UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

WOODLAND HARVESTING, INC., 

A Michigan Corporation, 

 Plaintiff, Case No. 09-10736 

 

v. Hon. AVERN COHN 

GEORGIA PACIFIC CORPORATION, 

A foreign corporation, 

 Defendant. 

_________________________________________________/ 

MEMORANDUM AND ORDER LIMITING PLAINTIFF’S DAMAGES 

I. Introduction 

This is a commercial dispute. Woodland Harvesting Inc. (WHI) supplied 

woodchips and wood products to Georgia Pacific (GP) who used them in its operation of 

a particle board plant in Gaylord, MI from 1987-2006. The plant closed in 2006 and GP 

canceled its contract with WHI. In response, WHI sued alleging fraud, breach of 

contract, and later promissory estoppel. The only claim still pending is promissory 

estoppel. 

Now before the Court is the defendant’s motion to strike plaintiff’s itemized 

statement of damages. (Doc. 41) In reality, defendant moves the Court to limit potential 

recovery to reliance damages. WHI claims it is entitled to expectation damages under 

the theory of promissory estoppel. 

For the reasons that follow plaintiff’s damages are limited to reliance damages. 

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I. Background 

 Over the course of 19 years WHI entered into a series of contracts with GP to 

supply wood chips to GP’s particle board plant. Shortly after signing a multi-year deal in 

2005, GP notified WHI that it intended to terminate the contract in accordance with a 

cancelation provision. GP terminated the contract and closed its plant. As a result, 

WHI sued GP alleging breach of contract, fraud, and later amended its complaint to 

include promissory estoppel. GP filed a motion to dismiss. The fraud and breach of 

contract claims were dismissed. The only claim that survived was promissory estoppel. 

 The parties have had several disputes related to discovery. The present 

controversy revolves around the appropriate measure of damages under the theory of 

promissory estoppel. The Court held a status conference on June 1, 2011 to address a 

dispute over the scope of discovery. At that conference, the Court ordered the plaintiff 

to produce an itemized statement of damages. 

 GP contends that WHI is in violation of this order because the statement of 

damages includes, almost exclusively, lost profits. The substance of this dispute turns 

on whether WHI may recover expectation damages if successful in its claim of 

promissory estoppel. 

II. Legal Standard 

A. Promissory Estoppel 

Promissory estoppel is an equitable doctrine, and an action based on promissory 

estoppel is considered an equitable action, rather than a legal one. C & K Engineering 

Contractors v. Amber Steel Co., 23 Cal. 3d 1, 587 P.2d 1136 (1978). As an equitable 

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doctrine the remedy is flexible, and will vary as justice requires. It is within the 

discretion of the court to award expectation, reliance, or restitutionary damages for 

promissory estoppel claims. Dynalectric Co. of Nevada, Inc. v. Clark & Sullivan 

Constructors, Inc., 127 Nev. Adv. Op. 41, 255 P.3d 286 (2011). However, the standard 

measure of damages is reliance. See Restatement (second) Contracts §90. Hoffman 

v. Red Owl Stores, Inc., 26 Wis.2d 683, 701-02, 133 N.W.2d 267, 277 (1965) provides a 

useful overview of the law: 

Where damages are awarded in promissory estoppel instead of 

specifically enforcing the promisor's promise, they should be only such as 

in the opinion of the court are necessary to prevent injustice. Mechanical 

or rule of thumb approaches to the damage problem should be avoided. In 

discussing remedies to be applied by courts in promissory estoppel we 

quote the following views of writers on the subject: 

‘Enforcement of a promise does not necessarily mean Specific 

Performance. It does not necessarily mean Damages for breach. 

Moreover the amount allowed as Damages may be determined by the 

plaintiff's expenditures or change of position in reliance as well as by the 

value to him of the promised performance. Restitution is also an 

‘enforcing’ remedy, although it is often said to be based upon some kind of 

a rescission. In determin[in]g what justice requires, the court must 

remember all of its powers, derived from equity, law merchant, and other 

sources, as well as the common law. Its decree should be molded 

accordingly.' 1A Corbin, Contracts, p. 221, sec. 200. 

III. Discussion 

A. Damages Recoverable Under Promissory Estoppel 

The standard measure of recovery under a theory of promissory estoppel is 

typically reliance damages. Restatement (second) of Contracts §90. Expectation 

damages, however, are a possible remedy. Plaintiff is correct to suggest that 

occasionally courts allow recovery of lost profits when justice so demands. See e.g.

Goodman v. Dicker, 169 F.2d 684 (D.C. Cir. 1948). There is nothing, however, to 

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suggest that this case presents one of the exceptional circumstances where the 

interests of justice require an award of lost profits. 

WHI had no realistic expectation of five years’ of profits. WHI’s contract with GP 

provides for a 90 day cancellation. After bargaining for that provision it is unrealistic for 

WHI to maintain that it has a right to the profits on the five year contract. Promissory 

estoppel cannot fashion a better deal than the plaintiff did. If there was reliance on 

profits, that reliance was unreasonable. At best, WHI detrimentally relied on GP’s 

representations and purchased the log sorting machine and entered into stumpage 

contracts in reliance on those representations. WHI’s statement of itemized damages is 

non-responsive to the discovery order because it lists expectation damages; WHI has 

no claim for lost profits. 

B. Itemization of Damages 

The itemized statement of damages is unsupported by financial papers as 

required by the Court’s order. Plaintiff should furnish information and supporting 

documents related to reliance damages. For example, WHI’s disclosure for its purchase 

of the log sorting machine is a one page invoice listing the selling price as $280,000. 

WHI does not provide any documents indicating the current value, if any, of the 

machine. It does not list expenses related to the purchase of the machine beyond the 

purchase price. Also, WHI says nothing related to the expense of employee time to 

complete the purchase of the machine, remodeling of facilities or land to accommodate 

the machine, or financing the purchase, or transportation costs. 

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Further, there is no information disclosed by WHI related to what steps, if any, it 

took to cover or mitigate damages after the cancelation of the contract with GP. The 

accounting for these steps has a direct effect on recoverable damages. Further absent 

are WHI’s expenses related to entering into stumpage contracts with land owners. It 

does not indicate what losses, if any, it suffered in relation to the stumpage contracts 

nor does WHI disclose whether it defaulted on the contracts or honored them and sold 

the wood product at a profit or loss. 

IV. Conclusion 

Defendant’s motion to strike (Doc. 41) is DISMISSED as moot. 

 SO ORDERED. 

Dated: October 4, 2011 S/Avern Cohn 

 AVERN COHN 

 UNITED STATES DISTRICT JUDGE 

I hereby certify that a copy of the foregoing document was mailed to the attorneys of 

record on this date, October 4, 2011, by electronic and/or ordinary mail. 

 S/Julie Owens 

 Case Manager, (313) 234-5160 

 

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