Filo v. Liberato

2013-Ohio-1014, 987 N.E.2d 707 (Ct. App.)

 

RULE:

Promissory estoppel, itself, does not operate as an exception to the statute of frauds. Instead, where an agreement is required by the statute to be in writing and no writing exists, promissory estoppel specifically exists to provide an action for damages to compensate a party injured due to his reliance on an unenforceable promise. An action for damages under promissory estoppel provides an adequate remedy for an unfulfilled or fraudulent promise because it allows compensation where the requisites of contract are not met, yet the promise should be enforced to avoid injustice. To be successful on a claim of promissory estoppel the party claiming the estoppel must have relied on conduct of an adversary in such a manner as to change his position for the worse and that reliance must have been reasonable in that the party claiming estoppel did not know and could not have known that its adversary's conduct was misleading. Thus, promissory estoppel is an adequate remedy for a fraudulent oral promise or breach of an oral promise, absent a signed agreement.

FACTS:

Appellant was a subcontractor on a commercial construction project owned by Appellee. Appellant approached Appellee because the general contractor was behind in making payments to Appellant. According to Appellant, Appellee promised him that he would be fully paid. Appellant subsequently received $7,000.00 of the alleged $33,600.00 owed. Appellee also released payment in full to another subcontractor. Appellant was never paid the remainder of the amount owed. Appellant subcontractor sued appellee building owner for payment for his services, alleging promissory estoppel, unjust enrichment, conversion, and fraud. The trial court granted the owner’s motion to dismiss for failure to state a claim. On appeal, judgment was affirmed. However, the trial court's dismissal of the subcontractor’s promissory estoppel, unjust enrichment, and fraud claims was reversed and the matter was remanded for further proceedings.

ISSUE:

Was appellant's promissory estoppel claim for damages barred by the statute of frauds?

ANSWER:

No.

CONCLUSION:

The trial court erred in dismissing the promissory estoppel claim under the theory that the claim concerned an interest in land, and was for this reason barred by the statute of frauds. The alleged promise that forms the basis of the promissory estoppel claim is the promise to pay money for construction work completed, not to convey an interest in real property. The trial court seems to believe that this matter involves an interest in land, in part because Appellant claims he did not file a mechanic's lien in order to show that he relied on Appellee's promise to pay to his own detriment. This reference to a mechanic's lien does not alter the nature of the underlying promise at issue, here. Again, Appellant's claim appears to be pure detrimental reliance on a promise. For this, he seeks only money damages for work done pursuant to that promise. In no way does he appear to allege any interest in real property beyond this monetary damage. Specifically, Appellant does not seek in this suit to obtain a lien or any other interest in or title to the subject property. Again, since the allegations in the complaint sustain an interpretation that allows recovery, any reliance on the statute of frauds to dismiss the complaint is misplaced. 

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