Barbara Lucinda Sawyer v. Melbourne Mills Jr ( 2009 )

AS MODIFIED : NOVEMBER 2, 2009
RENDERED : AUGUST 27, 2009
TO BE PUBLISHED
,SUyrkMr Courf of ~i
2007-SC-000296-DG
BARBARA LUCINDA SAWYER APPELLA
ON REVIEW FROM COURT OF APPEALS
V. CASE NO. 2006-CA-000697-MR
FAYETTE CIRCUIT COURT NO . 2003-CI-01679
MELBOURNE MILLS, JR. APPELLEE
OPINION OF THE COURT BY JUSTICE NOBLE
AFFIRMING
Appellant Barbara Lucinda Sawyer appeals a decision affirming the
circuit court's judgment notwithstanding the verdict ("JNOV") in favor of
Appellee Melbourne Mills, Jr., in a dispute over the validity of an alleged oral
agreement. Because the oral agreement violated the Statute of Frauds, lacked
consideration, and could not have induced Sawyer's action, it was
unenforceable, and the decision of the Court of Appeals is affirmed.
I. Background
Mills met Appellant Sawyer and her husband in 1991 . In 1994, Sawyer
requested that Mills become involved in already-pending class action litigation
involving breast implants, and she solicited some women she knew as clients .
Mills promised to give her a bonus if he ever had a big "payday" with one of his
class actions, and she continued to research potential products liability claims .
Between 1994 and 2001, she assisted Mills in marketing his law practice,
researching potential class action lawsuits, and in performing work as a
contract employee for relatively brief periods of time, for which she was paid.
Her employment ended on March 31, 2002 .
In 1997, the prescription drugs Fenfluramine and Phentermine
(commonly known as "Fen-Phen") were receiving national media attention due
to the possibility they were causing heart valve damage . Sawyer claims that
she recommended Mills pursue a class action against Fen-Phen's
manufacturer, and the drugs were recalled soon after Mills began to advertise
for Fen-Phen clients . Mills received an overwhelming response from his
advertising campaign and ultimately had about 2600 clients (about 400 of
whom were from Kentucky) that he signed up on a contingency fee basis.
Sawyer assisted with clerical work in processing the claims .
On May 1, 2001, a settlement for millions of dollars was reached between
Fen-Phen's manufacturer and Mills's clients . After receiving his initial portion
of the substantial attorney's fees on June 20, 2001, Mills made bonus
payments to all of his employees. Six long-term employees received a $100,000
bonus, one paralegal who Mills thought was instrumental to the Fen-Phen
litigation's success received more than a $1,000,000 bonus, and an attorney
received an initial $1,000,000 bonus (and a more substantial additional bonus
later) . Hourly employees such as Sawyer received a bonus equal to two weeks'
wages. Sawyer's bonus was $1,300. Over the years, Mills had mentioned to
Sawyer that he would reward her with a large bonus when he hit a "payday" in
the class action cases, and the Sawyers were disappointed in the $1,300
bonus . I
On June 25, 2001, the Sawyers invited Mills to their art studio and
secretly tape-recorded their conversation . Mills admitted that the voices on the
recording were his and the Sawyers'. Sawyer and her husband suggested to
Mills that he pay her a substantial bonus due to her encouragement of Mills to
pursue class actions. After a lengthy discussion, the Sawyers suggested that
Mills pay Sawyer a $1,065,000 bonus, consisting of $1,000,000 plus the value
of a luxury car ($65,000), and Mills agreed . Mills discussed how and when the
payments would be made.
Mills refused to make a lump sum payment even though he had the
financial ability to do so ; instead he agreed to make the payments in
installments of $10,000 per month . They would also be hidden from his office
employees (Sawyer claimed Mills did not wish to make the other employees
jealous) .2 Mills also agreed to pay for an attorney to draft a written agreement
to memorialize their understanding, and he spoke to the Sawyers' attorney,
1 Previously, Sawyer was paid more than $150,000 through an advertising agency set
up by her and through which the Mills Law Office placed its advertising .
