Alaska Democratic Party v. Rice

934 P.2d 1313 (Alaska 1997).

One-Sentence Takeaway: The court used promissory estoppel to enforce an oral promise of employment that was subject to the statute of frauds.

Summary: Plaintiff left a position of employment at will with the Gore Vice Presidential campaign in 1992 to accept an oral offer of employment in Alaska made to her on behalf of the state’s Democratic Party by the person who was then its chair-elect.  The oral offer was of employment for a term of two years, thus implicating the one-year provision of the statute of frauds.

In reliance on the oral contract of employment, Plaintiff moved from Maryland to Alaska, only to be denied employment by the party, whose governing board refused to honor the oral contract made by its chair-elect.

The Alaska Supreme Court upheld the jury verdict for Plaintiff and held that the doctrine of promissory estoppel can be invoked to enforce an oral contract employment that falls within the statute of frauds.

The court first outlined and compared the policy reasons behind the statute of frauds and the doctrine of promissory estoppel:

The question of whether the doctrine of promissory estoppel can be invoked to enforce an oral contract that falls within the Statute of Frauds presents a question of first impression. In order to resolve this question, the policy concerns behind both the Statute of Frauds and the doctrine of promissory estoppel must be examined. The purpose of the Statute of Frauds is to prevent fraud by requiring that certain categories of contracts be reduced to writing. However, “it is not intended as an escape route for persons seeking to avoid obligations undertaken by or imposed upon them.”

Id. at 1316.

The court observed that “[c]ommentators have noted that there is no question that many courts are now prepared to use promissory estoppel to overcome the requirements of the statute of frauds.”  The court decided to “join those states which endorse the Restatement approach in employment disputes,” and decided to enforce the employment contract based on promissory estoppel even though it fell within the statute of frauds.

Note:  The court’s ruling in Rice was specifically limited to employment contracts.  Five years after the Rice ruling, the Alaska Supreme Court decided Valdez Fisheries Development Ass’n, Inc. v. Alyeska Pipeline Service Co., 45 P.3d 657 (Alaska 2002), in which the court refused to extend the Rice ruling to oral contracts for anything beyond employment:

The RESTATEMENT (SECOND) OF CONTRACTS provides that promissory estoppel can bind a promisor notwithstanding the statute of frauds. In Alaska Democratic Party vRice, we endorsed this view as to employment contracts. We explicitly limited this holding to employment contracts, perhaps in recognition of the frequency of oral employment agreements and the extent to which the main terms of an employment contract are generally well understood . . . We decline to extend Alaska Democratic Party to cases involving the sale or lease of real estate, in which the purported oral agreement is ambiguous as to key terms. In such circumstances, promissory estoppel cannot be used to defeat the statute of frauds’ requirement that a writing memorialize the parties’ agreement. We therefore affirm the superior court’s dismissal of Valdez Fisheries’ promissory estoppel claims as to the oral promise.

Id. at 669.

Also, courts from other states have taken varying approaches to the issue of using promissory estoppel as an exception to the statue of frauds.

Some courts have agreed with the Alaska Supreme Court and the Second Restatement’s view that promissory estoppel may be applied to enforce certain oral promises that would otherwise be unenforceable under the Statute of Frauds. See, e.g., Brown v. Branch, 758 N.E.2d 48 (Ind.2001); Kolkman v. Roth, 656 N.W.2d 148 (Iowa 2003).

Other courts have held that promissory estoppel is an exception to the Statute of Frauds only when there has been an ancillary promise to memorialize the unwritten agreement in *94 a manner that complies with the Statute. See, e.g., Tiffany Inc. v. W.M.K. Transit Mix, Inc., 493 P.2d 1220 (Ariz. App. 1972); Nagle v. Nagle, 633 S.W.2d 796 (Tex.1982).

The courts in Utah have held that promissory estoppel is an exception only when a party has manifested an intention not to assert the Statute of Frauds in the course of entering into an unwritten agreement. See, e.g., Fericks v. Lucy Ann Soffe Trust, 100 P.3d 1200, 1204 (Utah 2004).

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