## Facts

- Mel T. Nelson, president and sole shareholder of Metro Auto, Inc. and Metro Toyota, Inc., sought to sell or refinance his dealerships amid financial distress; GMAC financed both dealerships.
- Nelson, through a broker, negotiated with John A. Elway, Jr. and Rodney L. Buscher for purchase of the dealerships and related real estate.
- The parties executed written buy-sell and real estate agreements setting a closing date; the written agreements contained merger clauses stating they were the complete and exclusive agreements and superseded prior negotiations.
- Nelson alleged the buyers also orally agreed to a separate “Service Agreement” under which they would pay Nelson $50 per vehicle sold by the dealerships for seven years as deferred compensation.
- GMAC imposed controls over the dealerships and informed the parties that Nelson was not to receive sale proceeds beyond what GMAC allowed.
- After GMAC’s position, the buyers refused to sign or honor the Service Agreement; it was never executed and was not included in the written closing documents.
- Nelson closed under the written agreements and later sued when the buyers did not make the $50-per-vehicle payments.

## Issues

1. Whether merger clauses in fully integrated written buy-sell agreements barred enforcement of an alleged prior or contemporaneous oral Service Agreement.
2. Whether Nelson’s conduct constituted part performance sufficient to avoid statute-of-frauds and integration barriers to enforcing the alleged oral Service Agreement.
3. Whether promissory estoppel could apply where the alleged promise to pay was expressly conditional on GMAC approval and the condition did not occur.
4. Whether summary judgment was proper on Nelson’s related tort and equitable claims (fraud/misrepresentation, dual agency, civil conspiracy, and punitive damages).

## Decision

- The Colorado Supreme Court affirmed summary judgment for defendants on breach of contract, fraud and misrepresentation, dual agency, civil conspiracy, and punitive damages.
- The Court reversed the court of appeals on promissory estoppel and held defendants were entitled to summary judgment on that claim as well.
- The result was judgment for defendants on all claims as a matter of law.

## Legal Principles

- A fully integrated written agreement containing a merger clause generally supersedes prior negotiations and bars enforcement of inconsistent alleged oral side agreements.
- Part performance will not remove an alleged oral agreement from statute-of-frauds or related enforcement limits unless the performance is substantial and exclusively referable to the alleged oral contract; conduct explainable by the written agreements does not satisfy that standard.
- Promissory estoppel requires reasonable, justifiable reliance; reliance is unreasonable as a matter of law when the promise is expressly subject to a condition that does not occur (consistent with Restatement (Second) of Contracts § 91).
- When the condition to a conditional promise fails, the promised obligation does not mature, and proceeding in the face of the failed condition does not create promissory-estoppel liability.

## Conclusion

The court held that the parties’ integrated written sale documents foreclosed enforcement of a claimed oral payment arrangement, and that promissory estoppel failed because any reliance on a promise conditioned on GMAC approval was unreasonable once that approval did not occur, warranting summary judgment for defendants on every claim.


Nelson v. Elway, 908 P.2d 102 (Colo. 1995)