Additionally, when Sawyer and her husband told Mills they were about to be evicted
from the building where their art studio was located, Mills wired her $100,000 so
they could buy the building . Finally, the Sawyers often accompanied Mills on
vacations at his expense .
2 Though Sawyer describes the complicated manner in which Mills attempted to keep
the payments he made hidden from his employees, the details are not relevant to the
disposition of this case.
Mark Moseley, on the phone and confirmed he had agreed to pay a bonus to
Sawyer . However, Mills later refused to sign any written agreement.
Mills made his first payment of $10,000 to Sawyer the day of the
meeting, and he eventually made a series of payments of $10,000 each, and
one of $15,000, totaling $65,000 . Mills also made a one-time payment of
$100,000 on October, 3, 2001 . The last payment was paid on February 7,
2002, and Mills informed Sawyer in March that he was terminating her
employment at the end of the month . He had paid her a total amount of
165,000 . It was undisputed that Sawyer had completed her performance that
might justify any bonus prior to the June 25 conversation between the parties,
and also that she continued to work for Mills after the agreement .
Prior to trial, Mills moved for summary judgment, arguing that
enforcement of the agreement was barred by Kentucky's Statute of Frauds and
raising lack of consideration as a defense . The trial court denied the motion.
After a four-day trial, the jury returned a verdict for Sawyer and awarded
her $900,000, and a trial verdict and judgment was entered . In response to
two interrogatories, the jury answered that it was satisfied from the evidence
that the parties reached an understanding and agreement as to the bonus at
issue, and that the understanding and agreement could have been fully
performed within one year of its making.
Mills moved the trial court for a JNOV, and it was granted . The court
specifically explained that it
had previously addressed its concerns that this Statute of Frauds
barred the claims of Cindy against Mel in this case . However, out
of an abundance of precaution, in order to allow Cindy to present
her full evidence at trial before a jury, the Court Overruled Mel's
Motion for Summary Judgment on this issue in an Opinion and
Order entered December 1, 2005.
After hearing Sawyer's full evidence at trial, however, the trial court found that
the Statute of Frauds did in fact bar her claims and it granted Mills's JNOV
motion . The Court of Appeals affirmed the trial court's ruling, and this Court
granted discretionary review .
II. Analysis
A. The June 25, 2001 Oral Agreement
1 . Application of the Statute of Frauds Where the Agreement's Terms and
the Parties' Intentions Demonstrate It Could Not Be Completed Within
One Year
Assuming there was a contract in this case, the Statute of Frauds applies
and bars its enforcement. Kentucky's Statute of Frauds provides in pertinent
part,
No action shall be brought to charge any person . . . [ulpon any
agreement that is not to be performed within one year from the
making thereof . . . unless the promise, contract, agreement,
representation, assurance, or ratification, or some memorandum
or note thereof, be in writing and signed by the party to be charged
therewith, or by his authorized agent . . . .
KRS 371 .010(7) . "In construing the Statute of Frauds, the general rule is that,
if a contract may be performed within a year from the making of it, the
inhibition of the Statute does not apply, although its performance may have
extended over a greater period of time." Williamson v. Stafford, 301 Ky. 59,
190 S .W.2d 859, 860 (1945) . However, "there is a well-recognized exception" to
the general rule, "and that is that when it was contemplated by the parties that
the contract would not, and could not, be performed within the year, even
though it was possible of performance within that time, it comes within the
inhibition of the Statute ." Id . (emphasis added) . This Court "must look to the
evidence to determine whether the contracts in question fall within the rule or
the exception ." Id . at 861 .
The Statute of Frauds "refers to a contract which, by its terms, is not to
be performed within a year, and which, from its stipulations, is not capable of
being performed within a year." Nickell v. Johnson, 162 Ky . 520, 172 S .W.
