Opinion
No. C0-98-2303.
Filed June 8, 1999.
An Appeal from the Ramsey County District Court, No. CX-98-4703.
Lawrence P. Schaefer, James R. Behrenbrinker, Lisa C. Stratton, (for appellants)
Peter S. Hendrixson, Robert R. Reinhart, Jr., Max C. Heerman, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellants challenge the district court's entry of judgment and related order granting respondent's Rule 12 motion to dismiss their promissory estoppel and fraudulent misrepresentation claims. Respondent counters that appellant's remaining breach of contract claim should also be dismissed. We affirm in part, reverse in part, and remand.
FACTS
Appellants, John Martens and Gerald Niles are scientists who have been employed by Minnesota Mining and Manufacturing Company (3M) for 30 and 34 years respectively. According to appellants, combined they claim patents for more than 40 useful and profitable products. They allege that 3M created and promoted a Dual Ladder System, which enables technical employees to achieve the same benefits and income increases as management employees. Appellants argue that this Dual Ladder System has been in place since the mid-1950's and that a binding contract has been created by written and oral statements that 3M made to its technical employees regarding this system. Appellants argue that they were induced by these knowingly false statements to stay with the company and continue their research for long-term benefits that never materialized.
The district court dismissed all but one count in the amended complaint, leaving only the breach of contract claim. Appellants now seek the reinstatement of the promissory estoppel and fraudulent misrepresentation claims. In contrast, respondent filed notice of review to have the remaining claim for breach of contract reviewed to determine if the complaint states a claim upon which relief can be granted. Therefore, we address the three disputed claims: promissory estoppel, fraudulent misrepresentation, and the breach of contract claim.
DECISION
A claim will prevail against a motion to dismiss on any evidence that might be produced consistent with complainant's theory to grant the relief demanded. Northern States Power Co. v. Franklin , 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963). All assumptions, conclusions, and inferences must favor the party against whom the dismissal is sought. Id. at 396, 122 N.W.2d at 30. When considering questions of law, a reviewing court is not bound by and need not give deference to a district court's determination. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n. , 358 N.W.2d 639, 642 (Minn. 1984).
Promissory Estoppel
It appears that the district court dismissed the promissory estoppel claim because it determined that recovery on a promissory estoppel claim is incompatible with recovery on a contract claim. However, counsel may raise distinctly different claims for relief that are based on different facts and legal theories. Musicland Group, Inc. v. Ceridian Corp. , 508 N.W.2d 524, 535 (Minn.App. 1993) review denied (Minn. Jan. 27, 1999) (citing Hensley v. Eckerhart , 461 U.S. 424, 431, 103 S.Ct. 1933, 1938 (1983). Under Minnesota law, the pleading of broad general statements that may be conclusory is permitted. Barton v. Moore , 558 N.W.2d 746, 749-50 (Minn. 1997) (citing Northern States Power Co. , 265 Minn. at 394, 122 N.W.2d at 29).
The district court's reasoning for dismissing the promissory estoppel claim is in error. Promissory estoppel operates to imply a contract in law where none exists in fact. Deli v. University of Minn. , 578 N.W.2d 779, 781 (Minn.App. 1998) review denied (Minn. July 16, 1998). Under the doctrine of promissory estoppel, a promise may be enforced where (1) clear and definite; (2) the promissor intended to induce the promisee to rely on the promise; (3) the promisee detrimentally relied on the promise; and (4) enforcement of the promise is required to prevent an injustice. Id. When a promise is not in plain contradiction of a contract or, if contradictory, when it is accompanied by misrepresentations of other material facts, the question of reasonable reliance is for the trier of fact. Johnson Bldg. Co. v. River Bluff Dev. Co. , 374 N.W.2d 187, 194 (Minn.App. 1985) review denied (Minn. Nov.18, 1985). At this early stage in the case, the promissory estoppel claims should remain because (1) the contract issue is yet to be decided, (2) appellants' allegations must be accepted as true, and (3) because respondent's argument on reliance is misplaced, as reliance is an issue to be determined by the trier of fact. Therefore, the district court's decision regarding promissory estoppel is reversed.
Fraud
Appellants argue that they were defrauded and induced to stay at 3M and convinced not to seek other employment opportunities. They also argue that they were defrauded out of actual salary dollars and benefits equivalent to those of the managers on the opposite side of the Dual Ladder, as they were promised.
Fraud is distinguished from negligence by the element of scienter required. Fraud is an intentional tort and scienter is an essential element. We have stated that a representation is made with fraudulent intent when it is known to be false or, in the alternative, when it is asserted as of the representer's own knowledge when he or she does not in fact know whether it is true or false.
