W.R. Grace & Co. v. Taco Tico Acquisition Corp.
454 S.E.2d 789 (1995)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A party cannot recover on a claim of promissory estoppel when a written agreement contains an express disclaimer of reliance on any promises pending a final executed agreement. Furthermore, a claim for quantum meruit is precluded when a valid, express contract governs the compensation for the services rendered.
Facts:
- Taco Tico Acquisition Corporation ('Taco Tico') and W. R. Grace & Co.-Conn. ('Del Taco') were competing fast-food Mexican restaurant operators.
- In 1990, Taco Tico began negotiations to acquire Del Taco.
- In August 1990, the parties executed a non-binding letter of intent that outlined the proposed acquisition terms.
- The letter of intent contained a clause stating it was non-binding and that no party would be under any legal obligation or could rely on any representations until a final, formal agreement was executed by all parties.
- On the same date, the parties executed a separate management services agreement, under which Taco Tico agreed to manage Del Taco's operations for a fee of $10 per month while acquisition negotiations were ongoing.
- Taco Tico began managing Del Taco's operations pursuant to the management agreement.
- Due to changing economic conditions, Taco Tico proposed new acquisition terms that differed from the letter of intent.
- Ultimately, Del Taco informed Taco Tico that the acquisition would not proceed and terminated the management agreement.
Procedural Posture:
- Taco Tico sued Del Taco in a Georgia trial court, asserting claims including fraud, rescission, promissory estoppel, and quantum meruit.
- The trial court granted summary judgment to Del Taco on some claims, and the remaining claims proceeded to a jury trial.
- A jury found for Del Taco on the fraud and rescission claims but awarded damages to Taco Tico on its promissory estoppel and quantum meruit claims.
- The trial court denied Del Taco's motion for a directed verdict, which asked the judge to rule that Taco Tico's claims failed as a matter of law.
- Del Taco (appellant) appealed the judgment on the promissory estoppel and quantum meruit claims to the Court of Appeals of Georgia.
- Taco Tico (appellee) did not appeal the adverse verdicts on its other claims.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Can a party recover damages under theories of promissory estoppel and quantum meruit when the parties' relationship is governed by written agreements that (1) expressly disclaim reliance on any promises regarding a future transaction and (2) specify the exact compensation for services rendered?
Opinions:
Majority - Birdsong, Presiding Judge
No. A party cannot recover under promissory estoppel or quantum meruit under these circumstances. For the promissory estoppel claim to succeed, Taco Tico's reliance on Del Taco's promises to complete the deal must have been reasonable. However, the letter of intent contained an explicit disclaimer stating that neither party could rely on any representations until a final agreement was executed. This contractual disclaimer makes any subsequent reliance by Taco Tico unreasonable as a matter of law. Regarding the quantum meruit claim, this equitable remedy is only available in the absence of an express contract. Here, the parties executed a specific management services agreement that fixed Taco Tico's compensation at $10 per month. Because a valid, express contract governed the services provided, there can be no recovery in quantum meruit.
Analysis:
This decision solidifies the legal power of disclaimer and no-reliance clauses in preliminary business agreements like letters of intent. It demonstrates that courts will strictly enforce such clauses among sophisticated parties, effectively shielding them from claims of promissory estoppel based on informal or oral assurances made during negotiations. The ruling also reinforces the fundamental contract principle that quasi-contractual remedies, such as quantum meruit, are not available when an express, written contract governs the specific subject matter of the dispute. This provides certainty for commercial entities, assuring them that the terms they explicitly bargain for will be upheld.
Unlock the full brief for W.R. Grace & Co. v. Taco Tico Acquisition Corp.