Chapter 37 - § 37.1 • INTRODUCTION

• Jurisdiction: Colorado

§ 37.1 • INTRODUCTION

Promissory estoppel "is an 'offensive theory of recovery' — a cause of action — that provides a remedy to those who detrimentally rely on a promise."¹ It is "an extension of the basic contract principle that one who makes promises must be required to keep them."² The doctrine of promissory estoppel derives from historical concepts of equity³ and evolved from contract law in the twentieth century.⁴ In Colorado, the doctrine has its roots in common law,⁵ and was recognized by the Colorado Supreme Court in 1982⁶ and the Colorado Court of Appeals in the 1970s.⁷ Although related to breach of contract⁸ and often utilized when traditional contract remedies prove unavailable,⁹ promissory estoppel is an equitable, quasi-contractual¹⁰ claim that rests primarily on the concept of "detrimental reliance" on a promise.¹¹ The doctrine encourages fair dealing in business and "discourages conduct which unreasonably causes foreseeable economic loss because of action or inaction induced by a specific promise."¹²

Detrimental reliance is an element central to both equitable estoppel and promissory estoppel.¹³ Related to, but distinct from, promissory estoppel, equitable estoppel (also referenced as estoppel in pais¹⁴ ) exists when: (1) the party estopped represents to the party claiming estoppel, regarding some material fact, something contrary to conditions later asserted by the party estopped; (2) the party claiming estoppel "misrelies" on the representation; and (3) detriment to the party claiming estoppel.¹⁵ Promissory estoppel consists of a promise intending reliance, reasonable and detrimental reliance, and injustice.¹⁶ Equitable estoppel rests in tort while promissory estoppel rests in contract.¹⁷ Equitable estoppel is only available as a defense, whereas promissory estoppel is the basis for a civil claim for damages.¹⁸

The Colorado Supreme Court has adopted the version of promissory estoppel articulated in the Restatement (Second) of Contracts.¹⁹ The court articulates promissory estoppel as a quasi-contractual cause of action providing a remedy for a party who relied on a promise.²⁰ Where the elements of promissory estoppel are proven, "a promise becomes binding and may be enforced through the normal remedies available under contract law."²¹

The Restatement (Second) of Contracts addresses promissory estoppel in the section entitled "Promise Reasonably Inducing Action or Forbearance." It provides: a "promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise."²²

Promissory estoppel may be asserted against public entities and is not barred by the Colorado Governmental Immunity Act.²³ Additionally, a promissory estoppel cause of action may be asserted against a municipality acting in its governmental capacity.²⁴

Privity is not required to establish a claim of promissory estoppel.²⁵ Subject to some statutory exceptions,²⁶ a claim of promissory estoppel does not implicate the statute of frauds, because the statute of frauds voids contracts and not promises.²⁷ A proponent of a promissory estoppel claim does not need to prove a meeting of the minds or mutual understanding.²⁸ Similarly, it is not necessary to establish mutual agreement on all essential terms of an agreement.²⁹

Promissory estoppel is commonly raised in employment disputes.³⁰ In such cases, the proponent of the promissory estoppel claim bears the burden of proving that his or her employment is not at-will.³¹ Often, the doctrine arises in employment disputes regarding a denial of benefits, workers' compensation, or wrongful termination.³²

Although rare, promissory estoppel claims have been addressed in Colorado actions concerning water rights.³³

Promissory estoppel is often pleaded as an alternative to claims alleging breach of contract,³⁴ and also arises in disputes concerning contract bidding.³⁵

The doctrine has even been used for causes of action by criminal defendants seeking to enforce promises made by governmental authorities during investigations.³⁶

Promissory estoppel is not one of the causes of action enumerated in the Colorado Rules of Civil Procedure as entitling a claimant to a jury trial.³⁷ And, where a jury is involved, a verdict on one claim or factual issue may have preclusive effect on a promissory estoppel cause of action when it is pleaded in the alternative.³⁸ Because promissory estoppel is an equitable cause of action, rather than a legal one, it usually does not entitle a claimant to a jury trial.³⁹ A trial court may consider a jury's verdict on a promissory estoppel claim as advisory only.⁴⁰

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Notes:

^[1] Tarco, Inc. v. Conifer Metro. Dist., 316 P.3d 82, 90 (Colo. App. 2013) (quoting Wheat Ridge Urban Renewal Auth. v. Cornerstone Grp. XXII, L.L.C., 176 P.3d 737, 741 (Colo. 2007)). See also Conagra Trade Grp., Inc. v. Fuel Exploration, LLC, 636 F. Supp. 2d 1166 (D. Colo. 2009) (promissory estoppel is affirmative claim for relief pleaded in the absence of a written agreement, not defense to enforcement of a contract).