938, 938 (1915) ; see also Lively v. Elkhorn Coal Co . , 101 F.Supp . 1014, 1016-
17 (E.D . Ky. 1952) ("[W]here it is obvious from all surrounding facts and
circumstances that it was not within the contemplation of the parties or within
reason that it would be performed within a year the statute applies .") The
appropriate inquiry thus is whether under the evidence of a particular case the
parties contemplated that the contract at issue would be performed within a
year, and if, by its terms, it could be. It is irrelevant whether performance
would be possible under different terms. A contrary rule-that if it is possible
to perform a contract within a year even though such completion is not
contemplated by the parties-would eviscerate the Statute of Frauds'
requirement that agreements not to be performed within one year be in writing .
Under well-settled precedent, this Court must determine whether Sawyer
and Mills contemplated that their oral contract would be, or could be under its
terms, performed within a year, even though Mills acknowledged that he could
have paid the entire amount at the time of the negotiations . Williamson, 190
S .W .2d at 860 .
This case involves the trial court's grant of a JNOV motion.
Upon review of the Order Granting JNOV, we must examine the
trial court's decision under the clearly erroneous standard . . . .
That is to say, we must review all the evidence presented to the
jury and must uphold the trial court's decision if after all the
evidence is construed most favorably to the verdict winner, a
finding in his favor would not be made by a reasonable [person] .
Moore v . Environmental Constr. Corp. , 147 S .W.3d 13, 16 (Ky. 2004) (internal
citation and quotation marks omitted) . For the purpose of the JNOV motion,
the trial court properly considered the evidence in the light most favorable to
Sawyer, the verdict winner and party opposing the JNOV motion, accepting
many of the disputed facts as true. Among other things, the trial court
accepted the following as true :
(5) That in the June 25, 2001 conversation between Mel,
Cindy, and Cindy's husband, Steve Sawyer (hereinafter "Steve"),
the figure of One Million Dollars ($1,000,000 .00) was first proposed
by Cindy and Steve as a lump sum payment. Mel clearly balked at
that figure as a lump sum payment. Quickly, Steve Sawyer, with
Cindy's encouragement and agreement, suggested that a total
payment of One Million Dollars ($1,000,000 .00) plus the cost of a
new luxury car to be paid over ten (10) years at Ten Thousand
Dollars ($10,000 .00) per month until paid would be acceptable to
them . This was the undisputed sworn testimony of Cindy, Steve,
and their attorney Mark Mosely [sic] at trial. The Court, in
accordance with the above JNOV standard, accepts that testimony
without qualification. Further, that testimony was accepted by the
jury in this case as reflected by the jury verdict when "Yes" was
checked in response to Interrogatory No. 1 which specifically found
that Cindy and Mel had each understood and agreed that Mel
would pay Cindy a bonus in the amount of One Million Dollars and
the value of a new car costing Sixty Five Thousand Dollars for
services performed by Cindy for the benefit of Mel per Jury
Instruction No . 1 .
Based on the undisputed fact that Mills "clearly balked" at an agreement where
he would have to make a one-million-dollar lump sum payment, such a
payment was not a part of the oral agreement.
Instead, Mills orally agreed to make a $1,065,000 payment "over ten (10)
years at Ten Thousand Dollars ($10,000.00) per month until paid ." The trial
court noted that this understanding was also reflected in Sawyer's Answer to
Interrogatory No . 8 in which she stated in her Amended Answer in part, "The
bonus was to be paid in monthly installments of $10,000.00 and on the first of
each month ." Attorney Mark Moseley's written draft agreement, which Mills
never signed, recognized that the total amount would be paid out over 107
months, with the last month's payment being $5,000 .
