Marjorie Conrad, Respondent, vs. Walter R. Fields, Appellant. A06-1387, Court of Appeals Unpublished, July 24, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1387

Marjorie Conrad,
Respondent,

vs.

Walter R. Fields,
Appellant.

Filed July 24, 2007

Affirmed; motion granted in part

Peterson, Judge

Hennepin County District Court

File No. 27-CV-05-006873

Michael B. Padden, Padden & Associates, P.L.L.C., P.O. Box 65521, St. Paul, MN 55101-0521 (for respondent)

Alan T. Tschida, 505 Tanglewood Drive, Shoreview, MN 55126 (for appellant)

Considered and decided by Peterson, Presiding Judge; Shumaker, Judge; and Ross, Judge.

U N P U B L I S H E D O P I N I O N

PETERSON, Judge

This appeal is from a judgment and an order denying posttrial motions. The judgment awarded respondent damages in the amount of the cost of her law-school tuition and books based on a determination that the elements of promissory estoppel were proved with respect to appellant’s promise to pay for the tuition and books. We affirm the judgment and grant in part and deny in part respondent’s motion to strike appellant’s brief and appendix.

FACTS

Appellant Walter R. Fields and respondent Marjorie Conrad met and became friends when they were neighbors in an apartment complex in the early 1990’s. Appellant started his own business and became a financially successful businessman. Appellant built a $1.2 million house in the Kenwood neighborhood in Minneapolis and leased a Bentley automobile for more than $50,000 a year. Appellant is a philanthropic individual who has sometimes paid education costs for others.

In the fall of 2000, appellant suggested that respondent attend law school, and he offered to pay for her education. Respondent, who had recently paid off an $11,000 medical bill and still owed about $5,000 for undergraduate student loans, did not feel capable of paying for law school on her own. Appellant promised that he would pay tuition and other expenses associated with law school as they became due. Appellant quit her job at Qwest, where she had been earning $45,000 per year, to attend law school. Appellant admitted at trial that before respondent enrolled in law school, he agreed to pay her tuition.

Respondent testified that she enrolled in law school in the summer of 2001 as a result of appellant’s “inducement and assurance to pay for [her] education.” Appellant made two tuition payments, each in the amount of $1,949.75, in August and October 2001, but he stopped payment on the check for the second payment. At some point, appellant told respondent that his assets had been frozen due to an Internal Revenue Service audit and that payment of her education expenses would be delayed until he got the matter straightened out. In May 2004, appellant and respondent exchanged e-mail messages about respondent’s difficulties in managing the debts that she had incurred for law school. In response to one of respondent’s messages, appellant wrote, “to be clear and in writing, when you graduate law school and pas[s] your bar exam, I will pay your tuition.” Later, appellant told respondent that he would not pay her expenses, and he threatened to get a restraining order against her if she continued attempting to communicate with him.

Respondent brought suit against appellant, alleging that in reliance on appellant’s promise to pay her education expenses, she gave up the opportunity to earn income through full-time employment and enrolled in law school. The case was tried to the court, which awarded respondent damages in the amount of $87,314.63 under the doctrine of promissory estoppel. The district court denied appellant’s motion for a new trial or amended findings. This appeal followed.

D E C I S I O N

The district court’s “[f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.” Minn. R. Civ. P. 52.01. In applying this rule, “we view the record in the light most favorable to the judgment of the district court.” Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999). If there is reasonable evidence to support the district court’s findings of fact, this court will not disturb those findings. Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999). While the district court’s findings of fact are reviewed under the deferential “clearly erroneous” standard, this court reviews questions of law de novo. AFSCME, Council No. 14 v. City of St. Paul, 533 N.W.2d 623, 626 (Minn. App. 1995). “Promissory estoppel implies a contract in law where no contract exists in fact.” Deli v. Univ. of Minn., 578 N.W.2d 779, 781 (Minn. App. 1998), review denied (Minn. July 16, 1998). “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Restatement (Second) of Contracts § 90(1) (1981).

The elements of a promissory estoppel claim are (1) a clear and definite promise, (2) the promisor intended to induce reliance by the promisee, and the promisee relied to the promisee’s detriment, and (3) the promise must be enforced to prevent injustice. Cohen v. Cowles Media Co., 479 N.W.2d 387, 391 (Minn. 1992). Judicial determinations of injustice involve a number of considerations, “including the reasonableness of a promisee’s reliance.” Faimon v. Winona State Univ., 540 N.W.2d, 879, 883 (Minn. App. 1995), review denied (Minn. Feb. 9, 1996).

“Granting equitable relief is within the sound discretion of the trial court. Only a clear abuse of that discretion will result in reversal.” Nadeau v. County of Ramsey, 277 N.W.2d 520, 524 (Minn. 1979). But

[t]he court considers the injustice factor as a matter of law, looking to the reasonableness of the promisee’s reliance and weighing public policies (in favor of both enforcing bargains and preventing unjust enrichment). When the facts are taken as true, it is a question of law as to whether they rise to the level of promissory estoppel.

