Terminated at Will Employee Promissory Estoppel Claim
The United States District Court for the Middle District of Alabama has certified to this Court the following questions, pursuant to Rule 18, Ala. R. App. P.:
"(1) Under Alabama law, may a terminated at-will employee who prevails on a promissory estoppel claim which does not alter his at-will status recover lost wages and benefits for the period after the termination of his employment?
"(2) Under Alabama law, may a terminated at-will employee who prevails on a promissory estoppel claim which does not alter his at-will status recover damages for mental anguish arising from the termination of his employment?"
The doctrine of promissory estoppel should not be used as a basis for awarding damages that would not, under general principles of contract law, be recoverable in an action for breach of contract.
Otherwise, the plaintiff in an action founded on promissory estoppel would be in a better position than if he had been entitled to recover in an action on a contract. See Deli v. University of Minnesota, 578 N.W.2d 779, 783 (Minn. Ct. App. 1998) ("Because promissory estoppel is a contract-based claim, to recover emotional distress damages, Deli was required to plead and prove the existence of an independent tort.").
Our law also requires that the plaintiff prove an independent tort in order to recover damages for mental anguish in an employment setting. In Hobson v. American Cast Iron Pipe Co., 690 So. 2d 341 (Ala. 1997), we stated: "This Court has not recognized claims for emotional distress in an employment case.
In fact, it has stated: 'No recovery has ever been allowed for mental distress arising from the wrongful discharge of an employee in breach of an employment contract.'" Id. at 344, citing Southern Medical Health Systems, Inc., v. Vaughn, 669 So. 2d 98 (Ala. 1995). Surely, as an employee at will,
We will consider the extent to which lost wages can form a component of damages under the facts stated by the district court, assuming the plaintiff prevails on his promissory-estoppel theory.
While Alabama has accepted the doctrine of promissory estoppel, as it is stated in Restatement (First) of Contracts 90 (1932), see Dixieland Food Stores, Inc. v. Geddert, 505 So. 2d 371 (Ala. 1987), this Court has not had occasion to determine the scope of the damages recoverable under this doctrine.
We are impressed with the analysis in Remes v. Nordic Group, Inc., 169 Vt. 37, 726 A.2d 77, 79-80 (1999), where the Supreme Court of Vermont stated:
"Vermont courts have in the past allowed compensatory or reliance damages in promissory estoppel cases. See Foote v. Simmonds Precision Products Co., 158 Vt. 566, 613 A.2d 1277 (1992); Stacy v. Merchants Bank, 144 Vt. 515, 521-22, 482 A.2d 61, 64-65 (1984). We have never suggested, however, that promissory estoppel damages are coextensive with full contractual remedies.
See 3 E. Holmes, Corbin on Contracts 8.11 (1996) (promissory estoppel remedy is not necessarily co-extensive with damages for breach of contract). the nature of damages afforded must correlate to the nature of the action brought.
"Promissory estoppel, as the term itself suggests, does not derive exclusively from legal origins; it has equitable as well as legal aspects.
"'The protean doctrine of "promissory estoppel" eludes classification as either entirely legal or entirely equitable, and the historical evidence is equivocal. It is clear, however, that both law and equity exert gravitational pulls on the doctrine, and its application in any particular case depends on the context in which it appears.'
" Merex A.G. v. Fairchild Weston Sys., Inc., 29 F.3d 821, 825 (2d Cir. 1994) (comparing promissory estoppel under Restatement (Second) of Contracts 90, 139 (1981)).
The mixed nature of promissory estoppel has led courts to treat the corresponding damages flexibly. See, e.g., id. at 826 (court retains discretion to award relief to avoid injustice); 3 Holmes, supra, 8.8, 8.11 (doctrine of promissory estoppel may justify either equitable remedy or judgment for damages; promissory estoppel remedy is equitably molded ad hoc for each case according to dictates of good faith, conscience and justice).
A remedial order in a promissory estoppel case must be fashioned carefully to achieve fairness to all parties according to the circumstances of a particular case. See Kiely v. St. Germain, 670 P.2d 764, 767 (Colo. 1983).
While a full range of legal damages may be available, promissory estoppel plaintiffs are not necessarily entitled to them as of right. See id. (interests of justice sometimes best served by partial, rather than total, enforcement of promise); Restatement (Second) of Contracts 90 cmt. d (full-scale enforcement by normal contractual remedies often appropriate for promise binding under this section, but relief may be limited).
"An award of prejudgment interest in a wrongful termination case serves to compensate plaintiff for the lost use of money that plaintiff otherwise would have earned. See Chandler v. Bombardier Capital, Inc., 44 F.3d 80, 83 (2d Cir. 1994).
Since prejudgment interest constitutes a part of the normal remedy in such cases, see Restatement (Second) of Contracts 354(1) cmt. c, illus. 7 (1981) (providing for prejudgment interest for damages in wrongful discharge suit), it is likewise available, under the court's discretion, in molding the relief that justice requires in a promissory estoppel case. Merex, 29 F.3d at 826.
We now adopt this approach and hold that promissory estoppel damages should be discretely designed as corrective relief to rectify the wrong committed in a particular case. See Holmes, supra, 8.8.
We conclude that in this case it was within the trial court's discretion to award prejudgment interest. Our conclusion obviates the need to address whether prejudgment interest should have been awarded here as a matter of right.
We nevertheless note that in a promissory estoppel case the question of interest may be more properly committed to the sound discretion of the trial court than awarded as of right given the mixed legal and equitable nature of the claim."