In Kentucky Utilities Co . v . Hurst, 207 Ky. 448, 269 S .W . 525 (1925), the
Court concluded that the agreement's terms and parties' intentions determine
whether a contract could be completed within one year so as to avoid the
Statute of Frauds. Specifically, the Court concluded the lower
court should have sustained defendant's motion for a peremptory
instruction, upon the ground that the alleged special contract for
the furnishing of the water, and upon which the action is based,
was verbal, and was one which, under the circumstances and the
contemplation of the parties at the time, was not to be performed
within one year from the time of its making, and was therefore
inhibited by . . . the statute of frauds .
Id . at 526 .
Subsequent to Hurst, the Court was again confronted with a similar
issue and it reaffirmed its position . The Court quoted the appellee's testimony
and concluded "[c]learly, the evidence for both parties shows that it was not
contemplated by either of them that the contract was to be performed, or could
be performed, within a year." Williamson , 190 S.W.2d at 861 . The only
testimony offered by the appellees in that case was that if the agreement had
been completed, "the parties contemplated that it would require several years
to perform under it ." Id.
Consistent with Hurst and Williamson , the trial court in this case was
not clearly erroneous in finding that Mills never agreed to a lump sum payment
payable within one year. Mills never signed a writing consistent with the oral
discussions of the parties. The agreement's terms and the parties' intentions
demonstrate this agreement could not be completed within one year, and thus
the trial court was correct that as a matter of law the June 25 oral agreement
between Sawyer and Mills failed the writing requirement of the Statute of
Frauds, and was unenforceable under the statute . As the trial court observed,
"[i]f the Statute of Frauds, codified at KRS 371 .010(7), does not apply to the
undisputed testimony in the case at bar, it would be hard to imagine any case
where it would apply."
2 . Completed Performance and Past Consideration
Sawyer claims the agreement is nonetheless enforceable because she
completed her performance, taking the agreement outside the operation of the
Statute of Frauds, as a completed executory contract. However, because
Sawyer concedes she had completed her performance prior to the June 25,
2001 oral agreement, it was supported only by past performance, which is no
consideration at all, and thus, under this argument, there was not a binding
contract.
Sawyer cites Pitcher v. Sadler, 276 Ky . 450, 124 S .W .2d 475, 479 (1939),
for the proposition that completed performance by one party removes an
agreement from the Statute of Frauds : "[A] contract is no longer executory, and
[the Statute of Frauds] has no application thereto, where it has been fully
performed upon one side and the other party by its terms has a longer time
than one year in which to perform his part thereof." The Court of Appeals
correctly noted, however, that Sawyer did not perform any obligations pursuant
to this agreement.
"[I]t is a general rule that past consideration is insufficient to support a
promise." 17A Am . Jur. 2d Contracts § 152 (2009) . Simply put, Sawyer's
claim that her completed performance takes her agreement outside of the
operation of the Statute of Frauds fails, because the fact that her performance
was done prior to the offer Mills made on June 25 means there was no
consideration for the promise Mills made on that date .
In Greenup v. Wilhoite, 212 Ky . 465, 279 S .W . 665, 666 (1926), the
Court described a similar situation and the applicable law as follows:
Appellants insist that the services for which appellee claims
compensation had all been performed before the making of the
contract sued on, and the consideration for the contract having all
passed, the contract has failed for want of a supporting
consideration . They insist that a past consideration which is some
act of forbearance in time past by which a man has benefited,
without thereby incurring any liability, is not sufficient to support
an executory contract, and this is ordinarily true.
Id . In that case, however, the agreement was upheld because part of the
consideration-in the form of services-was not yet given at the time the
parties entered into the agreement, which further underscores that the
agreement and consideration must be dependent on each other. Id .
("Manifestly the parties to the contract contemplated that the appellee Mrs .
Wilhoite was to receive compensation, not only for services which she had
performed up to the time of the making of the contract, but for all services
which she was to perform for Miller Wilhoite, Sr., during the remainder of his
life .") .
