Pickell v. Arizona Components Co.

Citations: 902 P.2d 392; 1994 WL 671401Docket: 93CA1771

Court: Colorado Court of Appeals; September 5, 1995; Colorado; State Appellate Court

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Cynthia Pickell, the plaintiff, successfully claimed promissory estoppel against Arizona Components Company, the defendant, which had offered her employment to induce her to leave her previous job. After a bench trial, the court found that the defendant made promises of better job conditions that reasonably induced Pickell to resign from her prior position. However, two months into her employment, the defendant closed the Denver office and terminated her. The trial court awarded Pickell one year's salary as damages, concluding that one year constituted a reasonable duration for the promises made.

The defendant appealed, arguing that the existence of an at-will employment contract barred Pickell's claim for promissory estoppel, as it implies an enforceable agreement negating her reliance on the defendant's promises. The plaintiff contended that no contract was formed due to incomplete negotiations and argued for the enforceability of the promises based on three theories: they were ancillary to any employment contract, constituted an unconscionable injury, or were supported by special consideration. The court ultimately agreed with the defendant, finding that an at-will employment contract existed, thus dismissing the plaintiff's ability to assert promissory estoppel under her proposed theories. The judgment was affirmed in part and reversed in part.

Plaintiff's argument that there was no contract with the defendant is rejected. In Colorado, employment without a specified duration is typically considered an "at-will" contract, which can be terminated by either party at any time. Evidence indicated that plaintiff's employment was intended to be indefinite, confirming a valid at-will agreement without any essential terms left unagreed upon. 

At-will employment allows termination without cause, but ancillary promises in employment manuals may lead to claims for promissory estoppel if an employee relies on them to their detriment. Plaintiff claims reliance on representations regarding support from a successful Arizona office and additional benefits, such as health insurance and bonuses, as grounds for her estoppel claim. However, the assertion of support from Arizona was not deemed a material term of the employment contract, and evidence showed such support was provided until the Denver office's closure. 

Additionally, claims regarding promised benefits were considered part of the employment contract rather than ancillary promises. The court found no basis for a claim of "unconscionable injury" as defined in previous case law, as the benefits were not separate from the employment terms. Thus, the court concluded that the plaintiff's claims did not support a valid promissory estoppel argument.

An oral employment contract that is not performable within one year is unenforceable under the statute of frauds unless it is written and signed. In this case, the court ruled that the contract was unenforceable despite partial performance and payment, but allowed the plaintiffs to pursue a promissory estoppel claim due to reasonable reliance on representations of future financial benefits, thus providing an equitable remedy. The statute of frauds does not apply to contracts that are indefinite in duration since they can potentially be performed within a year. The court noted that while some dicta suggested at-will contracts might fall under the statute, this case did not conflict with that principle, as it involved an unenforceable oral contract. The plaintiff's argument for a reasonable employment term based on relinquishing prior employment was rejected; mere resignation does not constitute 'special consideration' for a claim of permanent employment. Contracts for permanent employment, defined by various conditions, do not violate the statute of frauds as they can be fulfilled within one year.

Foregoing another job opportunity does not qualify as special consideration, as any employee accepting a new position must reject others. Leaving an at-will job does not meet the criteria for special consideration, as illustrated by the contrast between cases: Moody v. Bogue determined that leaving an at-will position did not provide sufficient consideration, while Collins v. Parsons College held that relinquishing a tenured position did. For the special consideration doctrine to apply, an employee must prove that permanent employment was explicitly offered. In reviewing the case, there was no evidence supporting the trial court's finding that the plaintiff was promised employment for over two months; the plaintiff only testified to an indefinite term. The absence of allegations regarding permanent employment or the permanent status of her previous job led to the conclusion that the special consideration doctrine was not applicable. Consequently, the judgment in favor of the plaintiff was reversed, and the case was remanded for judgment in favor of the defendant. Additionally, the plaintiff's request to amend her complaint to include claims of fraudulent or negligent misrepresentation was denied by the trial court, which has discretion under C.R.C.P. 15(b) to allow such amendments only when the issue has been intentionally tried, not merely based on some relevant evidence presented.

A claim for fraudulent inducement to contract is permissible in an at-will employment context, as it does not conflict with an employer's right to terminate employment at any time, as established in Berger v. Security Pacific Information Systems, Inc. However, in this case, both parties had only agreed to litigate the promissory estoppel claim, while the plaintiff sought to introduce a new claim for fraudulent concealment, which the defendant was not prepared to address. The mention of another employee during cross-examination did not indicate consent to litigate this new issue. Consequently, the court found no abuse of discretion in denying the plaintiff's motion to amend her complaint. The order denying the motion is affirmed, the judgment favoring the plaintiff is reversed, and the case is remanded for a judgment in favor of the defendant. Judges JONES and NEY concur.