Florenzano v. Olson , 387 N.W.2d 168, 173 (Minn. 1986) (citations omitted). Appellants have set forth facts establishing a legally sufficient cause of action for fraudulent misrepresentation. 3M's argument that appellants were not defrauded out of something to which they were entitled is yet to be determined. If appellants' allegations are correct, then they are entitled to the damages, either through the Dual Ladder System, which created a binding contract or, in lieu of a contract, through the equitable remedy of promissory estoppel. It is immaterial to our consideration here, on a motion to dismiss, whether the plaintiff can actually prove the facts alleged. Elzie v. Commissioner of Pub. Safety , 298 N.W.2d 29, 32 (Minn. 1980). The district court found that the alleged misrepresentations are not statements of past or present fact susceptible of knowledge. A misrepresentation is susceptible of knowledge if respondent knew, or should have known, the truth of its statement. See Nave v. Dovolos , 395 N.W.2d 393, 397 (Minn.App. 1986) (reasoning that because the home seller had recently replaced carpets, he knew, or should have known, the condition and quality of the flooring).
The district court found that appellants failed to establish a misrepresentation of a past or present fact where they allege only that a statement of intent to act in the future was made. Kramer v. Bruns , 396 N.W.2d 627, 631 (Minn.App. 1986). Although a statement may not give rise to an action for fraud, such a statement may be actionable if the one making the statement is relied upon for his expertise with respect to the subject of the statement. Midland Nat. Bank v. Perranoski , 299 N.W.2d 404, 412 (Minn. 1980) (finding that even though a statement about an investment was not a past or present fact, since speaker held himself out as an expert his statement could be actionable). In Lampert Lumber Co. v. Ram Construction , the court held:
We conclude the trial court correctly found "Boever's representations had to do with past or present facts which were material to Lampert and were susceptible to knowledge." Boever did not merely promise to pay in the future, but instead represented he had not received sufficient monies from the Amhoist Tower owners to pay respondent. That statement concerns a past or present fact.
Lampert Lumber Co. v. Ram Constr. , 413 N.W.2d 878, 881 (Minn.App. 1987).
3M's contemporaneous state of mind when making the representation is a present fact susceptible of knowledge for fraud purposes. See Restatement of Torts § 525,530 and comments (a misrepresentation of fact extends to intentions regarding future actions). Additionally, the Eighth Circuit explained that
[T]he failure to carry out * * * a promise, with nothing more, does not constitute fraud; there must be affirmative evidence that, when the maker made the promise, he or she had not intention of keeping it.
Exeter Bancorporation, Inc. v. Kemper Securities Group, Inc. , 58 F.3d 1306, 1312 (8th Cir. 1995). The allegations of misrepresentation are sufficient because we take the facts in the light most favorable to appellant. We find that the fraud claim should proceed to discovery and reverse the district court's decision regarding fraudulent misrepresentation.
Contract Claim
3M's claim that established legal doctrine would be extended in dramatically new directions is simply overreaching. Pine River State Bank v. Mettille , 333 N.W.2d 622, 630 (Minn. 1983), held that procedural restraints on termination of employees contained in employee handbook were contractually binding on employer, and employee was wrongfully terminated contrary to those provisions. Appellants cite this case to demonstrate that a handbook or other document may form the basis for a unilateral contract altering the terms of the employment relationship. Numerous cases since Pine River hold employers or employees bound or obligated by terms used in employee handbooks and manuals. Feges v. Perkins Restaurant, Inc. , 483 N.W.2d 701, 707-08 (Minn. 1992); Holman v. CPT Corp. , 457 N.W.2d 740, 743-44 (Minn.App. 1990). Moreover, oral statements can form the basis of a contract. Id.
There are three basic requirements for the formation of an employment contract: (1) there must be an offer that is definite in form and communicated to the employee; (2) the employee must accept the offer; and (3) the employee must supply consideration. Fitzgerald v. Norwest Corp. , 382 N.W.2d 290, 292 (Minn.App. 1986). Since the Pine River decision, the second and third requirements have been somewhat relaxed. Edwards v. Hennepin County , 397 N.W.2d 584, 586 (Minn.App. 1986). In the case of unilateral contracts, created through operation of an employee handbook, "the employee's retention of employment constitutes acceptance of the offer while continuance of employment supplies all necessary consideration." Id. Yet the offer must be definite in form and must be communicated to the offeree. Id. Further, the determination of whether a proposal is meant to be an offer for contract is governed by the outward manifestations of the parties, not by their subjective intentions. Id.
Appellants continued their employment. Because retention of employment constitutes acceptance of the offer while continuance of employment supplies all necessary consideration, all that is left to prove is the offer itself. The decisive question is whether the information was communicated to the employee, who was seeking to invoke its provisions, in a way that objectively manifests an offer to contract for employment. This is a question of fact for the fact finder to determine. Feges , 483 N.W.2d at 707. Therefore, this claim also passes the motion to dismiss stage. The district court's decision regarding the contract claim is affirmed.
Finally, 3M raises a statute of limitations claim, this claim is new on appeal and was not addressed by the trial court. Therefore, we decline to address the issue. Thiele v. Stich , 425 N.W.2d 580, 582 (Minn. 1988).