Though Sawyer also contends that she continued to work for Mills after
the agreement regarding her prior performance was made on June 25, she did
in fact receive other multiple substantial payments from Mills after the
agreement for that work. It therefore cannot also be used as the consideration
going forward from the June 25th agreement.
Sawyer also relies upon Fisher v . Long, 294 Ky. 751, 172 S .W.2d 545
(1943), for the proposition that a contract that is unenforceable because a term
is not yet decided becomes enforceable if an agreement on the term is ever
reached, that is, once the blank is filled in by the parties. Fisher, however, is
distinguishable because the parties in that case had already reached a written
agreement with valid consideration and mutual obligations, and all that
remained was to make a simple mathematical calculation. Id. at 547 ("Here
there was a meeting of the minds . . . This was the essential agreement. . . . It
took no expert accountant to ``adjust this difference in cash ."') . Fisher is simply
inapposite .
Finally, Sawyer objects to Mills's attempt "to obfuscate this issue with
circular logic," arguing that if Sawyer had completed her performance at the
time the bonus amount was filled in (as she concedes), there was no
consideration and the contract was unenforceable, but if she had not
completed performance at the time the bonus was filled in, the contract had to
be in writing to be enforceable. This is not obfuscation . That Sawyer loses for
two independent reasons does not undermine the logic, or make it circular.
Consequently, the JNOV granted by the circuit court was appropriate .
3. The Audio Tape Recording of the Parties' Conversation and Cancelled
Signed Checks as a Basis for Satisfying the Statute of Frauds' Writing
Requirement
Sawyer also claims that the audio tape of Mills's voice and cancelled
signed checks provide the basis for satisfying the Statute of Frauds' writing
requirement under the federal Electronic Signatures in Global and National
Commerce Act ("E-SIGN") and Calloway v. Calloway, 707 S .W .2d 789 (Ky. App.
1986) .
She first claims that the Statute of Frauds' writing requirement is
preempted by 15 U.S .C. § 7001(a), which provides,
Notwithstanding any statute, regulation, or other rule of law . . .
with respect to any transaction in or affecting interstate or foreign
commerce--
(1) a signature, contract, or other record relating to such
transaction may not be denied legal effect, validity, or
enforceability solely because it is in electronic form; and
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(2) a contract relating to such transaction may not be denied
legal effect, validity, or enforceability solely because an
electronic signature or electronic record was used in its
formation.
However, under 15 U.S .C . § 7001 (a) (1), the oral agreement is not being denied
"legal effect, validity, or enforceability solely because it is in electronic form ."
(Emphasis added.) The oral agreement is being denied legal effect because it
fails the writing requirement of the Statute of Frauds and under E-SIGN there
is not an electronic signature . Therefore, contrary to Sawyer's assertions, the
Statute of Frauds' writing requirement is not preempted by E-SIGN in this
case.
Under E-SIGN, "``electronic' means relating to technology having
electrical, digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities ." Id . ~ 7006(2) . "'[E]lectronic record' means a contract or other
record created, generated, sent, communicated, received, or stored by
electronic means ." Id . § 7006(4) . At issue in this case is the tape recording of
the conversation between Sawyer and Mills . Under 15 U .S .C . § 7006(2)'s broad
definition of "electronic," the tape recording is electronic, and it is an
"electronic record" because it was a "record created" and "stored by electronic
means" under 15 U .S .C. § 7006(4) .
However, contrary to Sawyer's assertions, Mills's voice does not
constitute an electronic signature merely because it was identifiable and was
identified at trial as being his. An electronic signature under 15 U.S.C . §
7006(5) requires that "an electronic sound, symbol, or process, attached to or
logically associated with a contract or other record" be "executed or adopted by
a person with the intent to sign the record."
There must be intent to attach or logically associate the electronic
signature to the agreement, that is, an intent to execute the contract. That was
impossible here, because the medium on which the alleged agreement and
electronic signature were recorded (the audio tape) was used surreptitiously.
