Shoemaker v. Commonwealth Bank

Brief Fact Summary. Plaintiffs, Shoemakers, obtained a mortgage on their home from Defendant Commonwealth Bank. Pursuant to the mortgage agreement, Plaintiffs were required to carry insurance on the property. The homeowner’s insurance on Plaintiffs’ home expired prior to the destruction of the home.

Synopsis of Rule of Law. Summary judgment is inappropriate for a promissory estoppel claim where a genuine issue as to each element is present.

Facts. Plaintiffs obtained a mortgage on their home from Defendant. Pursuant to the mortgage agreement, Plaintiffs were required to carry insurance on the property. Plaintiffs allege that they received a letter from Defendant informing them that their homeowner’s insurance had been cancelled and, if a new policy was not purchased, Defendant would purchase a policy and add the premium to the balance of their loan. Plaintiffs also allege that they received a phone call from Defendant to the same effect. Due to the letter and telephone call, Plaintiffs claim they did not realize the house was not insured until after it was destroyed by fire.
Defendant admits to sending the letter, but denies the contents of the phone conversation. Defendant insured the home, but decided to let the policy expire. Defendant claims to have sent Plaintiffs letters informing them of the coverage and warning them a little over a month before the coverage expired. Plaintiffs deny receiving either letter from Defendant.

Issue. Did the lower court err in granting the motion for summary judgment on the promissory estoppel claim?

Held. Yes. The lower court erred in granting summary judgment on the promissory estoppel claim.
The elements of promissory estoppel are (1) a promise made with a reasonable expectation of reliance, (2) reasonable and detrimental reliance on the promise, and (3) injustice can only be avoided by enforcing the promise. To survive a defendant’s motion for summary judgment, plaintiffs must show a genuine issue of fact with regard to each element of promissory estoppel.
With regard to the first element, the Court notes that Plaintiff alleges that Defendant promised to purchase insurance and add the premiums to their mortgage payments. Further, the Court determines that Defendant should have reasonably expected Plaintiffs to rely on such a promise.
In addressing the second element, the Court notes that Plaintiff failed to obtain insurance.
Finally, the Court notes that the reasonableness of the reliance may be considered in determining whether the third element is met. The Court finds that a genuine issue exists as to the reasonableness of Plaintiff’s reliance.
Finding a genuine issue as to all three elements, the Court holds that summary judgment was improperly granted with regard to the promissory estoppel claim.

Discussion. In the present case, the Court found that a genuine issue existed as to each element of the promissory estoppel claim. Therefore, the Court held that summary judgment was inappropriately granted on the claim.