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AMI 2444 Issues—Promissory Estoppel

Arkansas Supreme Court Committee On Jury Instructions-Civil

Ark. Model Jury Instr., Civil AMI 2444
Arkansas Model Jury Instructions-Civil
December 2023 Update
Arkansas Supreme Court Committee On Jury Instructions-Civil
Chapter 24. Contracts
Promissory Estoppel
AMI 2444 Issues—Promissory Estoppel
[Plaintiff] claims damages against [defendant] for promissory estoppel and has the burden of proving each of four essential propositions:
First,[defendant] made a promise to [plaintiff];
Second, [defendant] should reasonably have expected [plaintiff] to [act in reliance on the promise] [refrain from acting in reliance on the promise]; [and]
Third, [plaintiff][acted][refrained from acting] in reasonable reliance on the promise to [his][her][its] detriment; [and]
[Fourth, injustice can be avoided only by enforcement of the promise.]
NOTE ON USE
This instruction should only be used if the court has decided that the claim of promissory estoppel should be submitted to the jury or the parties consent.
The fourth bracketed element should only be used if the court has decided that the question of avoidance of injustice should be submitted to the jury or the parties consent.
Insert the appropriate bracketed clause for the particular fact pattern presented.
For the damages instruction, modify AMI 2442.
COMMENT
This instruction was cited as correctly stating the law in Fairpark, LLC v. Healthcare Essentials, Inc., 2011 Ark. App. 146, at 12, 381 S.W.3d 852, 859 (appeal from a decision of the circuit court sitting as the fact finder).
The Arkansas Supreme Court has not decided whether promissory estoppel is an appropriate claim to submit to a jury. Claims of promissory estoppel have been submitted to juries in several cases that reached the Arkansas appellate courts. Those cases do not, however, include any discussion of whether parties objected to the submission of claims of promissory estoppel to juries or of whether doing so was appropriate. In those cases, claims of promissory estoppel were submitted to juries along with other claims. See, e.g., Mercy Health Sys. of Northwest Ark. v. McGraw, 2013 Ark. App. 459 (negligence, promissory estoppel, and breach of fiduciary duty claims submitted to jury); Superior Fed. Bank. v. Jones & Mackey Constr. Co., 84 Ark. App. 1, 8, 8 S.W.3d 324, 328 (2003); 93 Ark. App. 317, 319, 219 S.W.3d 643, 645 (2005) (breach of contract, promissory estoppel, and defamation submitted to the jury); S. Beach Beverage Co. v. Harris Brands, Inc., 355 Ark. 347, 352, 138 S.W.3d 102, 104–05 (2003) (claims of violation of the Franchise Practices Act and promissory estoppel submitted to the jury, and the verdict in favor of the plaintiff was affirmed under the Franchise Practices Act); Tyson Foods, Inc. v. Davis, 347 Ark. 566, 578, 66 S.W.3d 568, 576 (2002) (fraud, promissory estoppel, and negligence were submitted on a general verdict form, and the verdict for the plaintiff was treated as indivisible); Belin v. West, 315 Ark. 61, 64, 864 S.W.2d 838, 840 (1993) (defamation, promissory estoppel, and interference with business expectancy submitted to the jury); Dickson v. Delhi Seed Co., 26 Ark. App. 83, 92–93, 760 S.W.2d 382, 388 (1988) (claims of breach of oral agreement and promissory estoppel against the defense of statute of frauds were submitted to the jury); Ralston Purina Co. v. McCollum, 271 Ark. 840, 841–42, 611 S.W.2d 201, 202 (1981) (claims of breach of oral agreement and promissory estoppel against the defense of statute of frauds were submitted to the jury).
After the passage of Amendment 80 to the Arkansas Constitution, which merged the courts of law and equity, the Arkansas appellate courts have held that claims which are historically equitable in nature should not be submitted to a jury. Nat'l Bank of Ark. v. River Crossing Partners, LLC, 2011 Ark. 475, at 10, 385 S.W.3d 754, 761 (“a circuit court must review the historical nature of the claims to determine whether they should be submitted to a judge as equitable matters or to a jury as legal matters”); Ludwig v. Bella Casa, LLC, 2010 Ark. 435, at 9, 372 S.W.3d 792, 798 (holding that a nuisance claim for injunctive relief, which was traditionally tried in equity, should not have been submitted to the jury); First Nat'l Bank of Dewitt v. Cruthis, 360 Ark. 528, 533–34, 203 S.W.3d 88, 91–92 (2005) (Amendment 80 did not alter the issues that could be submitted to the jury). One commentator has described promissory estoppel as an equitable doctrine, which derived from equitable estoppel, also known as estoppel in pais, in order to prevent frauds and other injustices from promises of future conduct. HOWARD W. BRILL, ARKANSAS LAW OF DAMAGES § 17:14, at 54–57 & nn. 5–6 (5th ed. 2010–11 Supp.) (citing, among other sources, Pomeroy's Equity Jurisprudence§ 808b (5th ed. 1941)). But see Merex A.G. v. Fairchild Weston Systems, Inc., 29 F.3d 821, 824–26 (2nd Cir. 1994) (tracing promissory estoppel's historical roots to conventions in both law and equity).
