must be "`of a definite and substantial character.'" Ragosta v. Wilder, 156 Vt. 390, 396, 592 A.2d 367, 371 (1991) (quoting Stacy v. Merchants Bank, 144 Vt. 515, 521, 482 A.2d 61, 64 (1984)). In other words, the promisee must have detrimentally relied on the promise. See Larose v. Agway, Inc., 147 Vt. 1, 4, 508 A.2d 1364, 1366 (1986),overruled on other grounds by Taylor v. National Life Ins. Co., 161 Vt. 457, 652 A.2d 466 (1993)

. Defendant does not seriously dispute that there was a promise or that plaintiff did take action based on the promise. Rather, defendant argues that plaintiff's reliance was not reasonable or detrimental, and that this is not a case where injustice can be avoided only by enforcement of the promise. We first address defendant's argument that plaintiff's reliance was not reasonable.

A.

In determining whether a plaintiff reasonably relied on a defendant's promise, courts examine the totality of the circumstances. See In re Bonnanzio, 91 F.3d 296, 305 (2d Cir.1996). Here, plaintiff presented evidence that it relied on defendant's promise of a two-year exclusive commitment by (a) ceasing to advertise and promote the business, failing to pursue other business opportunities, and turning down other business; (b) making hotel and restaurant reservations and arranging for transportation for the tours it was to operate for CW; and (c) making purchases related to the tours it was to operate for CW. Plaintiff suggests that this reliance was reasonable because, in negotiations with Maynard, plaintiff made clear that it required a two-year commitment due to its limited resources, the time it would have to devote to develop specialized tours for CW, and the ongoing communication between the parties as to future dates and requirements for tours.

Defendant argues that plaintiff's reliance was not reasonable based solely on standard industry practice that permits the cancellation of tours upon thirty to sixty days' notice.

While there was no dispute that tours could be canceled with appropriate notice, there was evidence that this industry practice did not apply to the parties' two-year commitment. Monahan testified that she and Maynard specifically agreed to the two-year time frame because she wanted a measure of security for her fledgling company. She further testified that it was her understanding, from negotiations with Maynard, that the two-year commitment was unaffected by the possibility that some scheduled tours might be canceled if, for example, too few people signed. This understanding finds support in Maynard's proposed method of handling deposits of people who canceled tour booking: if guests canceled more than sixty days before the trip, defendant would keep...