^[2] George v. Urban Settlement Servs., 833 F.3d 1242, 1257 (10th Cir. 2016) (quoting Schulz v. City of Longmont, 465 F.3d 433, 438 n.8 (10th Cir. 2006)); see also Patzer v. City of Love-land, 80 P.3d 908, 912 (Colo. App. 2003).

^[3] Restatement (Second) of Contracts § 90, cmt. a (Am. Law Inst. 1981) (it is fairly arguable that enforcement of informal contractual agreements rested historically on justifiable reliance on a promise). See also Bd. of Cnty. Comm'rs v. DeLozier, 917 P.2d 714 (Colo. 1996) (promissory estoppel is defined in terms of both equity and contract); Kiely v. St. Germain, 670 P.2d 764 (Colo. 1983) (damages award based on detrimental reliance is grounded on principles of fair dealing familiar to equity jurisprudence as well as contract); Soderlun v. Pub. Serv. Co., 944 P.2d 616 (Colo. App. 1997); Mariani v. Rocky Mt. Hosp. & Med. Serv., 902 P.2d 429 (Colo. App. 1994), aff'd, 916 P.2d 519 (Colo. 1996) (promissory estoppel is equitable); Frontier Exploration, Inc. v. American Nat'l Fire Ins. Co., 849 P.2d 887 (Colo. App. 1992) (in directing verdict against plaintiff, trial court assumed that promissory estoppel, although it is equitable claim, was properly question for jury); Snow Basin, Ltd. v. Boettcher & Co., 805 P.2d 1151 (Colo. App. 1990) (promissory estoppel is equitable doctrine); Shoemaker v. Mountain States Tel. & Tel. Co., 559 P.2d 721, 723 (Colo. App. 1976); Kennedy v. William R. Hudson, Inc., 659 F. Supp. 900 (D. Colo. 1987).

^[4] Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008); Mooney v. Craddock, 530 P.2d 1302 (Colo. App. 1974).

^[5] Kiely, 670 P.2d 764; Nicol v. Nelson, 776 P.2d 1144 (Colo. App. 1989); Mead Assocs., Inc. v. Antonsen, 677 P.2d 434 (Colo. App. 1984).

^[6] Vigoda v. Denver Urban Renewal Auth., 646 P.2d 900 (Colo. 1982).

^[7] See Mooney, 530 P.2d 1302; Hunter v. Hayes, 533 P.2d 952 (Colo. App. 1975); Shoemaker, 559 P.2d 721.

^[8] Berg v. State Bd. of Agric., 919 P.2d 254 (Colo. 1996) (promissory estoppel claim is "also contractual in nature").

^[9] Kiely, 670 P.2d 764; Vigoda, 646 P.2d 900; Marquardt, 200 P.3d at 1129; Osband v. United Airlines, Inc., 981 P.2d 616, 622 (Colo. App. 1998).

^[10] Pinnacol Assurance v. Hoff, 375 P.3d 1214, 1221 (Colo. 2016).

^[11] American Pride Co-op. v. Seewald, 968 P.2d 139, 142 (Colo. App. 1998).

^[12] Kiely, 670 P.2d at 767; Walshe v. Zabors, No. 15-cv-01218-MEH, 2017 WL 1048278 (D. Colo. March 20, 2017) (applying Colorado law). See also Vigoda, 646 P.2d 900 (purpose of doctrine is to provide remedy to those who rely to their detriment on promises that promisor should have reasonably expected to induce reliance); Marquardt, 200 P.3d 1126 (promissory estoppel is extension of basic contract principle that one who makes promise must be required to keep it); Patzer, 80 P.3d 908; Soderlun, 944 P.2d 616 (promissory estoppel allows for enforcement, in appropriate circumstances, of unilateral promise for which no consideration was...