Chapter 37 - § 37.4 • DEFENSES

• Jurisdiction: Colorado

§ 37.4 • DEFENSES

§ 37.4.1—Elemental Defense

An obvious requirement for promissory estoppel is the existence of each element.⁸¹ The absence of an element will preclude success on the claim.⁸²

§ 37.4.2—Preclusion by Contract

A prerequisite to bringing a promissory estoppel claim is establishing that the parties do not have a formal contract, whether express or implied.⁸³ However, as articulated above, plaintiffs may plead breach of contract and promissory estoppel as alternative claims for relief.

§ 37.4.3—Statute of Limitations

The statute of limitations for a promissory estoppel claim is ordinarily three years, but a shorter period may apply if the claim is brought against a governmental entity.⁸⁴ In addition, courts have enforced limitations periods shortened by stipulation or by a statute more specifically applicable to the claim.⁸⁵

§ 37.4.4—Preemption

A promissory estoppel claim may be preempted by state or federal law. Courts will apply the usual elements of preemption to determine whether a law preempts a claimant's promissory estoppel claim.⁸⁶ Promissory estoppel claims may also be barred when an applicable statute governs the claim in lieu of common law contract doctrine.⁸⁷

§ 37.4.5—Unjust Benefit to a Wrongdoer

Courts refuse to apply promissory estoppel to benefit a wrongdoer.⁸⁸ This is a reflection of the fourth element of the doctrine — that enforcement of the promise is required to prevent injustice. Thus, a finding that a promisee acted wrongfully will preclude a remedy sought under a promissory estoppel theory.⁸⁹

§ 37.4.6—Standing

A promissory estoppel claim may be defended against by proving that the proponent of the claim lacks standing to pursue it.⁹⁰ However, as discussed above, note that privity is not required for a promissory estoppel claim.

§ 37.4.7—Statute of Frauds

Because the premise of a promissory estoppel claim rests on an agreement outside of an express or implied contract, the statute of frauds is generally not a defense.⁹¹ However, Colorado's statute of frauds expressly precludes a credit agreement for a principal sum of more than $25,000 from being implied in any circumstances, including via promissory estoppel.⁹² Ultimately, unless the legislature expressly precludes a promissory estoppel claim from overcoming them, Colorado courts have indicated that statutes of fraud should not be applied in a manner that sanctions fraud or is inequitable, and that courts should analyze the issue under Restatement (Second) of Contracts § 139.⁹³ This analysis is implicitly rooted in the fourth, "prevent injustice" element of a promissory estoppel claim.

§ 37.4.8—Governmental Immunity

The Colorado Governmental Immunity Act (CGIA), C.R.S. §§ 24-10-106, et seq., generally grants public entities immunity from causes of action that arise, or could arise, in tort. However, the CGIA is not meant to apply in actions grounded in contract.⁹⁴ While the Colorado Supreme Court has clearly stated that causes of action alleging promissory estoppel are grounded in contract and thus do not trigger immunity granted by the CGIA,⁹⁵ it has also stated that promissory estoppel is similar to the tort of negligent misrepresentation, potentially cracking the door for a defense of immunity under the CGIA.⁹⁶ Thus, practitioners are well advised to plead promissory estoppel claims against governmental entities "in terms of a promise that the governmental entity failed to fulfill."⁹⁷

§ 37.4.9—After-Acquired Evidence

In employment cases, where a claim of promissory estoppel is based on an employee handbook or manual, the after-acquired evidence doctrine may apply to bar potential recovery.⁹⁸ The doctrine protects an employer from liability where, after the events at issue unfolded, evidence surfaces that shows the employee would have been terminated anyway.⁹⁹

§ 37.4.10—Uniform Commercial Code

"Common law principles of contract or promissory estoppel cannot supply a basis for relief where those principles are irreconcilable with an express provision of the UCC."¹⁰⁰ However, where the transaction at issue is a simple sale of goods not accompanied by entry into a credit agreement governed by the statute of frauds, it appears a claim for promissory estoppel would be viable.¹⁰¹

§ 37.4.11—Economic Loss Rule?

"Under the economic loss rule, a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty under tort law."¹⁰² One Colorado appellate case has suggested that promissory estoppel claims may be subject to the economic loss rule.¹...