## Facts

- Dennis E. Walters and Betty L. Walters, doing business as Denny’s Food Mart, sought a gasoline supply arrangement for a combination food store and service station in Indianapolis.
- In late December 1978, Dennis Walters contacted Marathon Oil Company about supplying the location.
- Relying on Marathon’s promises and ongoing negotiations, the Walters purchased the service station site in February 1979 and made improvements.
- The Walters submitted their proposal to Marathon along with a three-party agreement signed by the Walters and Time Oil Company (the prior supplier).
- After receiving the proposal but before accepting it, Marathon imposed a moratorium on new dealership/seller applications and refused to sign the three-party agreement.
- After Marathon’s refusal, the Walters contacted Shell Oil, Standard Oil of Indiana, and Texaco about becoming suppliers, and also sought supply from Time Oil, which declined.
- Following a bench trial, the district court found Marathon liable on promissory estoppel and awarded damages including $22,000 in first-year lost profits (projected 370,000 gallons at $0.06 per gallon), based on expert testimony.
- On appeal, Marathon did not contest promissory-estoppel liability, challenging only the lost-profits measure and mitigation.

## Issues

1. In a promissory estoppel action, may the court award damages measured by anticipated lost profits from the business arrangement the promisor induced and then refused to proceed with?
2. Did the Walters fail to take reasonable steps to mitigate damages after Marathon refused to supply gasoline?

## Decision

- The Seventh Circuit affirmed the district court’s judgment.
- The court upheld the award of lost profits as an appropriate remedy on the record presented.
- The court held the Walters reasonably mitigated their damages by pursuing alternative suppliers, and it rejected the argument that they were required to re-approach Marathon.

## Legal Principles

- Promissory estoppel permits flexible remedial choices to prevent injustice; damages are not categorically limited to reliance expenditures.
- Lost profits may be awarded in promissory estoppel when necessary to achieve a just result and when profits are supported by sufficient proof, including expert testimony, and are a foreseeable consequence of the broken promise.
- Mitigation requires reasonable efforts under the circumstances, not every conceivable effort; whether mitigation is adequate is a fact-bound determination reviewed deferentially on appeal.

## Conclusion

The court affirmed a promissory-estoppel judgment allowing expectation-type relief in the form of reasonably proven lost profits and held that the plaintiffs’ efforts to secure alternative gasoline suppliers satisfied the duty to mitigate.


Walters v. Marathon Oil Co., 642 F.2d 1098 (7th Cir. 1981)