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 dealership owners had entered into a purchase agreement and paid earnest money for land after the car manufacturer verbally informed them that they had been approved to sell its cars. A couple of days later, the dealership owners were told that a mistake had been made and that they were not approved. The dealership owners argued that the district court erred by instructing the jury that the damages on their promissory estoppel claim were limited to out-of-pocket expenses and erred in granting summary judgment on their claim under the Minnesota Motor Vehicle Sale and Distribution Regulations, Minn. Stat. § 80E.06(1).
Is it proper to limit the damages in a promissory estoppel claim to out-of-pocket expenses?
The court ruled that the district court did not err in limiting the award for damages because the manufacturer presented evidence that the dealership was far from fruition and that the owners would have great difficulty in meeting the capitalization requirements.
The district court's limitation was within the "range of choices" by Minnesota courts and our court. The Minnesota Supreme Court held that "relief may be limited to damages measured by the promisee's reliance." The Court also held that the Minnesota Court of Appeals specifically provided that "relief may be limited to the party's out-of-pocket expenses made in reliance on the promise. Similarly, the court held that comment d to section 90 specifically states that "relief may sometimes be limited to restitution or to damages or specific relief measured by the extent of the promisee's reliance rather than by the terms of the promise."
Walser and McLaughlin were correct in holding that the district court is not required by Minnesota law to limit the remedy in promissory estoppel cases to out-of-pocket expenses. However, such limitation is within the range of choices available to the district court, and the district court has the option in selecting the choice which serves the interests of justice.