## Facts

- Toyota identified the Minneapolis–St. Paul area as a market for two Lexus dealerships and used a three-step process: dealer application/plan, a Lexus division letter of intent (LOI) with conditions, and a final dealership contract after conditions were met.
- Paul Walser and Philip McLaughlin, owners of Bloomington, Minnesota dealerships, sought the proposed Bloomington/Richfield Lexus dealership and submitted an application and dealership plan.
- A Toyota representative told plaintiffs the LOI had been approved and that they were Toyota’s dealer, but about two days later reported that approval had not been finalized, that a mistake had been made, and that more financial information was needed.
- Relying on the initial assurance, plaintiffs purchased property for about $670,000 intended for the dealership; evidence indicated the property’s value was at least $550,000.
- Toyota ultimately did not issue an LOI to plaintiffs and did not grant them the Lexus dealership.
- Plaintiffs sued for breach of contract, promissory estoppel, fraud, and a Minnesota motor vehicle statute claim; the statutory claim was dismissed on summary judgment.
- A jury found for plaintiffs on promissory estoppel and awarded approximately $232,131, reflecting the out-of-pocket loss on the property purchase; plaintiffs sought but did not receive lost-profit damages.

## Issues

1. Whether the trial court erred by limiting promissory-estoppel damages to out-of-pocket reliance losses rather than allowing expectation damages (including claimed lost profits).
2. Whether the trial court erred by refusing to order specific performance compelling Toyota to grant the Lexus dealership as a promissory-estoppel remedy.
3. Whether plaintiffs were entitled to judgment as a matter of law on a contract theory, and whether the contract instructions were erroneous.
4. Whether summary judgment on the Minnesota motor vehicle statute claim and related rulings (costs and a minor payment discrepancy) were erroneous.

## Decision

- The Eighth Circuit affirmed in full.
- The court held the district court acted within its discretion by limiting promissory-estoppel damages to reliance losses measured by the difference between the price paid and the property’s actual value.
- The court held the district court did not abuse its discretion in denying specific performance.
- The court upheld the denial of judgment as a matter of law on the contract claim and found no reversible error in the contract instructions.
- The court affirmed summary judgment for Toyota on the Minnesota motor vehicle statute claim and rejected the remaining challenges.

## Legal Principles

- Under Restatement (Second) of Contracts § 90 as applied in Minnesota, promissory-estoppel relief is equitable and “the remedy granted for breach may be limited as justice requires.”
- A court may limit promissory-estoppel recovery to reliance damages (out-of-pocket expenses) rather than awarding expectation damages, particularly where the alleged deal is uncertain and profits are speculative.
- Specific performance is discretionary and is generally inappropriate when the alleged agreement is preliminary, not reduced to the parties’ contemplated formal writings, or would require ongoing cooperation and business judgment.
- Evidence of a structured, multi-step contracting process (application, LOI, final contract) supports a finding that no binding contract exists absent completion of the required steps.

## Conclusion

The Eighth Circuit held that, even when promissory estoppel is established, a court may limit relief to reliance damages and deny both lost-profit recovery and specific performance where negotiations for a dealership remained preliminary and the claimed expectancy was uncertain.


Walser v. Toyota Motor Sales, U.S.A., Inc., 43 F.3d 396 (8th Cir. 1994)