In federal court, the right to jury trial is determined by the Seventh Amendment to the United States Constitution. Three U.S. Circuit Courts of Appeals have held that certain claims of promissory estoppel should not be submitted to the jury. In Merex v. Fairchild, the Second Circuit held that the appellant's claim of promissory estoppel in response to the defense of the statute of frauds “is properly regarded as equitable rather than legal and, consequently, [the appellant] was not entitled to a jury trial on its claim for promissory estoppel.” 29 F.3d at 826. The court noted that this form of promissory estoppel is restated in the Restatement (Second) of Contracts § 139(1). The court implied, without deciding, that the Seventh Amendment conferred a right to jury trial on the form of promissory estoppel restated in the Restatement (Second) of Contracts § 90, which it described as detrimental reliance. Id. at 824–25. Likewise, in InCompass IT, Inc. v. XO Communication Services, Inc., the Eighth Circuit, relying on Merex v. Fairchild, concluded that as the appellant was using promissory estoppel to avoid the statute of frauds, the promissory estoppel claim was equitable in nature. 719 F.3d 891. In addressing the nature of the remedy sought, the court recognized that while “[a] claim for money damages … constitutes ‘legal’ relief” which generally affords a right to a jury trial, “money awarded incidental to the grant of equitable relief [is] not legal in nature.” Therefore, the appellant was not entitled to a jury trial as the appellant's claim as a whole was “undeniably equitable [in] nature.” In Nimrod Marketing (Overseas), Ltd. v. Texas Energy Investment Corp., the Fifth Circuit held that no right to jury trial attached under the Seventh Amendment to claims of promissory estoppel based on the plaintiff's detrimental reliance on comfort letters and verbal authorizations to acquire equipment and supplies for the defendant's construction project. 769 F.2d 1076, 1078–79 (5th Cir. 1985). The court reasoned: “Promissory estoppel is an equitable form of action in which equitable rights alone are recognized …. Defendants had no right to trial by jury ….” Id. at 1080.
The determination of the right to jury trial over particular claims and defenses is beyond the charge given the Committee by the Arkansas Supreme Court. The Committee therefore takes no position on the propriety of the submission of the claim of promissory estoppel to the jury in state or federal courts. The Committee has included this instruction in the AMI in the event that a trial court determines that the claim should be submitted to a jury, the parties consent to the submission of the claim to the jury, or the court empanels an advisory jury to decide the claim under Ark. R. Civ. P. 39(c). In order to preserve error in the submission of one of several claims to a jury, the claims should be submitted on interrogatories instead of a general verdict. S. Beach Beverage Co., 355 Ark. at 352, 138 S.W.3d at 105; Tyson Foods, 347 Ark. at 578–79, 582, 66 S.W.3d at 575–76, 578.
This instruction is based on the Restatement (Second) of Contracts § 90 (1981):
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. The remedy granted for breach may be limited as justice requires.
See Van Dyke v. Glover, 326 Ark. 736, 745, 934 S.W.2d 204, 209 (1996). See also, K.C. Props. of N.W. Arkansas, Inc. v. Lowell Inv. Partners, LLC, 373 Ark. 14, 30, 280 S.W.3d 1, 14 (2008).
“[T]he party asserting estoppel must prove it strictly, there must be certainty to every intent, the facts constituting it must not be taken by argument or inference, and nothing can be supplied by intendment.” K.C. Props., 373 Ark. at 30, 280 S.W.3d at 14. See also Ward v. Worthen Bank & Trust Co., 284 Ark. 355, 359–60, 681 S.W.2d 365, 368 (1985) (citing Julian Martin, Inc. v. Ind. Refrigeration Lines, Inc., 262 Ark. 671, 560 S.W.2d 228 (1978)).
A party asserting estoppel must prove that in good faith he relied on some act or failure to act by the other party and, in reliance on that act, suffered some detriment. Rigsby v. Rigsby, 356 Ark. 311, 316–18, 149 S.W.3d 318, 322–23 (2004) (affirming chancery court's award of one-half interest in real property, including mineral rights, where son made improvements to the real property because of father's promises that the property would one day be his); Regions Bank v. Wetzel, 649 F. 3d 831, 837 (8th Cir. 2011) (assignee of judgment against the debtor may not raise the detrimental reliance of his assignor to estop the claims of the debtor to trust income); Mercy Health v. McGraw, 2013 Ark. App. 459, 7–8 (clinic office manager's oral promise to “take care of” malpractice complaint and summons was sufficiently specific to support doctor's reasonable reliance).
