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Cocchiara v. Lithia Motors, Inc. - 353 Or. 282, 297 P.3d 1277 (2013)

Rule:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. The requirement that enforcement be necessary to avoid injustice may depend on the reasonableness of the promisee's reliance, and on its definite and substantial character in relation to the remedy sought, among other things. 

Facts:

Plaintiff Michael Cocchiara, who worked as a salesperson for defendants Lithia Motors, Inc. and Lithia Motors Support Services, Inc. ("Lithia"), informed his manager that he was leaving to work for another company. He had been employed for nearly eight years but had a heart attack that required him to seek a less stressful job. His manager told him a new position was available and, after calling the Lithia's corporate offices, told him that he definitely had been given the position. In reliance on that information, he turned down the job with the other company. However, Lithia did not hire him for the new position. Cocchiara filed a lawsuit against Lithia in Oregon state court alleging claims of promissory estoppel, fraudulent misrepresentation and unlawful employment practices, including employment discrimination. The trial court granted partial summary judgment for Lithia on the promissory estoppel and fraudulent misrepresentation claims; Cocchiara had dismissed the unlawful employment practices claim without prejudice. Cocchiara appealed, and the appellate court affirmed the trial court's judgment, holding that, because the corporate job was terminable at will, Cocchiara could not reasonably rely on the promise of employment or recover future lost wages.

Issue:

Could an employee bring a promissory estoppel claim or a fraudulent misrepresentation claim against his employer based on the employer's representations regarding a job that was terminable at will?

Answer:

Yes.

Conclusion:

The state supreme court reversed the lower courts' decisions and remanded to the trial court for further proceedings. The court held that the at-will nature of the new position did not preclude Cocchiara from pursuing his claims of promissory estoppel and fraudulent misrepresentation. The parties' lengthy employment relationship might have made it reasonable for Cocchiara to rely on the promise of employment, even though the new position was terminable at will. Moreover, the at-will nature of the new position did not create a conclusive presumption that Cocchiara could not prove damages consisting of future lost wages. He could attempt to show the likely duration of employment. Pleading only damages associated with the loss of the new position, and not damages associated with turning down the other job, did not defeat the fraud claim.

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