Lovely v. Dierkes

347 N.W.2d 752, 132 Mich. App. 485

• Court: Michigan Court of Appeals
• Decided: March 5, 1984
• Docket: Docket 67776
• Status: Published

Opinions

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.