Lead Opinion
Eric Steven Bower sued Ultramontane Associates (Ultramontane), its president, E. Michael Jones, and its business manager, Ruth Jones, for breach of an employment contract, breach of an oral agreement to put that contract into writing, fraud, and promissory estoppel. The district court granted summary judgment for the defendants on the breach of the oral agreement, fraud, and promissory estoppel claims, and dismissed the claim for breach of an employment contract on statute-of-frauds grounds. The court thereafter denied Bower’s motion to amend his second amended complaint to add a modified breach-of-employment-contract claim and a claim for equitable estoppel. Bower appeals each of these rulings. We affirm in part, reverse in part, and remand.
I. BACKGROUND
In May of 1988 E. Michael Jones contacted Bower about joining his firm as the Publisher for Fidelity, a magazine produced by Ultramontane. Bower, who was employed at the time but looking for a new job, accepted the offer after negotiating with Jones over an incentive program, as well as the usual terms of employment, including salary, expenses, and vacation time. Bower asked Jones to memorialize the oral agreement in a written contract, which he agreed to do. Later that month Jones displayed to Bower a draft agreement containing the terms they had discussed. However, when Bower began work on June 1, 1988, the final written contract was not ready. During the next few weeks Bower repeatedly asked for the written contract, but Jones, though assuring him that a contract was forthcoming, said that one would not be ready for a while because his attorney was on vacation and needed more time to work on it.
Accepting this explanation, Bower stayed at Ultramontane, letting another job offer (with a higher salary but without an incentive program) lapse. Much of Bower’s time at Ultramontane was devoted to preparing a grant proposal to publish a book about the University of Notre Dame.
Bower thereafter filed a complaint against Ultramontane, Michael Jones, and Ruth Jones, claiming that they had committed fraud in luring him to the company with false promises of a guaranteed one-year term of employment and a written contract, just so they could take advantage of his writing skills and professional contacts in order that they might obtain the grant, and thereafter discharge him before he received his agreed-upon share of the grant proceeds. He further alleged a breach of contract as to the promised one year of employment.
The court dismissed the contract count, finding that the employment contract was unenforceable because it was oral and could not be performed within a year of its making, and thus failed to satisfy Illinois’ version of the statute of frauds. Ill.Rev. Stat. ch. 59, § 1. Bower filed a second amended complaint, reiterating the fraud charge and adding counts based on breach of the oral agreement to put the employment contract into writing and promissory estoppel. The court granted summary judgment to the defendants on all three claims, relying primarily oh one case, Sinclair v. Sullivan Chevrolet Co.,
Reacting to this decision, Bower sought leave to amend his second amended complaint by adding two new counts. The first, Count VIII, was for breach of the employment contract. The contract alleged herein is different from that alleged in Bower’s first amended complaint, which the court had dismissed. It has fewer terms and conditions of employment, and Bower apparently believed that the contract in Count VIII could satisfy the statute of frauds, even though the more elaborate contract alleged in his first complaint had not done so. The second addition, Count IX, was for equitable estoppel. Bower argued that this should apply to prevent the use of the statute of frauds as a bar to his breach of contract claim, even though the court had expressed its opinion of equitable estoppel in rejecting his fraud claim. The court refused to allow the addition of either claim, saying Bower’s request was “denied on the basis of prior rulings in this action.”
II. ISSUES
Bower raises three claims on appeal. Initially, he contends that the district court abused its discretion in refusing his request to amend his second amended complaint. Second, he alleges error in the court’s grant of summary judgment oh the fraud, breach of oral contract, and promissory estoppel claims of his second amended complaint. Third, he asserts that the court should not have dismissed the breach-of-written-contract claim contained in his first amended complaint.
