Chapter 2 - § 2.5 • DEFENSES

• Jurisdiction: Colorado

§ 2.5 • DEFENSES

§ 2.5.1—Statute Of Frauds

The statute of frauds renders certain contracts unenforceable, such as unwritten contracts that by their terms cannot be performed within one year. C.R.S. § 38-10-112(1)(a). However, an express oral agreement may be enforceable, notwithstanding the statute of frauds, if there is any possible means of performance within one year. See, e.g., Foley v. Interactive Data Corp., 765 P.2d 373 (Cal. 1988) (statute of frauds does not apply to oral contract to employ "permanently" where the employee could have resigned or the employer could have terminated employment for cause within one year); Ohanian v. Avis Rent-a-Car Sys., Inc., 779 F.2d 101 (2d Cir. 1985) (oral "just cause" contract not barred by the statute of frauds, since plaintiff could have been terminated for just cause within one year without any breach by plaintiff). This is because the statute of frauds applies only to those contracts whose performance could not possibly or conceivably be completed within one year. See, e.g., Chidester v. Eastern Gas & Fuel Assoc., 859 P.2d 222, 224 (Colo. App. 1992) (holding that the statute of frauds applied to an oral contract that by its own terms contemplated a "minimum of five years"); Buechner v. Rouse, 538 P.2d 117, 120 (Colo. App. 1975) (statute of frauds inapplicable where employment contract could have been terminated within a year of its execution by plaintiff's death). In other words, the statute of frauds is inapplicable if, at the time the contract is formed, any contingent event could complete the terms of the contract within one year.²⁸

Practice Pointer
The statute of frauds is not a defense to promissory estoppel in Colorado. Therefore, plaintiff's counsel should always consider bringing a promissory estoppel claim in any case where the statute of frauds could be an issue.

§ 2.5.2—Statutes Of Limitations

Breach of contract and promissory estoppel actions generally must be brought within three years from the date of accrual. C.R.S. § 13-80-101(1)(a); but see Bell v. Coca-Cola Enters., Inc., 2006 U.S. Dist. LEXIS 36118, *8-9 (D. Colo. June 1, 2006) (unpublished decision) (holding that two-year statute of limitations contained in C.R.S. § 13-80-102(1)(a) applied to breach of contract claim where claim alleged failure to act in "good faith" and intentional and false representations regarding employment prospects, allegations that were tortious in nature). However, breach of contract actions premised on unpaid wages may be brought within six years from the date of accrual pursuant to C.R.S. § 13-80-103.5(1)(a) when the amount due can be determined by simple calculation. This is true even though the employer may contest the merits of the claim or the amount owed to the employee. Fishburn v. City of Colo. Springs, 919 P.2d 847, 850 (Colo. App. 1995). In addition, the shorter two-year limitations period applicable to governmental entities under C.R.S. § 13-80-102(1)(h) does not apply to breach of contract actions brought against a governmental employer. Id. at 849.

The same rules apply to conciliation agreements, which are entered into to resolve charges of discrimination filed with administrative agencies such as the EEOC or CCRD. In Cisneros v. ABC Rail Corp., 217 F.3d 1299 (10th Cir. 2000), the Tenth Circuit held that a claim for breach of a conciliation agreement was not subject to Title VII's or the Colorado Antidiscrimination Act's requirements that a complainant can bring a civil action only after exhausting administrative procedures and within 90 days of receiving a right to sue letter.

§ 2.5.3—Specificity And Definiteness

One of the defenses used most frequently by the employer is that the promises allegedly made to the plaintiff are too vague or indefinite to support a claim for either breach of contract or promissory estoppel. However, the case law in this jurisdiction is contradictory, and does not provide the practitioner with much guidance for determining whether a court will find a particular promise too vague or indefinite as a matter of law to be enforced.

On the one hand, courts in Colorado routinely have held that when the existence of an employment contract is at issue and the evidence admits of more than one inference, it is up to the jury to decide whether a contract in fact exists.²⁹ Thus, courts have allowed the jury to determine whether the language of a particular promise is sufficiently definite to be enforced.³⁰ However, some courts in Colorado, the federal courts in particular, have refused to enforce certain statements on the ground that the alleged promise is too vague or indefinite as a matter of law to be enforced.³¹

Unfortunately, there are no concrete rules dictating whether a particular promise of job security will be viewed as sufficiently definite. For every case holding that a particular statement is nothing more than a "vague assurance of job security," there are other cases holding similar statements to be enforceable.³² However, it appears that courts are more likely to dismiss breach of contract or promissory estoppel claims on grounds of vagueness when the claims are based on nothing more than one or two isolated statements made to the employee. See Jones v. Denver Pub. Sch., 427 F.3d 1315, 1325 (10th Cir. 2005) (dismissing promissory estoppel claim based on single assurance that the employer could "work around" the suspension of the plaintiff's driver's license); Smith v. Colorado Interstate Gas Co., 794 F. Supp. 1035 (D. Colo. 1992) (refusing to enforce one statement made to plaintiff during a performance evaluation); Allen v. Dayco Prod., Inc., 758 F. Supp. 630, 632 (D. Colo. 1990) (dismissing claim based on one or two statements made during the recruitment and orientation process); but see McFadden v. Pioneer Natural Resources USA, Inc., 2007 U.S. Dist. LEXIS 3260, *7-8 (D. Colo. Jan. 16, 2007) (unpublished decision) (rejecting defense argument that a company's promise is necessarily vague and indefinite if it is based upon only one or two isolated statements; promises are not deemed lacking "because of insufficient repetition"). Courts are also more likely to dismiss breach of contract or promissory estoppel claims on grounds of vagueness or when the employee has no knowledge of the corporate policy that the employee is seeking to enforce. See Vasey v. Martin Marietta Corp., 29 F.3d 1460 (10th Cir. 1994) (documents upon which employee based his claim made no mention of company policies, and employee had no knowledge of the policy he was seeking to enforce). A court also may consider the length of the plaintiff's employment, as well as the nature of the promise. See Snoey v. Advanced Forming Tech., Inc., 844 F. Supp. 1394 (D. Colo. 1994) (plaintiff, who only worked two months for defendant and who had signed a separate at-will disclaimer, failed to state claim based on vague statements that company would take care of him); Soderlun v. Pub. Serv. Co., 944 P.2d 616 (Colo. App. 1997) (vague assurances of job security are insufficient to enforce extraordinary promise never to engage in involuntary layoffs); but see Price v. Pub. Serv. Co., 1 F. Supp. 2d 1216 (D. Colo. 1998) (finding similar promises of lifetime employment to be enforceable).

Practice Pointer
To avoid having claims dismissed on grounds of vagueness, plaintiff's counsel should base the claim on more than one or two promises made to a single employee, depending on the specificity of the promise. Look for additional witnesses who are familiar with the company's practices, as well as any written documents that corroborate the terms of the promise made to the client.

§ 2.5.4—The After-Acquired Evidence Doctrine

The after-acquired evidence doctrine is a defense commonly asserted by employers where, after an employee is terminated, the employer learns for the first time about employee misconduct that would have caused the employer to discharge the employee. See Crawford Rehab. Servs., Inc. v. Weissman, 938 P.2d 540, 547 (Colo. 1997). Depending upon the nature of the claim asserted by the employee, the defense either can shield the employer from liability completely or limit the relief available to the employee. Id.; see also McKennon v. Nashville Banner Pub. Co., 513 U.S. 352 (1995).

Application in Colorado

The...