Opinion ID: 1890401
Heading Depth: 1
Heading Rank: 6

Heading: B.2. Bruce's Claim for Promissory Fraud

Text: Undeterred, Bruce insists that the trial court erred in entering a summary judgment against him on his claim for promissory fraud. He argues that he relied to his detriment on Cole's oral promise, which, Bruce says, Cole made with the then-existing intent not to perform and with a then-existing intent to deceive. See Porter v. Hook, 554 So.2d 382, 384-85 (Ala. 1989), for the essential elements of promissory fraud. In the promissory fraud case of Hinkle v. Cargill, Inc., 613 So.2d 1216, 1220 (Ala. 1992), this Court wrote: Cargill argues that a fraud action cannot be based on the breach of an unwritten contract that is void under the Statute of Frauds. As the above-cited authorities show, however, the Statute of Frauds does not bar proof of a fraud committed by means of a promise that ordinarily could not be enforced as a contractual promise because of the Statute of Frauds. Furthermore, `it is well settled in Alabama that fraud may be predicated upon a breach of contract which is void, because not in writing, where the contract was made for the purpose of perpetrating the fraud.' Caron v. Teagle, 408 So.2d 494, 496 (Ala. 1981). Indeed, in the promissory fraud case of US Diagnostic v. Shelby Radiology, P.C., 793 So.2d 714 (Ala.2000), addressing a promise void by operation of the Statute of Frauds, a plurality of this Court held that the alleged promisor-defendant's denial that he made the alleged promise at all constituted evidence that, at the time he made the promise, he did not intend to honor it and he did intend to deceive the promisee-plaintiff. However, in the more recent case of Holman v. Childersburg Bancorporation, Inc., 852 So.2d 691, 701 (Ala.2002), this Court held that where, as here, an element of a tort claim turns on the existence of an alleged agreement that cannot, consistent with the Statute of Frauds, be proven to support a breach-of-contract claim, the Statute of Frauds also bars proof of that agreement to support the tort claim. Were the rule otherwise, the Statute of Frauds could be effectively avoided by the simple wording of the complaint. The Holman Court explains: As a general rule, `[i]f the proof of a promise or contract, void under the statute of frauds, is essential to maintain the action, there may be no recovery.' Pacurib v. Villacruz, 183 Misc.2d 850, 861, 705 N.Y.S.2d 819, 827 (N.Y.Civ.Ct.1999) (emphasis added); see also Dwight v. Tobin, 947 F.2d 455, 460 (11th Cir.1991); McDabco, Inc. v. Chet Adams Co., 548 F.Supp. 456, 458 (D.S.C.1982) (it is a `well accepted doctrine that one cannot circumvent the Statute of Frauds by bringing an action in tort, when the tort action is based primarily on the unenforceable contract'); Weakly v. East, 900 S.W.2d 755 (Tex.Ct.App.1995). This is so, because, `[i]f a plaintiff was allowed to recover the benefit of a bargain already barred by the statute of frauds, the statute of frauds would become meaningless.' Sonnichsen v. Baylor University, 47 S.W.3d 122, 127 (Tex.Ct. App.2001). `Thus, the Statute of Frauds bars a [tort] claim when a plaintiff claims as damages the benefit of the bargain that he would have obtained had the promise been performed.' Id. 852 So.2d at 699. In 1823, Alabama adopted the English Statute of Frauds, 29 Car. II, ch. 3 (1676), enacted by Parliament and approved by King Charles II, effective June 24, 1677. Toulmin Code 1823, Tit. 18, Ch. III, § 1. Section 1, 29 Car. II, ch. 3 (1676), states the purpose of the Statute of Frauds, in pertinent part: For prevention of many fraudulent Practices, which are commonly endeavored to be upheld by Perjury and Subordination [sic] of Perjury. Further, [t]he public policy underlying the statute of frauds is that fraud or perjury will not be rewarded by denying enforcement of alleged contracts that never, in fact, existed. The statute exists to protect not just the parties to a contract, but also to protect the fact finder from charlatans, perjurers and the problems of proof accompanying oral contracts. 73 Am.Jur.2d Statute of Frauds § 425, p. 102 (2001) (footnotes omitted) (emphasis added). See David Co. v. Jim W. Miller Constr., Inc., 444 N.W.2d 836 (Minn.1989), and McInerney v. Charter Golf, Inc., 176 Ill.2d 482, 223 Ill.Dec. 911, 680 N.E.2d 1347 (1997). Moreover, [t]he purpose of the statute of frauds is to prevent the fraudulent enforcement of unmade contracts, and not to legitimate [sic] the enforcement of contracts that were in fact made. 73 Am.Jur.2d Statute of Frauds § 425, p. 103 (2001) (footnote omitted). See Timberlake v. Heflin, 180 W.Va. 644, 379 S.E.2d 149 (1989). Thus, the Statute of Frauds identifies defined categories of oral promises that are especially subject to fabrication and especially unworthy of reliance or enforcement. Therefore, for the courts, on a theory of promissory fraud, to countenance a plaintiff's claim that he has relied on such a promise and to redress that plaintiff's claim that he has suffered from the breach of such a promise, defies the policy and frustrates the efficacy of the Statute of Frauds. Therefore, applying the legal reasoning of Holman, supra, this Court now holds that an oral promise that is void by operation of the Statute of Frauds will not support an action against the promisor for promissory fraud. The cases of US Diagnostic v. Shelby Radiology, P.C., 793 So.2d 714 (Ala.2000), Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So.2d 359 (Ala.1993), Hinkle v. Cargill, Inc., 613 So.2d 1216 (Ala.1992), Dean v. Myers, 466 So.2d 952 (Ala.1985), and Caron v. Teagle, 408 So.2d 494 (Ala.1981), are overruled to the extent, but only to the extent, that they conflict with this holding. Accordingly, Cole's alleged oral put-call promise does not support Bruce's promissory fraud theory against Cole. The trial court did not err in entering a summary judgment against Bruce on his promissory fraud claim.