Chapter 37 - § 37.3 • ELEMENTS DEFINED
| Jurisdiction | Colorado |
§ 37.3.1—Promisor Made a Promise to Promisee
For any claim of promissory estoppel to be viable, there must be a promise. "[A] promise is 'a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.'"47 The Restatement (Second) of Contracts provides that a promise may be expressed — stated in words — or inferred wholly or in part by conduct.48 The promise must be clear, unambiguous, and definite enough to allow a court to understand the nature of the obligation.49 It need not be direct.50 But a "vague assurance" will not constitute a promise.51 Further, the promise asserted must be one that the promisor is authorized to make.52
The Restatement and Colorado cases provide that privity is not required; therefore, a proper promisee may be a third party to the promise if the evidence otherwise established a promise.53
In 2016, the Colorado Supreme Court analyzed the promise prong of the promissory estoppel claim in a workers' compensation insurance-related claim.54 There, a plaintiff was injured while performing roofing work for a subcontractor whose workers' compensation insurance policy had lapsed due to nonpayment of premiums. The plaintiff sued for compensation for injuries under a promissory estoppel theory.55 The court concluded that the certificate of insurance at issue contained no assurance mandating notice of eventual cancellation of the policy and that the plaintiff's promissory estoppel claim therefore failed for lack of a promise.56
The U.S. District Court for the District of Colorado also recently evaluated the promise element in a promissory estoppel claim brought under Colorado law. In Walshe v. Zabors,57 the court determined that a proposed employment agreement that included provisions for "additional compensation potential" and a "bonus" presented sufficient support for the court's conclusion that the employer had promised the employee compensation in addition to normal compensation, even when it was undisputed that the employee never signed the agreement.58
§ 37.3.2—Reasonable Expectation that Promise Would Induce Forbearance
The evidence presented must reflect that the promisor did know or should have known that the promisee would act and rely on the promise to his or her detriment.59 A court's finding regarding this reasonable expectation prong is factual and will be upheld if the record supports the finding.60
§ 37.3.3—Promisee Reasonably and Detrimentally Relied on Promise
The third prong of the analysis requires a sufficient showing that the promisee relied on the promise, that his or her reliance was reasonable, and that the promisee suffered detriment as a result of the reasonable reliance.61 The absence of any of these considerations will cause a claim of promissory estoppel to fail.62
A jury's verdict that a party failed to accept an offer does not, in and of itself, determine whether a party relied on a promise.63 "Reliance can be shown where a party alters his or her position as a consequence of another's conduct."64 Reliance is evaluated via an objective standard applying what a reasonably prudent person would have done under the circumstances.65 The plaintiff's knowledge and sophistication can negate reliance.66 A promise made conditional on another event or occurrence that has not occurred will preclude a cause of action based on promissory estoppel because, as the Colorado Supreme Court has articulated, reliance on a conditional promise is not reasonable.67
Reasonable reliance is often central to a court's determination of a promissory estoppel claim and, if not pled with sufficient specificity, will form the basis for a court's ruling on a motion to dismiss.68 It is also a factual determination that will require courts to conduct case-by-case factual analysis into the specifics of each scenario.69
Detriment is shown through facts suggesting that, in relying on the promise, the promisee was worse off than he or she would have been had he or she disregarded the promise in the first place.70 In other words, a plaintiff must establish a change in his or her position.71 A finding that no express contract existed will not preclude a finding of reliance on a promise.72
A comment to the Restatement notes that the promissory estoppel section should be used with caution in the case of promises to procure insurance; because the promise may only be a promise to use reasonable efforts to procure insurance, reliance by the promisee may not be justified.73
Examples of reasonable, detrimental reliance help one understand what courts generally look for, but the application of this element requires case-by-case analysis. For instance, for a successful claim of promissory estoppel in a construction case between a general contractor and a subcontractor, where the general contractor created a bid based on promises made by the subcontractor, the general contractor must show that he relied on the subcontractor's promise. Evidence showing lack of reliance may include evidence that the general contractor continued to negotiate with the subcontractor or attempted to accept terms different from those agreed on between the general contractor and the subcontractor.74 Another common example is an employee attempting to rely on an employment handbook to show his or her employment was not at-will. Often, the language of the employee handbook negates an employee's ability to prove reasonable reliance.75 Similarly, a public employee who serves at the pleasure of another official cannot reasonably rely on any alleged promise of continued employment.76
§ 37.3.4—Enforcement of Promise to Avoid Injustice
Finally, to complete a prima facie case, the proponent of a promissory estoppel claim must show that the court's enforcement of the promise is necessary to avoid injustice. Court opinions rarely discuss this fourth element.77 The doctrine of promissory estoppel exists to prevent injustice where mutual agreement does not exist on all material aspects of an agreement and a promise will not be otherwise enforced, but one party is unjustly benefitted to another's...
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