Case Name: LOVELY v. DIERKES
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1984-03-05
Citations: 132 Mich. App. 485
Docket Number: Docket No. 67776
Parties: LOVELY v DIERKES
Judges: Before: Danhof, C.J., and Bronson and W. R. Peterson, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 132
Pages: 485–496

Head Matter:
LOVELY v DIERKES
Docket No. 67776.
Submitted October 12, 1983, at Lansing.
Decided March 5, 1984.
Steven Lovely brought an action in Jackson Circuit Court alleging breach by J. Michael Dierkes and The Real Food Company of an employment contract. Plaintiff alleged that defendant Dierkes had offered plaintiff a three year employment contract with defendant company at a salary of $400 per week, plus a percentage interest in defendant company which would increase with each year of employment, that in reliance on that promise plaintiff had quit the two jobs he had in Ann Arbor and had moved his family to Jackson where the new job was located. Plaintiff further alleged that defendant Dierkes had promised to reduce the oral contract to writing but never did and, despite an agreement that plaintiff would not be discharged without good cause, had discharged plaintiff after only two months of employment. Defendants moved for summary judgment on the basis of the statute of frauds. The trial court, James G. Fleming, J., granted defendants’ motion, holding that defendants were not equitably estopped from pleading the statute of frauds. Plaintiff appeals. Held:
1. Since the oral contract of employment was for a period of three years, it falls within the provisions of the statute of frauds and is not enforceable unless it is determined that defendants should be estopped on equitable grounds from pleading the statute of frauds.
2. Promissory estoppel is available where: (1) there is a promise, (2) the promisor should reasonably have expected the promisee to be induced to take some definite and substantial act of forbearance or reliance on the basis of the promise, (3) _the promisee does, in fact, undertake such definite act in reliance upon the promisor’s promise, and (4) injustice will be avoided only if the promise is enforced.
References for Points in Headnotes
28 Am Jur 2d, Estoppel and Waiver § 48.
73 Am Jur 2d, Statute of Frauds § 565 et seq.
Promissory estoppel. 48 ALR2d 1069.
72 Am Jur 2d, Statute of Frauds § 34.
73 Am Jur 2d, Statute of Frauds § 563.
73 Am Jur 2d, Statute of Frauds § 605.
3. While plaintiffs termination of his prior employment, by itself, would not be sufficient to establish the reliance element necessary to establish the right to invoke promissory estoppel, the termination of his prior employment, coupled with the fact that he relocated his family and was promised an ownership interest in the business and a written contract, is sufficient to establish the right to raise promissory estoppel as a bar to the application of the statute of frauds in this case.
Reversed and remanded.
W. R. Peterson, J., dissented. He would hold that promissory estoppel is available to plaintiff only upon a showing of unjust enrichment to defendants or an unconscionable injury to himself if the defendants are able to rely on the statute of frauds. Since plaintiff has failed to plead facts which would support a finding of an unconscionable injury, as opposed to merely the injustice occasioned by the loss of the contractual bargain which is implicit in any application of the statute of frauds, plaintiff is not entitled to assert the doctrine of promissory estoppel. He would hold that the trial court, accordingly, did not err in granting summary judgment in favor of defendants. He would affirm.
Opinion of the Court
1. Estoppel — Promissory Estoppel — Statute of Frauds.
The elements of promissory estoppel are (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; promissory estoppel, if established, can be invoked to defeat the defense of the statute of frauds (MCL 566.132[a]; MSA 26.922[a]).
2. Estoppel — Promissory Estoppel — Statute of Frauds — Employment Contracts.
The termination of one’s prior employment alone is insufficient to establish the element of reliance necessary to invoke the doctrine of promissory estoppel and thereby bar the application of the statute of frauds with respect to a claim of breach of an oral employment contract which is not capable of being completed in less than one year.
3. Estopppel — Promissory Estoppel — Statute of Frauds — Employment Contracts — Sufficiency of Pleadings.
A plaintiff bringing a breach of contract action for the alleged failure of the defendant to honor an oral employment contract is entitled to invoke the doctrine of promissory estoppel so as to bar the application of the statute of frauds where the plaintiff has pled that, in reliance on the oral employment contract with the defendant, he gave up prior employment, relocated his family and residence, was promised a definite salary for a definite period of time, was promised an ownership interest in the business of defendant, and was told that the oral contract would be reduced to writing.
Dissent by W. R. Peterson, J.
4. Estoppel — Promissory Estoppel — Statute of Frauds — Unconscionable Injury.
The application of the statute of frauds necessarily results in substantial injustice, since by the application of the statute of frauds honest men will lose the beneñt of the bargain of a contract which was not reduced to writing; accordingly, the injustice element of the doctrine of promissory estoppel necessary to defeat the defense provided by the statute of frauds is not satisfied by proof of the loss of beneñt of the bargain of the contract, but rather requires proof that the party asserting the statute of frauds would be unjustly enriched or that an unconscionable injury would result to the party seeking to enforce the contract.
5. Estoppel — Promissory Estoppel — Statute of Frauds — Pleading.
A party seeking to avoid the application of the statute of frauds to an oral employment contract by invoking the doctrine of promissory estoppel must plead and prove both that he relied upon the promise of employment and that as a result of that reliance he suffered an unconscionable injury; in applying the doctrine of promissory estoppel, courts must be careful to ascertain that there is pled and proved both reliance on the promise of employment and an unconscionable injury resulting from such reliance.
Rappleye, Wilkins & Arcaro (by Viola A. Kaminski), for plaintiff.
Curtis, Davidson & Curtis, P.C. (by Ronald J. Fabian), for defendants.
Before: Danhof, C.J., and Bronson and W. R. Peterson, JJ.
Circuit judge, sitting on the Court of Appeals by assignment.

Opinion:
Danhof, C.J.
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. MCL 566.132; MSA 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 agree and reverse the trial court's grant of summary judgment to defendants.
The Michigan statute of frauds, MCL 566.132; MSA 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 to be performed within 1 year from the making thereof."
Since plaintiffs 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 NW2d 140 (1977).
We find that plaintiff has sufficiently alleged all of the elements of promissory estoppel. If the evidence at trial supports plaintiffs allegations, the reliance by plaintiff on defendants' promise would be sufficient to estop defendants from raising the statute of frauds as a defense to plaintiffs action.
Plaintiff here alleged a promise by defendants to 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 NW2d 713 (1979), lv den 409 Mich 880 (1980); Schipani v Ford Motor Co, 102 Mich App 606, 615; 302 NW2d 307 (1981); Pursell v Wolverine-Pentronix, Inc, 44 Mich App 416; 205 NW2d 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 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.