Greuling v. Wells Fargo Home Mortgage, Inc., 690 N.W.2d 757, 761 (Minn. App. 2005) (citation omitted).

Appellant argues that respondent did not plead or prove the elements of promissory estoppel. Minnesota is a notice-pleading state that does not require absolute specificity in pleading and, instead, requires only information sufficient to fairly notify the opposing party of the claim against it. See Minn. R. Civ. P. 8.01 (requiring pleading to include a “short and plain statement of the claim” showing entitlement to relief); Minn. R. Gen. Pract. 507 (the statement of the claim must “contain a brief statement of the amount and nature of the claim”); Roberge v. Cambridge Coop. Creamery Co., 243 Minn. 230, 232, 67 N.W.2d 400, 402 (1954) (stating that pleadings must be framed so as to give notice of the claim asserted and permit the application of the doctrine of res judicata).

Paragraph 12 of respondent’s complaint states, “That as a direct and approximate result of the negligent conduct and breach of contract conduct of [appellant], [respondent] has been damaged . . . .” But the complaint also states:

4. That in 2000, based on the assurance and inducement of [appellant] to pay for [respondent’s] legal education, [respondent] made the decision to enroll in law school at Hamline University School of Law (Hamline) in St. Paul, Minnesota which she did in 2001.

5. That but for the inducement and assurance of [appellant] to pay for [respondent’s] legal education, [respondent] would not have enrolled in law school. [Appellant] was aware of this fact.

Paragraphs four and five of the complaint are sufficient to put appellant on notice of the promissory-estoppel claim.

At a pretrial deposition, respondent testified that negligence and breach of contract were the only two causes of action that she was pleading. Because promissory estoppel is described as a contract implied at law, respondent’s deposition testimony can be interpreted to include a promissory-estoppel claim.

In its legal analysis, the district court stated:

The Court finds credible [respondent’s] testimony that [appellant] encouraged her to go to law school, knowing that she would not be able to pay for it on her own. He knew that she was short on money, having helped her pay for food and other necessities. He knew that she was working at Qwest and would need to quit her job to go to law school. He offered to pay for the cost of her going to law school, knowing that she had debts from her undergraduate tuition. He made a payment on her law school tuition after she enrolled. [Respondent] knew that [appellant] was a wealthy philanthropist, and that he had offered to pay for the education of strangers he had met in chance encounters. She knew that he had the wealth to pay for her law school education. She knew that [] he was established in society, older than she, not married, without children, an owner of a successful company, an owner of an expensive home, and a lessor of an expensive car. Moreover, [appellant] was a friend who had performed many kindnesses for her already, and she trusted him. [Appellant’s] promise in fact induced [respondent] to quit her job at Qwest and enroll in law school, which she had not otherwise planned to do. . . .

. . . [T]he circumstances support a finding that it would be unjust not to enforce the promise. Upon reliance on [appellant’s] promise, [respondent] quit her job. She attended law school despite a serious health condition that might otherwise have deterred her from going.

These findings are sufficient to show that respondent proved the elements of promissory estoppel.

Appellant argues that because he advised respondent shortly after she enrolled in law school that he would not be paying her law-school expenses as they came due, respondent could not have reasonably relied on his promise to pay her expenses to her detriment after he repudiated the promise. Appellant contends that the only injustice that resulted from his promise involved the original $5,000 in expenses that respondent incurred to enter law school. But appellant’s statement that he would not pay the expenses as they came due did not make respondent’s reliance unreasonable because appellant also told respondent that his financial problems were temporary and that he would pay her tuition when she graduated and passed the bar exam. This statement made it reasonable for respondent to continue to rely on appellant’s promise that he would pay her expenses.

II.

Citing Olson v. Synergistic Techs. Bus. Sys., Inc., 628 N.W.2d 142, 151 (Minn. 2001), appellant argues that the doctrine of promissory estoppel is not a substitute for consideration and that respondent had no basis for claiming an enforceable contract given the total lack of consideration. The Olson court stated:

American courts adopted the Chancery court’s equitable cause of action based on good-faith reliance to enforce promises unsupported by consideration – not as a consideration substitute, but rather as a doctrine based on reliance that the courts could use to prevent injustice. Eventually, the American courts characterized this line of cases as “promissory estoppel,” and identified the key elements of the doctrine of promissory estoppel as (1) a promise, (2) the promisee’s right to rely on the promise and the promisor’s duty to prevent reliance, and (3) harm suffered in reliance on the promise. Over time, the doctrine of promissory estoppel evolved, and courts began to focus on the promisee’s right to rely rather than the promisor’s duty to prevent reliance. As the doctrine developed, many courts adopted the Restatement of Contracts § 90 (1932) (setting out the elements of promissory estoppel), but in Minnesota, we limited relief available under Restatement of Contracts § 90 to the extent necessary to prevent injustice. For jurisdictions adopting the Restatement of Contracts § 90, the equitable remedy was not a mechanical calculation, but rather it was determined ad hoc on a case by case basis. In contrast, when a plaintiff pleaded a common-law cause of action based on detrimental reliance as a consideration substitute, the legal remedy consisted of compensating the plaintiff for the full value of the promise.

