JOCK SHOCK: BROADCASTER LOSES CONTRACT CLAIMS AGAINST STATION

January 26, 2004

Steven P. Garmisa
Hoey & Farina Attorney

In the case of a radio personality who allegedly quit a job in New Mexico because he believed he had a five-year employment contract in Chicago, U.S. District Judge James F. Holderman -- applying Illinois law -- ruled:

• The exception to the Statute of Frauds for "partial performance" does not apply to a lawsuit for damages.
• There are strict requirements for an alleged "waiver" of the Statute of Frauds.
• The Statute of Frauds applies to claims for promissory estoppel (even though it does not apply to claims for equitable estoppel). Dumas v. Infinity Broadcasting Co., 2003 U.S. Dist. LEXIS 22779 (N.D. Ill., Dec. 17).

Cliff Dumas filed a complaint for breach of contract against Infinity Broadcasting. According to Dumas, he quit his job working for a radio station in New Mexico, and paid for a release of his employment contract, because of an alleged agreement to give him a five-year job at WUSN in Chicago.

Count 2 alleged promissory estoppel. As section 90(1) of the Restatement (Second) of Contracts explains: "(1) 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."

Infinity Broadcasting filed a motion for summary, arguing that both of Dumas' claims are barred by the Statute of Frauds.

Holderman agreed that the Illinois Statute of Frauds applied to the breach of contract claim because Dumas was alleging a five-year employment contract.

While he did not have a written agreement signed by an agent of Infinity, Dumas argued his conduct triggered the "partial performance" exception. As Holderman explained (with various omissions that aren't noted in the quoted text):

"The Illinois Statute of Frauds has no application where a party to an oral contract has substantially performed his part of the agreement. However, the doctrine of part performance has no application to an action at law for damages and, hence, cannot operate to take an alleged oral agreement out of the Statute of Frauds."

The fact that Dumas claimed money damages prevented him from relying on the partial performance exception.

Next, Dumas argued that Infinity waived the Statute of Frauds by allegedly acknowledging the existence and subject matter of the claimed contract. The question for Holderman was what is required to establish waiver of a Statute of Frauds defense under Illinois law.
"In Derby Meadows Utility Co. v. Inter-Continental Real Estate, 202 Ill.App.3d 345 (1st Dist. 1990), the court, in analyzing the plaintiff's claim of waiver, evaluated the evidence to determine whether the defendant had made a judicial admission establishing the existence and subject matter of the alleged contract. The court also noted that Illinois Supreme Court Rule 212 allowed the use of discovery depositions to establish admissions to the same extent as any other admission made by that person.

"The court determined that any admission regarding a contract and its subject matter must be 'clear unequivocal and within that party's personal knowledge.' The court ruled against the plaintiff's argument of waiver.

"First, the court ruled that defendant's admissions in the pleadings did not sufficiently establish that a contract existed. Next, the court expressed doubt as to whether the plaintiff could utilize the deposition testimony of defendant's employee that was taken in separate litigation, but eventually decided that the defendant's reference to the agreement with plaintiff as a 'deal' in a deposition, even if considered, 'was not an unequivocal statement regarding the existence of a contract.'

"Accordingly, the court ruled that defendant had not waived the statute of frauds as a defense.

"In making its decision, the court in Derby Meadows Utility Co. relied on two other Illinois Appellate Court cases finding that the defendant had waived the Statute of Frauds. See Whildin v. Kovacs, 93 Ill.App.3d 582 (1st Dist. 1981); Haas v. Cravatta, 71 Ill.App.3d 325 (2d Dist. 1979). In both Whildin and Haas, the courts determined that the defendants had waived the Statute of Frauds as a defense because the defendants admitted the validity of the alleged contract in their pleadings."

Based on his analysis of Illinois cases, Holderman concluded that under Illinois law "waiver of the statute of frauds as a defense can only be accomplished by an admission either in the pleadings, a request for admission, or otherwise during a judicial proceeding.

"To rule otherwise would substantially weaken the Statute of Frauds requirement of sufficient writings because a plaintiff who was unable to meet that requirement could simply argue that the writings (insufficient to satisfy the Statute of Frauds) established waiver."

Applying this rule, Dumas was unable to prove waiver of the Statute of Frauds.

The final question was whether the Statute of Frauds applies to a claim for promissory estoppel.

"During the latter part of the last century," Holderman recounted, "there was an ongoing debate in both the state and federal courts of Illinois, including the [7th U.S. Circuit Court of Appeals], about whether Illinois law applied the Statute of Frauds to bar a promissory estoppel claim that was based on the same facts as a breach of contract claim barred by the statute of frauds. See Goldstick v. ICM Realty, 788 F.2d 456, 464-66 (7th Cir. 1986).

"In Goldstick, the 7th Circuit 'guessed (a word used deliberately) that [the Illinois Supreme Court] would hold the Statute of Frauds applicable to promissory estoppel (since to do otherwise would require the court to overrule two of its decisions).'

"Then, in Architectural Metal Inc. v. Consolidated Inc., 58 F.3d 1227, 1231 (7th Cir. 1995), the 7th Circuit stated 'the view tentatively adopted in [Goldstick has] since [been] confirmed by two decisions of the Illinois Appellate Court.' These two decisions are: First National Bank v. McBride Chevrolet Inc., 267 Ill.App.3d 367 (4th Dist. 1994), and Dickens v. Quincy College Corp., 245 Ill.App.3d 1055 (4th Dist. 1993), which both directly held that the Statute of Frauds applies to promissory estoppel claims.

"Finally, in Fischer v. First Chicago Capital Markets Inc., 195 F.3d 279, 284 (7th Cir. 1999), the 7th Circuit held that 'under Illinois law, the Statute of Frauds is applicable to a promise claimed to be enforceable by virtue of the doctrine of promissory estoppel.' This ruling by the 7th Circuit was consistent with a number of Northern District of Illinois courts, which have also held that Illinois law applies the Statute of Frauds to promissory estoppel claims."

Applying these cases, Holderman concluded the claim for promissory estoppel is barred by the Statute of Frauds.

"It is true," Holderman noted, "that Illinois law does not apply the Statute of Frauds to equitable estoppel claims. However, plaintiff has never alleged a claim for equitable estoppel, and even now maintains that his claim is for promissory estoppel."

Having alleged promissory estoppel (not equitable estoppel), both counts of Dumas' claim were barred by the Statute of Frauds.

Back to Trial Notebook Main page