Facts
- Tour Costa Rica (TCR), a newly formed tour operator owned by Leigh Monahan, negotiated with Country Walkers, Inc. (CW), a Vermont tour company owned by Robert Maynard, to develop and run customized Costa Rican walking tours.
- Monahan communicated that TCR’s limited resources required a longer-term commitment before it could afford to develop specialized tours for CW.
- The parties reached an oral understanding that TCR would design, arrange, and lead CW’s Costa Rican tours for 1995 through 1997.
- In reliance, TCR performed substantial preparatory work, including scouting routes, arranging hotels and transportation, researching safety and medical resources, and preparing brochure copy and itineraries.
- TCR ran two CW tours in March and April 1995, and the parties later discussed and scheduled approximately eighteen tours for 1996–1997.
- Because of its limited capacity, TCR stopped advertising and pursuing other tour opportunities while working with CW.
- In August 1995, CW informed TCR it was canceling all tours scheduled after April 1995 because CW would use another company.
- TCR canceled arrangements for multiple planned tours and could not replace the lost business in time for the season.
- TCR sued for, among other theories, promissory estoppel, seeking anticipated profits from canceled tours; the jury found for TCR on promissory estoppel and awarded $22,520 in expectation damages.
- After trial, CW and Maynard sought judgment as a matter of law under V.R.C.P. 50(b); the trial court denied the motion.
Issues
- Whether the evidence was sufficient to support promissory estoppel (a clear promise, foreseeable and reasonable reliance, actual reliance, and enforcement necessary to avoid injustice).
- Whether expectation damages, including lost profits, are available in a promissory estoppel action and whether the $22,520 award was supported by the evidence.
- Whether defendants preserved their objection to a jury instruction permitting expectation damages, and if not, whether any unpreserved error warranted reversal.
Decision
- The Vermont Supreme Court affirmed the denial of judgment as a matter of law and the judgment on the verdict.
- The evidence, viewed most favorably to TCR, permitted the jury to find a sufficiently definite promise of a continuing commitment for CW’s Costa Rican tours and reasonable, detrimental reliance by TCR.
- The court held that expectation damages may be awarded for promissory estoppel when justice requires, and the jury’s award of $22,520 in anticipated profits was supported by the record.
- Any challenge to the expectation-damages instruction was waived for failure to properly object at trial; no plain error required reversal.
Legal Principles
- Promissory estoppel requires proof of: (1) a promise; (2) reasonable expectation that the promise will induce action or forbearance; (3) induced action or forbearance; and (4) injustice avoidable only by enforcing the promise.
- A promise may be found sufficiently definite for promissory estoppel based on surrounding negotiations and subsequent scheduling and performance consistent with an ongoing commitment.
- Reliance may be shown by a party restructuring its business and forgoing other opportunities in a manner foreseeably induced by the promise.
- Remedies for promissory estoppel are flexible; expectation damages, including lost profits, may be appropriate where the promise is functionally contractual and such damages are necessary to prevent injustice.
- A party must preserve objections to jury instructions at trial; otherwise appellate review is limited, and reversal requires plain error.
Conclusion
The Vermont Supreme Court upheld a jury verdict enforcing an oral tour-operations commitment under promissory estoppel and confirmed that, when needed to avoid injustice and supported by evidence, a promissory estoppel plaintiff may recover expectation damages including lost profits.