Mills did not know he was being recorded when he went to the Sawyers' art
studio . Thus, Mills's identifiable voice on the tape, even if construed as an
electronic signature, was procured without Mills's knowledge or intent, and
would be tantamount to a forgery which cannot be used to demonstrate a valid
contract. Cf. E . L . Strobin, Annotation, Procuring Signature by Fraud as
Forgery, 11 A .L .R .3d 1074, § 5 (1967 8, Supp . 2009) ("[W]here a genuine
signature to an instrument is procured by some trick or device without intent
on the part of the party signing to execute such an instrument, the attitude of
the courts has been that the signature thereto will be treated in law as a
forgery .) . The statute contemplates more than a mere verbal assent recorded in
secret; it requires the electronic equivalent of a signature, that is, an electronic
sound, symbol, or process solemnizing the agreement and evidencing an intent
to enter into it.
That the recording was not intended to be a signature is further
supported by the fact that the parties evidenced some intent to draft and sign a
written contract to memorialize their understanding, which Mills refused to
sign. Clearly then, Mills did not have any intent to "execute" or "adopt" the
conversation that took place, and he did not "sign the record" memorializing it
that was drafted by Sawyer's attorney. Sawyer's claim that E-SIGN provides a
basis for satisfying the Statute of Frauds in this case fails.
Sawyer next claims that Calloway, 707 S .W.2d 789, controls the outcome
in this case because the tape recording cannot be barred by the Statute of
Frauds . Calloway , which involved an oral statement recorded by a court
reporter, is distinguishable for many reasons . In that case, the husband
explicitly agreed to a settlement agreement under oath, and the court relied on
an estoppel theory "in light of the peculiar circumstances of [that] case," to hold
that a settlement agreement entered into during a judicially sanctioned
proceeding was sufficient to satisfy the Statute of Frauds . Id. at 792 . The
court noted, "We cannot overlook the importance of stipulations between
litigants and the promotion of expeditious and complete justice by their
enforcement provided no harsh or unfair contract results ." Id. In sum,
Calloway involved a unique set of facts involving a stipulation under oath at a
deposition where the court relied on an estoppel theory, not a surreptitiously
recorded conversation as in this case . Therefore, Calloway is easily
distinguished .
Finally, Sawyer claims that Mills's voice, coupled with cancelled signed
checks, is sufficient to satisfy the Statute of Frauds. The same rationale for
why the recording cannot be a sufficient electronic signature applies here to
bar the recording from being a "memorandum" of the parties' agreement .
Given the secret nature of the recording and the expressed intent to draft a
written document, the recording cannot have been intended by Mills as the
repository of the parties' agreement . Cf. Ellis Canning Co . v. Bernstein,
348 F.Supp . 1212 (D . Colo . 1972) (allowing audio recording to satisfy writing
requirement but only where parties agreed that the recording would be the
contract) .
As for the checks, in addition to the fact that the cancelled signed checks
for monthly payments to Sawyer are inconsistent with her claim that the
agreement could be completed within one year, Sawyer does not cite any law
that signed checks satisfy the Statute of Frauds, and this Court is not
persuaded that they do. Though some courts have held that checks can be
used to demonstrate the existence of a contract, those checks almost invariably
include references to the terms of the contract or a document that contains the
terms . See, e .g. , Walter E. Heller 8s Co . v . Video Innovations, Inc . , 730 F .2d 50,
53 (2d Cir. 1984) ("delivery of signed rental checks which contained specific
references to the written lease, would be sufficient to satisfy the Statute of
Frauds") ; Clark v . Larkin , 239 P.2d 970 (Kan. 1952) (notation of terms on
check) . In the one Kentucky case on the subject, the check in question
referred to the "property" and the sale was confirmed in a letter a few days
later. See Purtell v. Bell, 179 Ky. 356, 200 S .W. 644, 645 (1918) ("Obviously
the check, indorsement thereon, and letter together designate and identify the
real estate, its location, and the terms of the contract . . . ." (emphasis added)) .
