Stearns v. Emery-Waterhouse Co.

Brief Fact Summary.

Stearns (Plaintiff) left long-term employment at Sears and accepted a position with Emery-Waterhouse Company (Defendant), pursuant to an oral contract promising the Plaintiff employment to age fifty-five at $85,000 per year.  The Defendant terminated Plaintiff’s employment prior to age fifty-five, and Plaintiff sought to recover based on the theory of promissory estoppel.

Synopsis of Rule of Law.

Contracts incapable of being performed within one year must be in writing to satisfy the statute of frauds.  Promissory estoppel does not permit avoidance of the statute in employment contracts that require more than one year to perform.

Facts.

The Plaintiff resigned from his position and moved from Massachusetts to Maine, in reliance on the Defendant’s promise of continued employment.  However, the oral contract between the parties was never reduced to writing. 

The trial court denied summary judgment for the Defendant based on the theory that promissory estoppel applied to prevent it from asserting its statute of frauds defense based on the Plaintiff’s detrimental reliance.  The jury established a special contract and breach, and the court awarded damages.  The Defendant appealed. 

Issue.

Can an employee avoid the statute of frauds based solely upon his detrimental reliance on an employer’s oral promise of continued employment?

Held.

No.  Judgment vacated.

Because the Plaintiff did not produce clear and convincing evidence of fraud on the part of the employer, enforcement of the oral contract was barred by the statute of frauds. 

Dissent.

None.

Concurrence.

None.

Discussion.

An actual, subjective intention to deceive can stop the operation of the statute.  Further, an oral, ancillary promise may be enforced if the circumstances show objectively that substantial injustice tantamount to fraud would result from strict application of the statute. 
Equitable estoppel based on a fraudulent promise of employment can avoid application of the statute. 
However, the Court rejected the part performance doctrine as an avenue for avoidance of the statute in the employment context. 
It would be all too easy for disgruntled employees to allege reliance on an employer’s promise, but very difficult to differentiate between reliance and ordinary preparations for new employment.