Stearns v. Emery-Waterhouse Co.
596 A.2d 72 (1991)
Rule of Law:
In the context of an oral employment contract for a term greater than one year, an employee's detrimental reliance (promissory estoppel) is insufficient to overcome the statute of frauds defense. To enforce such a contract, the employee must provide a written agreement or prove the employer's fraudulent conduct by clear and convincing evidence.
Facts:
- At age fifty, Timothy Stearns was a 27-year employee of Sears, earning approximately $99,000 annually.
- In December 1984, Charles Hildreth, president of Emery-Waterhouse Co., met with Stearns to discuss hiring him to run the company's retail stores.
- Following their discussions, Hildreth gave Stearns an oral promise of employment until he reached age fifty-five, at a guaranteed annual salary of $85,000.
- In reliance on this oral promise, Stearns resigned from his long-term position at Sears and moved from Massachusetts to Maine.
- Stearns worked for Emery-Waterhouse for nearly two years, first in his original role and then in a different position at a lower salary.
- Emery-Waterhouse subsequently eliminated Stearns's position and terminated his employment before he reached the age of fifty-five.
Procedural Posture:
- Timothy B. Stearns filed a complaint for breach of contract against Emery-Waterhouse Co. in the Superior Court of Cumberland County, Maine.
- The trial court denied Emery-Waterhouse's motion for summary judgment, which was based on the statute of frauds defense.
- At trial, a jury returned special findings establishing the existence of an oral contract and its breach by Emery-Waterhouse.
- The trial court judge, applying an estoppel theory, found in favor of Stearns and awarded him damages.
- Emery-Waterhouse, the defendant-appellant, appealed the judgment to the Supreme Judicial Court of Maine.
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Issue:
Does an employee's detrimental reliance on an oral promise of employment for a term greater than one year prevent the employer from asserting the statute of frauds as a defense to a breach of contract claim?
Opinions:
Majority - Roberts, Justice
No. An employee's reliance on an oral promise of employment for a term exceeding one year does not estop the employer from asserting the statute of frauds. To overcome the statute's requirement for a written contract, an employee must prove the employer engaged in fraudulent conduct. The court declined to adopt the promissory estoppel theory from Restatement (Second) of Contracts § 139 in the employment context, reasoning that it would contravene the policy of the statute of frauds, which is to prevent fraudulent claims. The court found it is too easy for a disgruntled employee to allege reliance, and difficult to distinguish such reliance from the ordinary preparations for any new job. Therefore, the focus must be on the employer's conduct (i.e., fraud) rather than the employee's reliance. Since Stearns did not allege or prove fraud by Emery-Waterhouse, his claim for breach of the oral contract is barred by the statute of frauds.
Analysis:
This decision reinforces a strict interpretation of the statute of frauds in the employment context within Maine, explicitly rejecting the more flexible approach of the Restatement (Second) of Contracts § 139. By refusing to allow promissory estoppel to overcome the statute, the court sets a high bar for employees seeking to enforce multi-year oral contracts. This precedent significantly strengthens an employer's ability to rely on the statute of frauds as a defense, compelling employees to secure long-term employment agreements in writing. The ruling prioritizes the statute's goal of preventing fraudulent claims over the potential injustice to an employee who detrimentally relied on an oral promise.
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