III. DISCUSSION
A. Denial of Leave to Amend the Second Amended Complaint
In his proposed amendment to his second amended complaint, Bower sought to remedy the defects that had caused the court to dismiss his initial breach-of-written-contract claim. That claim, set forth in Count III of his first amended complaint, alleged a contract guaranteeing Bower one year of employment, a $29,000 salary, a share of the revenues from advertising, subscriptions, and grants, and reimbursement for expenses. He had argued that this contract satisfied the statute of frauds because the defendants had admitted these contract terms in their answer to his complaint. Poulos v. Reda,
When a party seeks to amend a complaint after the defendant has answered, the district court has discretion in deciding whether or not to allow the amendment, and we review its decision for an abuse of that discretion. J.D. Marshall Int’l, Inc. v. Redstart, Inc.,
An amendment is futile when it “merely restates the same facts using different language, or reasserts a claim previously determined.” Wakeen v. Hoffman House, Inc.,
The Illinois statute of frauds requires contracts that cannot be fully performed within a year of their making to be in writing, or they are unenforceable. 111. Rev.Stat. ch. 59, § 1. The writing must contain the agreement’s essential terms and be signed by the party against whom enforcement is sought, and may consist of several different documents. Chapman v. Freeport Securities Co.,
The salary and health insurance terms of the contract alleged in Count VIII were admitted in the defendants’ answer to Bower’s first amended complaint, which qualifies as a signed writing capable of satisfying the statute of frauds. Poulos v. Reda,
During his deposition, Michael Jones answered the following questions:
Q: Now, when Eric Bower first started working for you, it was contemplated that there would be a written contract between you and Mr. Bower, isn’t that correct?
A: (Nodding)
*1009 Q: For what duration was this contract to run?
A: A year or two.
R. 166, at 4-5. A deposition may qualify as a signed writing for statute of frauds purposes, see II Farnsworth on Contracts, § 6.7, at 134 (1990) (“To the extent that the statute’s function is viewed as evidentiary, it is difficult to see why the statute should not be satisfied by a written admission in a pleading, stipulation, or deposition”), and Jones’s statements establish that at least a one-year contract had been agreed to. The memorandum used to satisfy the statute of frauds must demonstrate that there has been an agreement as to the essential terms of the contract, evidencing a “meeting of the minds.” See Dresser Industries, Inc. v. Pyrrhus AG,
Furthermore, Bower supports his contention by pointing to the draft contract shown to him before he began work at Ultramontane.
1. TERM OF EMPLOYMENT. Employer hereby employees [sic] the Employee and Employee hereby accepts employment with the Employer for a period of one (1) year, beginning the first day of June, 1988. This agreement may be terminated earlier or renewed as hereinafter provided.
R. 181, Ex. 5. This paragraph demonstrates that the defendants specifically intended to give Bower a one-year contract, with certain limitations on their right to discharge him. There is one problem, however; the draft contract is not signed by any of the defendants. Thus, the draft contract cannot be used to satisfy the statute of frauds (which requires that contracts that cannot be performed within a year of their making be in writing and signed by the party to be charged in order to be enforceable) unless one of the signed writings specifically refers to it, or somehow demonstrates that it relates to the same contract. Chapman,
Q: I am going to hand you back what’s been marked Exhibit No. 1 and ask you if you recognize what I’ve handed you? A: It looks like the contract — the draft that my lawyer sent me.
* 5¡S $ Sfc ¡jt *
Q: I am going to ask you one other question. If I could look at this for a second. The postmark on this [draft contract] says May 6, 1988, and you can correct me if I’m wrong.
MR. APPEL: I can’t tell whether it’s a 6 or 15. There is also a 15 on the other side.
Q: May 6 or May 15. Does looking at the postmark refresh your recollection at all about when you requested Mr. Appel to draft this contract.
A: It was around this time.
Q: But it was before Mr. Bower ever started working for you?
A: I suppose it was.
* # * * * *
Q: Did you ever show that contract to
Mr. Bower?
A: I believe I did.
R. 166, Ex. A, at 41; R. 131, Ex. 3, at 42-43. Jones went on to discuss several specific terms in the draft contract and their intended meaning to himself and Bower. It is clear from this discussion that the draft incorporated the terms Jones and Bower agreed to, though for our purposes it is only important that it states the one-year employment term, meaning that all the terms of the contract alleged in Count VIII are admitted in a memorandum suffi
The defendants argue that the court’s refusal to allow the amendment may be supported because allowing Bower to add Count VIII would have caused undue delay or unduly prejudiced their case. We disagree. Bower did not have access to the writings supporting Count VIII until late in discovery, when he deposed Michael Jones and received a copy of the draft contract, both after he had filed his second amended complaint. By seeking to add Count VIII soon after he had the documents to support it, Bower did everything in his power to foreclose any claim of undue delay. We also are of the opinion that allowing the addition of Count VIII would not have unduly prejudiced the defense. Legally, the claim and likely defenses to it are quite similar to those involved in the original written contract claim, meaning that the defendants will incur little extra time or expense in defending the claim. Also, the necessary discovery on the claim is complete. A similar analysis applies to the defendants’ contention that Bower’s amendment was improper because of his “repeated failure to cure deficiencies.” True, he had previously filed a number of amendments but, as noted, the documents supporting Count VIII were not available until late in discovery, and Bower did not sleep on his rights once he was able to assert them. We hold that the district court abused its discretion in not allowing Bower to amend his complaint by adding Count VIII.
