Uncle Megabucks is at a Christmas dinner and gets up to make an announcement. He has always thought very highly of his niece, Terri, but thinks she needs a bit of a push to excel in her studies. He knows that Terri has always wanted to go to law school. Thus, Uncle Megabucks announces to the entire large family gathering that if Terri gets at least an A- average, 3.75 GPA, in her bachelors degree program, he will pay for her law school education at a law school of her choice. Terri hearing this redoubles her efforts and graduates from State U with a 3.85 GPA. She now wants to go to University of Chicago law school and has been accepted. Unfortunately, Terri and Uncle Megabucks have had a falling out and Uncle Megabucks no longer wants to pay for her law school. Does Terri have a case? If the reader recalls, the elements of a valid contract are agreement (offer/acceptance), consideration (bargained for exchange), capacity, and legality. In this case, the elements of a valid contract are probably not met as consideration (bargained for exchange) is problematic. Rather, what we have here is a person relying on a promise to their detriment. In situations such as this, a plaintiff is apt to turn to the doctrine of promissory estoppel, oftentimes referred to as detrimental reliance. What the person alleges in a promissory estoppel claim is: 1) A promise was made; 2) The promisor should have reasonably expected reliance on the promise; 3) The promissee relies on the promise; and 4) Injustice could only be avoided by enforcing the promise.1 Thus, Uncle Megabucks would probably lose this case if promissory estoppel were applied to him.
However, things have become very strange in Illinois. In fact, things are so strange that one wonders what on earth is going on with respect to the doctrine of promissory estoppel. As a result of the recent case law, there are now two questions to consider. First, in Illinois, does the cause of action of promissory estoppel, often called detrimental reliance, even exist for a plaintiff? Second, if it does exist, does the cause of action offer both legal and equitable remedies or just equitable remedies?
Any discussion of promissory estoppel in Illinois begins with the case of Quake Construction, Inc. v. American Airlines, Inc.2 In Quake, one Jones Brothers Construction, Inc. (Jones) was hired by American Airlines to prepare bid specifications, accept bids, and award contracts for construction of the expansion of American Airlines O’Hare facilities.3 Quake received an invitation to bid on the employee facilities and automotive maintenance shop project and submitted their bid to Jones.4 Jones then orally notified Quake that they had been awarded the contract for the project.5 When Jones asked Quake for the license numbers of their subcontractors, Quake informed Jones that they could not furnish that information without Quake’s submission of a signed subcontract agreement to them.6 Jones then sent to Quake a letter of intent in which it stated the award was Quake’s and that a contract agreement was being prepared and be available for signature shortly7 (no such contract was ever formulated).8 The letter of intent also outlined the scope of work Quake was to perform and the price to perform that work.9 At a preconstruction meeting, Jones told Quake, Quake’s subcontractors, and governmental officials that Quake was the general contractor for the project.10 However, American Airlines had different ideas because on that same day they notified Quake that their involvement in the project was terminated, subsequently confirmed by Jones in a letter.11 Quake brought suit for damages and alleged breach of contract, promissory estoppel, waiver of condition precedent, and impossibility of contract with respect to the money it spent in procuring the contract, preparing to perform the contract, as well as its loss of anticipated profits from the contract.12 The trial court dismissed the claims of Quake, the appellate court reversed the trial court in part, and appeal was taken to the Illinois Supreme Court.13
With respect to promissory estoppel, the Illinois Supreme Court allowed the claim to proceed and reasoned as follows. First, they noted that to prove promissory estoppel, four elements have to be met: 1) An unambiguous promise must be made to the plaintiff; 2) Plaintiff relied on the promise; 3) Plaintiff’s reliance was foreseeable by the defendants; and 4) Plaintiff actually relied on the promise to its detriment.14 The Supreme Court agreed with the appellate court in reversing the dismissal of the promissory estoppel claims.15 The Supreme Court noted Quake alleged that in reliance on Jones’ representations Quake had: 1) expanded its office space; 2) hired a project manager; 3) secured subcontractors for the project and provided their license numbers to Jones; and 4) prepared to perform work on the project.16 Quake also alleged Jones knew Quake incurred great time and expense in performing the above mentioned tasks.17
The Quake case is blackletter law very familiar to any of us who remember contracts in our first year of law school. However, Quake is not the last word on the matter because the first and fifth appellate districts in Illinois have very different ideas when it comes to promissory estoppel. The First Appellate District in the case of Chatham Surgicore, Ltd. v. Health Care Service Corp.,18 relied on Quake to allow a promissory estoppel claim for damages by a medical provider against Blue Cross and Blue Shield to proceed, where the medical provider relied on what turned out to be mistaken representations of Blue Cross and Blue Shield that payment would be made by them prior to providing care to patients.19
