Lige Dickson Co. v. Union Oil Co. of California

635 P.2d 103, 96 Wash. 2d 291, 32 U.C.C. Rep. Serv. (West) 705, 1981 Wash. LEXIS 1260
CourtWashington Supreme Court
DecidedOctober 15, 1981
Docket47550-4
StatusPublished
Cited by28 cases

This text of 635 P.2d 103 (Lige Dickson Co. v. Union Oil Co. of California) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lige Dickson Co. v. Union Oil Co. of California, 635 P.2d 103, 96 Wash. 2d 291, 32 U.C.C. Rep. Serv. (West) 705, 1981 Wash. LEXIS 1260 (Wash. 1981).

Opinions

Dore, J.

The Ninth Circuit Court of Appeals certified the following question1 to us:

Under the law of the State of Washington, may an oral promise otherwise within the statute of frauds, Wash. Rev. Code § 62A.2-201, nevertheless be enforceable on the basis of promissory estoppel? See Restatement (Second) of Contracts § 217A. See generally Klinke v. Famous Recipe Fried Chicken, Inc., 94 Wash.2d 255, 616 P.2d 644 (1980).

Our answer to this question is "no". Analysis and elaboration follow.

The business relationship between plaintiff Lige Dickson Company (or its predecessor partnership) and defendant Union Oil Company of California is long standing, dating from 1937. Plaintiff was a general contractor and purchased its oil-based products from defendant. In 1964, defendant encouraged and aided plaintiff in entering the asphalt paving business. From 1964 through 1973, with one exception, plaintiff purchased all its liquid asphalt from defendant. In the ordinary course of business, plaintiff telephoned orders to defendant, plaintiff was invoiced, and all bills were paid. [293]*293Plaintiff and defendant never executed a written contract providing for the sale and purchase of liquid asphalt.

From 1964 until late 1970, the defendant's price for liquid asphalt remained constant. In December 1970, all of the suppliers of liquid asphalt in the Tacoma area raised their prices. Responding to this in May or June of 1971, plaintiff requested, and defendant provided, an oral guaranty against further increases insofar as would affect those contracts which committed the plaintiff to manufacture and sell asphalt paving at fixed, agreed sums. A list was made of the plaintiff's contracts and the parties computed the amount of liquid asphalt needed to fulfill them. At the same time, defendant promised plaintiff that any upward change in price would be applicable only to contracts which plaintiff entered into after the price increase.

At trial, an official of defendant conceded that by November 1973 there was an unwritten custom in the liquid asphalt business in the Tacoma area, well known and acted upon by suppliers and users, that any increase in price of liquid asphalt would not be applicable to manufacturers' then-existing contracts. From mid-1971 until November 1973, defendant's sales representatives visited plaintiff and ascertained tonnage of liquid asphalt needed for plaintiff to fulfill existing paving contracts and also promised plaintiff that the price for that liquid tonnage would be protected.

Nevertheless, in November 1973 defendant wrote to plaintiff that the price of liquid asphalt was rising by $3 per ton and plaintiff was informed on December 6 and 13, 1973 of further increases. The new prices were to be applicable to all purchases made after December 31, 1973. This was plaintiff's first notification that defendant was abandoning the parties' price protection agreement. In addition, the new prices were on a "verbal, indefinite basis . . . subject to change" with or without notice.

Without a firm supplier, plaintiff was unable to seek new paving contracts during the first part of 1974. What liquid asphalt was available was used by plaintiff to complete [294]*294existing contracts. Plaintiff incurred a total increased out-of-pocket cost of $39,006.50 in acquiring liquid asphalt to perform existing contracts.

Plaintiff brought suit against defendant in the United States District Court for Western Washington for breach of contract. The trial court found that there was an oral contract between the parties, but the statute of frauds, RCW 62A.2-2012 rendered the contract unenforceable. The cause was appealed to the Ninth Circuit which certified the question quoted above to this court.

The facts as outlined above are contained in the District Court's findings of fact which were made part of the record before this court. In the Ninth Circuit appeal, defendant has assigned errors to certain of these findings. These contentions, however, are not before us. We do not need certainty in the facts to answer the pure question of law presented for our determination. The Ninth Circuit has [295]*295retained jurisdiction over all matters but the narrow question of law certified here.

The Restatement (Second) of Contracts § 217A (Tent. Drafts Nos. 1-7, 1973)3 (hereinafter § 217A) authorizes enforcement of a promise which induced action or forbearance by a promisee notwithstanding the statute of frauds. Adoption of § 217A was before this court in Klinke v. Famous Recipe Fried Chicken, Inc., 94 Wn.2d 255, 616 P.2d 644 (1980).

In Klinke, the plaintiff had been induced by defendant to leave his employ in Alaska and to move to Washington to establish a food franchise. Defendant had promised plaintiff that defendant would qualify and register in Washington as a dealer in franchises. After plaintiff's move, defendant failed to secure the proper dealer registration and later abandoned its efforts to do so. The plaintiff claimed $200,000 in lost time and wages and other damages. On summary judgment, the trial court dismissed the case because RCW 19.36.010(1)4 voids unwritten contracts [296]*296which cannot be performed in 1 year. The Court of Appeals reversed the trial court based on two theories. Klinke v. Famous Recipe Fried Chicken, Inc., 24 Wn. App. 202, 600 P.2d 1034 (1979). First, defendant's failure to reduce the agreement with plaintiff to a writing, and plaintiff's reliance on such promise, estopped defendant from asserting the statute of frauds as a defense. Restatement of Contracts §§ 90, 178, comment / (1932). Second, the Court of Appeals adopted § 217A. On review of that decision, we refused to adopt § 217A but affirmed the court's reversal on its first theory. We stated:

The unforeseen application of section 217A to areas of law outside the scope of the facts of this case convinces us that it would be unwise to adopt that section now unless necessary to effectuate justice. That is not mandated by the facts of this case.

Klinke v. Famous Recipe Fried Chicken, Inc., 94 Wn.2d 255, 262, 616 P.2d 644 (1980).

Plaintiff in the subject case urges us to now adopt § 217A as being "necessary to effectuate justice". Plaintiff focuses on the parties' long-standing relationship and defendant's responsibility "in great part" for introducing plaintiff into the asphalt paving business. Plaintiff also asserts that defendant's price protection agreement and assurances encouraged {i.e., induced?) plaintiff to make bids and enter into contracts.

Defendant asks this court to distinguish the statute of frauds at issue in

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Bluebook (online)
635 P.2d 103, 96 Wash. 2d 291, 32 U.C.C. Rep. Serv. (West) 705, 1981 Wash. LEXIS 1260, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lige-dickson-co-v-union-oil-co-of-california-wash-1981.