Opinion ID: 1174822
Heading Depth: 2
Heading Rank: 4

Heading: issues of fact re: promissory estoppel.

Text: Zeman argues that genuine issues of fact exist regarding the elements of promissory estoppel. The trial judge determined that the evidence is uncontradicted that plaintiff Zeman did not substantially change his position in reliance on any of defendant's statements. This conclusion was based on the finding that plaintiff intended to construct the apartment complex regardless of whether defendant would lease it... . The summary judgment will be reversed only if the evidence in the record, taken in a light most favorable to Zeman, the non-moving party, poses genuine issues of material fact regarding this theory. Brock, 645 P.2d at 190; Howarth, 540 P.2d at 490. This court recently approved the formulation of promissory estoppel set out in Restatement (Second) of Contracts § 90 (1979). [3] Glover v. Sager, 667 P.2d 1198, 1202 (Alaska 1983). Four elements are needed to make out a case of promissory estoppel: 1) The action induced amounts to a substantial change of position; 2) it was either actually foreseen or reasonably foreseeable by the promisor; 3) an actual promise was made and itself induced the action or forbearance in reliance thereon; and 4) enforcement is necessary in the interest of justice. State v. First National Bank, 629 P.2d 78, 81 (Alaska 1981); 1A A. Corbin, Corbin on Contracts § 200, at 215-21 (1963). We must determine whether a decision by a builder/developer to alter a pre-set construction schedule and plans, if reasonably induced by another's promise, can constitute a substantial change for purposes of promissory estoppel. If so, we must then determine whether the specific changes Zeman made in his construction schedule and plans rise to a level which meet the law's requirements. We have little difficulty concluding that altering an existing construction schedule and plan may constitute a substantial change. There is no practical reason to distinguish between creation of a new blueprint or alteration of an existing one. Thus, the trial court was mistaken in its assumption that Zeman's pre-existing plan to build ipso facto prevented a finding of substantial change. The real question is whether the changes actually induced represent substantial and actual economic losses. Zeman argues that he underwent substantial changes of position even though he always intended to build the apartment complex. He emphasizes the timing of the construction, obtaining financing for two projects, furnishing the units for Lufthansa, the necessity of building another complex to accommodate Air France when the lease expired, and agreeing to judgment against himself in Swain-Williams' suit for delinquent payments for the property on which the Lufthansa units were built. Whether particular actions represent substantial changes is a question of all the circumstances and is not determinable by reference to a set formula. 1A A. Corbin, Corbin on Contracts § 200 at 216 (1963). Courts look for evidence of actual and substantial economic loss. E.g., Weiner v. Romley, 94 Ariz. 40, 381 P.2d 581, 583-84 (1963); Brand S Corp. v. King, 102 Idaho 731, 639 P.2d 429 (1981). Each of Zeman's proffered examples of loss, therefore, must be examined to determine its substantiality and actuality in the context of his admitted decision to build in any event. First, Zeman argues that acceleration of the construction schedule from an October 31, 1979 completion date to a May completion date required accelerated draws on the construction loans and payment of interest. He makes the conclusory statement that the six-month acceleration is substantial without providing figures to quantify the extent of the loss occasioned by acceleration. The costs of acceleration could be substantial if they significantly increased the price of the project. These calculations are not available in the record. Second, the money spent furnishing the units could signify a substantial loss depending on the cost of the furnishings actually supplied to meet Lufthansa's special needs as a proportion of the overall project. The record does not contain data to answer this question satisfactorily. Third, Zeman consented to judgment against himself in Swain-Williams' action for delinquent payments due on the property acquired for the project. Zeman did this believing that Lufthansa would sign a lease which would in turn free loan funds which he could use to pay Swain-Williams. This loss, even if substantial, is not within the scope of reasonable reliance on Lufthansa's statements. Assuming for the sake of argument that Lufthansa did agree to lease the building, that promise does not justify Zeman consenting to judgment against himself. Lufthansa should not be held responsible for Zeman's unilateral decision to handle his legal difficulties with a third party in a particular manner. Finally, the question of financing the Lufthansa building, and construction of another building for Air France, can be disposed of much like the confessed judgment argument. Assuming that Lufthansa agreed to lease the units, Zeman's decision to build another complex so he could continue his business arrangement with Air France has no connection with Lufthansa. Zeman's business decision to construct more apartments was one of many ways he could have chosen to maintain business ties with the French company. Similarly, construction of the second building may indeed have required more financing, but Zeman cannot hold Lufthansa responsible for the financing costs associated with that building. We remand this portion of the judgment with instructions to determine the substantiality of the costs associated with accelerated loan draws and furnishing the apartments to meet Lufthansa's special requests. If either of these costs proves substantial, then Zeman may pursue the promissory estoppel theory. Otherwise, he may not.