Alaska Democratic Party v. Rice

Alaska Supreme Court
934 P.2d 1313 (1997)

ELI5:

Rule of Law:

The doctrine of promissory estoppel can be invoked to enforce an oral contract for employment that would otherwise be unenforceable under the Statute of Frauds, provided that injustice can only be avoided by its enforcement, as outlined in the Restatement (Second) of Contracts § 139.

Facts:

Kathleen Rice was working for the Maryland Democratic Party when Greg Wakefield, the chair-elect of the Alaska Democratic Party (Party), contacted her about serving as his executive director.
In the summer of 1992, after Wakefield's election, he allegedly offered Rice a two-year position as executive director at a salary of $36,000 per year plus benefits.
In the fall of 1992, Rice accepted Wakefield's offer.
In November 1992, in reliance on the job offer, Rice resigned from her position in Maryland, which she claimed could have continued indefinitely, and moved to Alaska.
No written employment contract was ever created between Rice and either Wakefield or the Party.
On February 5, 1993, the Party's executive committee informed Wakefield that he was not permitted to hire Rice.
On February 15, 1993, Wakefield formally notified Rice that she would not be hired for the position.

Procedural Posture:

Kathleen Rice filed suit against the Alaska Democratic Party and Greg Wakefield in the superior court (trial court).
The superior court granted partial summary judgment, dismissing several claims but allowing the promissory estoppel and misrepresentation claims to proceed to trial.
Following a trial, the jury returned a verdict in favor of Rice, awarding her $28,864 on the promissory estoppel claim and $1,558 on the misrepresentation claim.
The superior court denied the Party's and Wakefield's motions for directed verdicts and for judgment notwithstanding the verdict (J.N.O.V.).
The Alaska Democratic Party and Greg Wakefield, as appellants, appealed the judgment to the Alaska Supreme Court.

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Issue:

Does the doctrine of promissory estoppel allow for the enforcement of an oral employment contract for a term longer than one year, which would otherwise be barred by the Statute of Frauds, when a party has substantially relied on that promise to their detriment?

Opinions:

Majority - Rabinowitz, Justice

Yes. The doctrine of promissory estoppel can overcome the Statute of Frauds to enforce an oral employment contract where enforcement is necessary to prevent injustice. The court adopted the Restatement (Second) of Contracts § 139, which allows for the enforcement of a promise, notwithstanding the Statute of Frauds, if the promise induced action or forbearance, and injustice can only be avoided by enforcement. The court reasoned that this approach properly balances the fraud-prevention purpose of the Statute of Frauds with the goal of preventing injustice that underlies promissory estoppel. Rice's reliance on the promise was substantial (resigning and moving across the country), foreseeable, and reasonable, and the jury could properly find that injustice could only be avoided by awarding damages based on the promised employment.

Analysis:

This decision formally establishes in Alaska that promissory estoppel serves as an exception to the Statute of Frauds in the context of oral employment contracts. By adopting the Restatement (Second) of Contracts § 139, the court aligns Alaska with a modern trend that prioritizes preventing injustice over the strict, formalistic application of the Statute of Frauds. This creates a significant precedent, allowing employees who detrimentally rely on oral promises of long-term employment to seek enforcement, provided they can meet the high evidentiary standard of clear and convincing proof required by the Restatement test.

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