In this case, the checks, rather than evincing an agreement involving a
quid pro quo, are just as consistent with a gratuitous bonus of the sort paid to
Mills's other employees . Sawyer is basically claiming that two halves make a
whole, but in this case neither side makes a "half," and thus together they do
not make a "whole" writing sufficient to satisfy the Statute of Frauds .
4. Promissory Estoppel
Despite the parties' dispute over whether the issue of promissory
estoppel was properly preserved and appealed, it is clear that the trial court
was correct in concluding there was insufficient proof to support a jury
instruction on the issue .
The doctrine of promissory estoppel provides as follows :
"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 . The remedy granted for breach may be limited as justice
requires ."
Meade Constr. Co . v . Mansfield Commercial Elec ., Inc . , 579 S .W .2d 105, 106
(Ky. 1979) (quoting Restatement (Second) of Contracts § 90 (Tentative Draft No.
2, 1965)) . 3
First, it is not clear that under Kentucky law promissory estoppel can
defeat the Statute of Frauds . Though the headnotes for the case state
otherwise, the Court of Appeals has recently held that a claim of promissory
estoppel "alone is not sufficient to defeat the statute of frauds ; actual fraud
3 Though after quoting the doctrine of promissory estoppel in Meade Constr. Co . , this
Court noted that it did not at that time "decide whether the doctrine of promissory
estoppel applies in this state or whether, if so, it governs this case," _id. at 106, it has
since become clear that "the doctrine of promissory estoppel, if it can be established,
is ``alive and well' in this Commonwealth ." McCarthy v. Louisville Cartage Co . , 796
S .W.2d 10, 11 (Ky. App. 1990) .
17
must be proven ." Rivermont Inn, Inc . v . Bass Hotels 8s Resorts, Inc . , 113
S.W .3d 636, 642 (Ky. App. 2003) . As the court then noted, the claim
"confuses promissory estoppel with equitable estoppel, and incorrectly
interchanges the terms . . . ." Id . Equitable estoppel requires a fraudulent
misrepresentation as to a material fact, which has not been claimed in this
case.
While this Court has stated that "the statute of frauds is not a bar to a
fraud or promissory estoppel claim based on an oral promise of indefinite
employment," United Parcel Service Co . v. Rickert, 996 S .W.2d 464, 471 (Ky.
1999), the statement was only dicta, as the decision turned on equitable
estoppel (i.e., a claim of fraud) . More recently this Court stated that it is
"incorrect[] [to] infer[] from Rickert that detrimental reliance is a bar to the
statute of frauds . All that may be deduced from Rickert concerning the statute
of frauds is that in a fraud or promissory estoppel action involving a promise of
employment, it does not act as a bar ." Farmers Bank and Trust Co . of
Georgetown, Kentucky v. Willmott Hardwoods, Inc . , 171 S .W. 3d 4, 10 (Ky.
2005) ; see also Architectural Metal Systems, Inc. v. Consolidated Systems,
Inc. , 58 F .3d 1227, 1231 (7th Cir. 1995) (Posner, J .) ("[T]he statute of frauds is
applicable to a promise claimed to be enforceable by virtue of the doctrine of
promissory estoppel." (citing First National Bank v. McBride, 642 N .E.2d 138,
142 (Ill. 1994) ; Dickens v. Quincy College Corp . , 615 N .E.2d 381, 386 (Ill.
1993), and relying on Illinois law)) . Willmott Hardwoods, Inc. then went on to
hold that except in the most extreme circumstances, even equitable estoppel
(which involves fraud) cannot defeat the statute of frauds, "lest the Court run
afoul of judicially amending the statute in violation of separation of powers."
Id. 4
But even assuming that promissory estoppel could allow a plaintiff to get
around the Statute of Frauds, Sawyer cannot invoke the doctrine in this case.