However, the fifth appellate district has gone in a completely different direction. In two separate cases, the fifth district has held that promissory estoppel is simply not available as a claim to the plaintiff, but rather can only be used for defensive purposes.20 The case first setting forth this principle is ESM Development Corporation v. Dawson.21 In ESM, a developer of a golf course wanted to build condominiums in conjunction with a golf course as part of the overall development plan.22 They received various assurances and documents from public officials suggesting that they could go ahead.23 However, the condominium project was forced to stop before completion when it was realized that not all the necessary resolutions had been passed for them to get the necessary tax abatements.24 The developer brought suit for damages claiming promissory estoppel.25 The fifth appellate district in denying the plaintiff’s claim quoted from a remedies hornbook written by one Dobbs in 1984 that said estoppel is not available as a basis for a damages claim and that estoppel can only be used for defensive purposes.26 The holding in ESM holding was subsequently followed by the fifth appellate district, over a vigorous dissent, in DeWitt v. Fleming.27
So where does this leave promissory estoppel in Illinois. If Quake and Chatham are to be believed, promissory estoppel would seem to be available to a plaintiff for both legal and equitable remedies. If ESM and DeWitt are to be believed, promissory estoppel would not seem to be available as a remedy at all in Illinois, a rather novel concept.28
There are two other possibilities as well. First, an argument could be made that promissory estoppel could be limited to cases involving equitable remedies only. Such a possibility might exist from a reading of Justice Freeman’s concurrence and dissent in the case of Doyle v. Holy Cross Hospital29. In that case, plaintiffs brought a claim alleging breach of contract and promissory estoppel with respect to their employer’s unilateral change to the employee handbook.30 The Illinois Supreme Court said the plaintiffs claims had the right to proceed for various reasons.31 However, the majority opinion never addressed how their decision would impact the plaintiffs promissory estoppel claims.32 Thus, Justice Freeman in his opinion thought it appropriate to discuss promissory estoppel.33 In his opinion, Justice Freeman noted that in contrast to legal remedies, promissory estoppel is an equitable remedy.34 Justice Freeman also said promissory estoppel was not a possible cause of action where there was a finding an enforceable contract existed in the first place.35 Thus, if one takes what Dobbs says about promissory estoppel, i.e. that damages, are not available, when combined with Justice Freeman’s statements in Doyle, one could argue that promissory estoppel exists in Illinois but only as a means for obtaining equitable remedies since the term "damages," traditionally refers to only legal remedies.36
Second, ESM and DeWitt could simply be wrong altogether. In DeWitt, Justice Hopkins filed a vigorous dissent over the issue of whether promissory estoppel exists as a cause of action in Illinois.37 In support of his view that promissory estoppel exists as a cause of action in Illinois, Justice Hopkins reasoned as follows. First, he noted that ESM relied on a hornbook, which is only secondary authority, for the proposition that promissory estoppel does not support a cause of action.38 He further noted that the hornbook relied upon by the ESM court
was nearly twenty years old at the time ESM was decided.39 Second, Justice Hopkins noted that the Illinois Supreme Court in Quake allowed a claim for direct relief for damages based on promissory estoppel to go forward.40 Third, Justice Hopkins cited to numerous Illinois cases whereby affirmative causes of action for damages based on promissory estoppel were allowed to proceed.41 Finally, while not noted by Justice Hopkins in his opinion, an argument exists, as alluded to above, that ESM misread the plain meaning of Dobb’s statement in the hornbook. Traditionally, when one says "damages are not available," they could well mean legal remedies only as legal remedies refer to damages.42 Somehow, the ESM court citing to Dobbs applied it to a cause of action generally and not just to legal remedies.
Ultimately, the Illinois Supreme Court will have to resolve the problem because the first appellate district and the fifth appellate district in the cases mentioned above disagree on whether promissory estoppel is a viable cause of action. It’s hard to believe that what we all learned as blackletter law in law school regarding promissory estoppel might not even exist in Illinois, at least as a cause of action for a plaintiff is concerned. It would seem more likely that promissory estoppel would either exist for both legal and equitable remedies or just for equitable remedies. However, the final decision will have to be left to the Illinois Supreme Court to decide.
1 See, footnote 14 below.
2 Quake Construction, Inc. v. American Airlines, Inc., 141 Ill. 2d 281, 565 N.E.2d 990, 152 Ill. Dec. 308 (1990).
3 Id. at 285.
7 Id. at 285-86.
8 Id. at 287.
9 Id. at 286.
10 Id. at 287.
12 Id. at 285, 87.
13 Id. at 285.
14 Id. at 310.
16 Id. at 311.
18 Chatham Surgicore, Ltd. v. Health Care Service Corp., 356 Ill. App. 3d 795, 826 N.E.2d 970, 292 Ill. Dec. 534 (1st Dist. 2005).
19 Id. at 974-77.
20 ESM Development Corp. v. Dawson, 342 Ill. App. 3d 688,693, 795 N.E.2d 397, 277 Ill. Dec. 30 (5th Dist. 2003); DeWitt v. Fleming, 828 N.E.2d 756, 758, 293 Ill. Dec. 446 (Ill. App. 5th Dist. 2005).
21 ESM Development Corporation supra.
22 Id. at 690.
23 Id. at 690-91.
24 Id. at 691.
25 See, id. at 690.
26 Id. at 693.
27 DeWitt, 828 N.E.2d at 760.
28 See, Dumas v. Infinity Broadcasting Corp., 416 F.3d 671, 681 (7th Cir. 2005).
29 Doyle v. Holy Cross Hospital, 186 Ill. 2d 104, 708 N.E.2d 1140, 1147-1150, 237 Ill. Dec. 100 (J. Freeman Concurring and Dissenting).
30 Id. at 1142.
31 Id. at 1144-47 (J. Freeman Concurring and Dissenting).
32 Id. at 1147.
33 Id. at 1148.
34 See, id. at 1149 [citation omitted].
35 Id. at 1148.
36 See e.g., 25 C.J.S. Damages § 1 (2002) (Discussing the general definition of damages in the legal sense).
37 See generally, DeWitt, 828 N.E.2d at 760-63 (J. Hopkins dissenting).
38 Id. at 760.
40 Id. at 761.
41 Id. at 762-63.
42 See, note 36 supra.
William D. Goren, currently an Associate Professor of Legal Studies at Northwestern Business College’s Naperville campus and a member of the DCBA Publication Board, is the author of books and articles on various topics, including but not limited to disability rights, preventive law, sports law, and health law. He is also the author of the book, Understanding the Americans With Disabilities Act: An Overview for Lawyers (American Bar Association 2000, a Second Edition to be published by the ABA is currently in press).