In Minnesota, we have consistently recognized and applied the equitable aspects of promissory estoppel.

628 N.W.2d at 151 (citations omitted). Read in its entirety, Olson does not indicate that consideration is required for recovery under the promissory-estoppel doctrine.

III.

Appellant argues that because he did not sign a written agreement between the parties and respondent admitted that she intended to take more than one year to complete law school, any contract between the parties is unenforceable under the statute of frauds. Under the statute of frauds, if an agreement “by its terms is not to be performed within one year,” no action upon the agreement shall be maintained unless the “agreement, or some note or memorandum thereof, expressing the consideration, is in writing, and subscribed by the party charged therewith[.]” Minn. Stat. § 513.01(1) (2006).

But an agreement “may be taken outside the statute of frauds by . . . promissory estoppel.” Norwest Bank Minn. v. Midwestern Mach. Co., 481 N.W.2d 875, 880 (1992) (citing Berg v. Carlstrom, 347 N.W.2d 809, 812 (Minn. 1984)), review denied (Minn. May 15, 1992). “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise.” Restatement (Second) of Contracts § 139(1) (1981).

Because appellant’s expensive home and car and position as a successful business owner made it appear as if he was fully capable of keeping his promise to pay respondent’s law-school expenses and because appellant had bestowed his generosity on respondent several times before he promised to pay her law-school expenses, appellant reasonably should have expected his promise to induce action by respondent. The promise did induce action by respondent and left her with a substantial debt when appellant failed to keep his promise. Respondent quit her job and attended law school with the expectation that appellant would pay her law-school expenses and she would not be in debt for these expenses when she graduated. Because it would be unjust to require respondent to pay a debt that she incurred in reliance on appellant’s promise to pay the debt, appellant’s promise is enforceable notwithstanding the statute of frauds.

IV.

In actions based on promissory estoppel, “[r]elief may be limited to damages measured by the promisee’s reliance.” Dallum v. Farmers Union Cent. Exchange, Inc., 462 N.W.2d 608, 613 (Minn. App. 1990), review denied (Minn. Jan. 14, 1991). “In other words, relief may be limited to the party’s out-of-pocket expenses made in reliance on the promise.” Id.

Appellant objects to respondent seeking damages for lost income and living expenses, including housing. But the district court awarded respondent damages only for the cost of tuition and books. Appellant argues that respondent sought double recovery for the cost of tuition and the amount of her student loans. But an exhibit prepared by respondent and admitted into evidence shows that tuition totaled $86,462.21 and books cost $2,802.17. The district court awarded respondent $87,314.63 (tuition plus books minus payment made by appellant).

Appellant argues that respondent was obligated to mitigate her damages and she could have avoided all of her damages by dropping out of law school immediately after appellant refused to pay her tuition as it was incurred. But as we explained when addressing the reasonableness of respondent’s reliance, appellant told respondent that his financial difficulties were temporary and that he would pay her expenses after graduation. Under these circumstances, respondent was not aware until after she graduated that she would suffer damages, and by the time she graduated, she had already paid for her tuition and books and had no opportunity to mitigate damages.

Appellant argues that because respondent received a valuable law degree, she did not suffer any real detriment by relying on his promise. But receiving a law degree was the expected and intended consequence of appellant’s promise, and the essence of appellant’s promise was that respondent would receive the law degree without the debt associated with attending law school. Although respondent benefited from attending law school, the debt that she incurred in reliance on appellant’s promise is a detriment to her.

VI.

The record on appeal consists of “[t]he papers filed in the trial court, the exhibits, and the transcript of the proceedings[.]” Minn. R. Civ. App. P. 110.01. “An appellate court may not base its decision on matters outside the record on appeal, and may not consider matters not produced and received in evidence [in the district court].” Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

Respondent argues that appellant’s entire brief and appendix should be stricken due to references to deposition transcripts and a tax-lien document. The deposition transcripts were part of the district court record. Appellant’s reference to respondent’s deposition in his argument relating to the theories pleaded in the complaint is proper, and we deny the motion to strike the entire brief and appendix. Although the deposition is part of the record, because it was not admitted into evidence at trial, it cannot be used to prove facts disputed at trial. Therefore, we grant respondent’s motion to strike references to the depositions to support factual allegations.

The tax-lien document was not part of the record before the district court. This court may consider essentially uncontroverted documentary evidence that is not included in the district court file. Franke v. Farm Bureau Mut. Ins. Co., 421 N.W.2d 406, 409 n.1 (Minn. App. 1988), review denied (Minn. May 25, 1988). But the tax lien is evidence of appellant’s financial condition, which is a disputed issue in this case. Accordingly, we strike the tax-lien document.

Affirmed; motion granted in part.