First, promissory estoppel requires "[a] promise which the promisor should
reasonably expect to induce action or forbearance on the part of the promisee
. . . and which does induce such action or forbearance . . . ." Meade Constr.
Co . , 579 S .W.2d at 106 . Sawyer argues in this regard that she agreed to
continue working for Mills at his request after the agreement and bypassed
other job opportunities, in reliance upon his promise .
But there is no reasonable basis to argue that Mills believed Sawyer
continued working for him from June 25, 2001 through March 2003 because of
his promise . During that time, he paid her $165,000 in line with his promise,
and paid her as an hourly employee until he released her from employment . At
no time has the testimony indicated that his promise to her on June 25 was
premised on her continued employment with him. There is no indication that
he asked her not to accept other employment . Indeed, during that nine month
span of time, the $165,000 dollars paid to her under his promise could
4 Even those states allowing equitable estoppel to reach the Statute of Frauds
frequently require, for example, that "either an unconscionable injury or unjust
enrichment would result from refusal to enforce the contract . . . ." Monarco v. Lo
Greco, 220 P.2d 737, 741 (Cal. 1950) (Traynor, J .) . Though, as one commentator has
noted, following the adoption of the Restatement (Second) of Contracts, some states
required only "injustice" rather than unconscionable injury or unjust enrichment .
See 2 Alan E. Farnsworth, Farnsworth on Contracts § 6.12, at 207-08 (3d ed. 2004) .
19
reasonably have led Mills to believe that she did not need the hourly
employment, but continued working for him in hope of future benefits. He had
no cause to "reasonably expect" action or forbearance from Sawyer. Also, at
best, Sawyer alleges a reliance based only on her own statements ; nothing else
in the record supports her claim that she continued working for Mills for nine
months after his promise because of that promise. Sawyer does not make a
supportable promissory estoppel claim.
B. Prejudgment Interest
Because this Court concludes the trial court did not err in granting the
JNOV motion in Mills's favor, it is unnecessary to address the issue of
prejudgment interest for Sawyer.
III. Conclusion
Because the terms of the agreement and the parties' intentions
demonstrate it could not be completed within one year, the Statute of Frauds
required that it be in writing, but that was never done. Additionally, since
Sawyer concedes she completed performance before the June 25, 2001
conversation, the agreement lacked valid consideration and could not be a
binding contract. The audio tape recording and cancelled signed checks do not
serve as a basis for satisfying the Statute of Frauds' writing requirement in this
case . Finally, Sawyer does not have a claim for promissory estoppel because
the record does not substantiate her claim that she relied on Mills's promise by
way of a forbearance or action, and Mills could not have reasonably been
expected to believe that she had. The JNOV entered by the trial court was
appropriate .
For the foregoing reasons, the Court of Appeals is affirmed .
All sitting . All concur.
COUNSEL FOR APPELLANT:
Thomas W. Miller
Michael Joseph Cox
Miller, Griffin 8z; Marks, PSC
271 West Short Street, Suite 600
Lexington, Kentucky 40507
COUNSEL FOR APPELLEE :
William E. Johnson
Samuel Ryan Newcomb
Johnson, True & Guarnieri, LLP
326 West Main Street
Frankfort, Kentucky 40601
,*uyrrntr Courf of ~irufurkV
2007-SC-000296-DG
BARBARA LUCINDA SAWYER APPELLANT
ON REVIEW FROM COURT OF APPEALS
V. CASE NO . 2006-CA-000697-MR
FAYETTE CIRCUIT COURT NO. 2003-CI-01679
MELBOURNE MILLS, JR. APPELLEE
ORDER
On the Court's own motion, the Opinion of the Court by Justice Noble
rendered Au st 27, 2009 shall be modified on page 20, line 8. Pages 1 and 20
shall be substituted, as attached hereto, in lieu of pages 1 and 20 of the
Opinion as originally rendered. Said modification does not affect the holding.
Entered : November 2, 2009.