Chapter 2 - § 2.4 • PROMISSORY ESTOPPEL

• Jurisdiction: Colorado

§ 2.4 • PROMISSORY ESTOPPEL

§ 2.4.1—Historical Background

Historically, Colorado courts have enforced employment promises through the doctrine of promissory estoppel. See, e.g., Kiely v. St. Germain, 670 P.2d 764 (Colo. 1983) (enforcing oral promise to hire plaintiff); Hunter v. Hayes, 533 P.2d 952 (Colo. App. 1975) (enforcing promise to hire plaintiff as a flag girl on a construction job) (not selected for official publication). As the Colorado Supreme Court explained in Kiely v. St. Germain, promissory estoppel has been viewed as an extension of the basic contract principle that "one who makes promises should be required to keep them." 670 P.2d 764, 767 (Colo. 1983).

In Continental Air Lines, Inc. v. Keenan, the Colorado Supreme Court expressly affirmed that promissory estoppel can be used to enforce promises made to employees in the context of an existing employment relationship. 731 P.2d 708 (Colo. 1987). Thus, even if the requisites for contract formation are not found, an employee may enforce termination procedures promulgated by an employer in a handbook, provided that the employee can show

that the employer should reasonably have expected the employee to consider the employee manual as a commitment from the employer to follow the termination procedures, that the employee reasonably relied on the termination procedures to his detriment, and that injustice can be avoided only by enforcement of the termination procedures.

Id. at 712. Put another way, the test is "whether the employer should have reasonably expected its representation to be relied upon by its employee and, if so, whether the expected action or forbearance actually resulted and was detrimental to the employee." Mers v. Dispatch Printing Co., 483 N.E.2d 150, 155 (Ohio 1985).

§ 2.4.2—Status Of Doctrine Today

Following Keenan, courts in this jurisdiction repeatedly have recognized that employees can enforce an employer's promises under a theory of promissory estoppel.²⁴ In particular, promissory estoppel can be a powerful tool for plaintiff's counsel in employment cases, where many promises are made to employees orally, and the requisites for formation of a contract may not exist.²⁵ In these situations, promissory estoppel can be used to further the recognized policy of "preventing unjust results when parties deal with each other by oral rather than written communication." Kiely v. St. Germain, 670 P.2d 764, 769 (Colo. 1983). Promissory estoppel is available as a remedy only in the absence of an otherwise enforceable contract. Scott Co. of California v. MK-Ferguson Co., 832 P.2d 1000, 1003 (Colo. App. 1991); Bellairs v. Coors Brewing Co., 907 F. Supp. 1448, 1455 (D. Colo. 1995), aff'd, 107 F.3d 880 (10th Cir. 1997).

The Colorado Supreme Court's opinion in Pickell v. Arizona Components Co. is illustrative, and indicates the court's continued willingness to enforce employment promises under the doctrine of promissory estoppel. In Pickell, the plaintiff's promissory estoppel claim was based on oral assurances made by Arizona Components Company (ACC) during the recruiting process that she would have "better future prospects, paid vacations, a year-end bonus, and full insurance benefits" if she came to work for ACC. 931 P.2d 1184, 1185 (Colo. 1997). ACC also assured Ms. Pickell that it had adequate financial backing and would give the Denver office the financial support necessary to endure over time. Less than two months later, however, ACC closed its Denver office and terminated Ms. Pickell for financial reasons. Id. Even though ACC had not expressly promised to employ Ms. Pickell for a definite period of time, the trial court found that it had promised Ms. Pickell a job "for a reasonable time," which "was certainly not only two months." Id. at 1185. It then awarded Ms. Pickell damages of a little over $21,000 based on her previous annual salary for one year as reasonable compensation. Id. at 1185, n. 2.

On appeal, the court of...