Hoffius v. Maestri lists the following five factors that may be used to determine whether “injustice” has occurred:
  • (a) the availability and adequacy of other remedies, particularly cancellation and restitution;
  • (b) the definite and substantial character of the action or forbearance in relation to the remedy sought;
  • (c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise or the making and terms are otherwise established by clear and convincing evidence;
  • (d) the reasonableness of the action or forbearance;
  • (e) the extent to which the action or forbearance was foreseeable by the promisor.
31 Ark. App. 13, 786 S.W.2d 846 (1990) (citing Restatement Second, Contracts § 139 (1979)).
Some jurisdictions that submit the claim of promissory estoppel to the jury do not submit the fourth element, the avoidance of “injustice” by enforcement of the promise. Those jurisdictions reason that the element of injustice presents a policy question for the court instead of a fact question for the jury. Mich. Civil Jury Instructions 130.01, cmt. (“Certainly the avoidance of injustice requirement of promissory estoppel is equitable in nature and presents a policy decision for the court, not a question of fact for the jury …. [W]hether injustice can be avoided only by enforcement of the promise is a question of law for the court and is not submissible to the jury.”); 4 Minn. Prac. Jury Instructions Guides—Civil, CIVJIG 20.50, Use Note (“One element of a promissory estoppel claim is whether injustice can be avoided only by enforcing the promise. That issue is a question of law for the court.”); Ohio Jury Instructions—Civil 501.31, cmt. (“The first three elements are questions of fact for the jury …. Whether injustice can be avoided only by enforcement of the promise is an issue of law for the judge.”); Pavel Enter., Inc. v. A.S. Johnson Co., 342 Md. 143, 168, 674 A.2d 521, 534 (1996) (“Finally, as to the fourth prima facie element, the trial court, and not a jury, must determine that binding the [defendant] is necessary to prevent injustice.”); Hoffman v. Red Owl Stores, Inc., 26 Wisc. 2d 683, 698, 133 N.W.2d 267, 275 (1965) (“[T]he [final] requirement, that the remedy can only be invoked where necessary to avoid injustice, is one that involves a policy decision by the court. Such a policy decision necessarily embraces an element of discretion.”); D&S Coal Co., Inc. v. USX Corp., 678 F.Supp. 1318, 1320–21 (E.D. Tenn. 1988) (“The injustice requirement of promissory estoppel is an equitable consideration which must ultimately be determined by the Court, not the jury.”). But see Haw. Civil Jury Instructions 15.12 (including as fifth element of the promissory estoppel instruction: “Injustice can be avoided only by enforcement of the promise”); Burton v. Gen. Motors Corp., No. 1:95-cv-1054-DFH-TAB, 2008 WL 3853329, at *12, *15 (S.D. Ind. Aug. 15,2008) (including as a final element in a promissory estoppel jury instruction under federal common law under the LMRA that “plaintiff suffered a financial loss because [defendant] broke the promise, and an award of damages for breaking the promise is needed to avoid what would otherwise be an injustice”).
The Committee takes no position on the propriety of the submission of the fourth element of promissory estoppel to the jury in state or federal courts.
The Restatement Second, Contracts § 90 (1981) states that the remedy for breach of a promise “may be limited as justice requires.” The comments to the Restatement expand on this potential limitation: “[R]elief may sometimes be limited to restitution or to damages or specific relief measured by the extent of the promisee's reliance rather than by the terms of the promise.” Id. at cmt d. One commentator describes various Arkansas cases as awarding either expectation or reliance damages, depending on the facts and circumstances of each case. Eric Mills Holmes, Restatement of Promissory Estoppel, 32 Willamette L. Rev. 263, 316-21 (1996) (surveying Arkansas law of promissory estoppel). However, another commentator states that the remedy for promissory estoppel should be expectancy damages. Howard W. Brill, Arkansas Law of Damages§ 17:14, at 55 (5th ed. 2010–11 Supp.) (“The recovery under a promissory estoppel claim should … be what the party would have received, or what he would have avoided, if the promises had been carried out.”). The Committee is not aware of any reported Arkansas case that directly addresses the measure of damages for promissory estoppel cases as a whole. See, e.g., Country Corner Food & Drug, Inc. v. Reiss, 22 Ark. App. 222, 225–28, 737 S.W.2d 672, 67–75 (1987) (affirming judgment for expectancy damages for breach of oral contract; estoppel was asserted by the plaintiff against the defense of the statute of frauds). Whether the court determines that the proper measure of damages for the claim of promissory estoppel in a particular case is expectation or reliance damages, it may modify AMI 2442 for use as the damage instruction.
Generally, the law will not permit recovery on the basis of promissory estoppel when the parties have made a specific contract on the same subject matter. Glenn Mech., Inc. v. S. Ark. Reg'l Health Ctr., Inc., 101 Ark. App. 440, 445, 278 S.W.3d 583, 586–87 (2008) (an enforceable written contract prevented recovery on claims of promissory estoppel and unjust enrichment). For exceptions to this general rule, see AMI 2445, cmt.
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