The second item Bower hoped to add to his complaint, Count IX, alleged that the defendants should be equitably estopped from using the statute of frauds as a defense to Bower’s contract claim, because doing so would allow the defendants, who had lured Bower to Ultramontane with false promises of a written, one-year contract to hide behind the statute and complete their fraud. As before, the district court denied leave to amend based on its “prior rulings.”
We assume that the relevant prior ruling occurred when the court granted summary judgment on the fraud claim in Bower’s second amended complaint. In giving its reasons, the court stated:
[T]he Illinois Supreme Court has ruled that equitable estoppel does not apply to save an oral agreement for services, such as employment, otherwise unenforceable because of the statute of frauds. Sinclair,31 Ill.2d at 510 [202 N.E.2d 516 ]; 37 CJS, “Statute of Frauds”, ¶ 247. Equitable estoppel normally requires an equitable remedy such as specific performance, and specific performance is normally not decreed in a suit involving a contract for services.
Memorandum Opinion & Order, at 6. Contrary to the district court’s belief, however, Illinois apparently does allow the use of equitable estoppel to bar an opponent’s statute of frauds defense. Sinclair v. Sullivan Chevrolet Co.,
We will not reverse the district court on Count IX, for that Count fails to state a valid claim for relief, and would therefore be futile. Glide,
B. Summary Judgment
The district court granted summary judgment on the first three counts of Bower’s second amended complaint. These counts alleged promissory fraud, breach of an oral contract to put the employment agreement in writing, and promissory es-toppel. Our review is de novo, and we view the record and all reasonable inferences that may be drawn from it in the light most favorable to the nonmovant. Kara-zanos v. Navistar Int’l Transp. Corp.,
1. Promissory Fraud
Count I of the second amended complaint charged the defendants with intentionally making false promises and representations to Bower as part of a scheme to induce him to work for Ultramontane long enough to prepare the Notre Dame book proposal, implement his fund-raising skills, and reveal his professional contacts and knowledge. Then, once he had outlived his usefulness, the scheme would conclude with Ultramontane’s firing him and refusing to pay' him the promised percentages of grants received and subscription and advertising revenues. The specific representations that Bower claims were false and calculated to induce him to work for Ultramontane were that: (1) he would receive five percent of the revenue from new subscriptions, twenty percent of advertising revenue, and twenty-five percent of all other monies received through other sources, such as book grants; (2) the agreement would be put into writing; and (3) he had a guaranteed one-year term of employment. Bower alleges that none of these promises were kept, and claims that he has been defrauded because he passed up another job offer in reliance on the promises.
Promissory fraud is generally not actionable in Illinois, but there is an exception to this rule “where the false promise or representation of intention of future conduct is the scheme or device to accomplish the fraud.” Steinberg v. Chicago Medical School,
As to the first alleged promise, to pay Bower a certain percentage of advertising and subscription revenues, summary judgment was proper, as Bower has presented no evidence demonstrating that the defendants failed to keep the promise. See Consolidated Bearings Co. v. Ehret-Krohn Corp.,
As to the second alleged promise, to reduce the employment contract to writing, Bower has failed to adduce any evidence demonstrating that the defendants never intended to keep their word. Promissory fraud is a disfavored cause of action in Illinois because fraud is easy to allege and difficult to prove or disprove. Hollymatic Corp. v. Holly Systems, Inc.,
In order to survive the pleading stage, a claimant must be able to point to specific, objective manifestations of fraudulent intent — a scheme or device. If he cannot, it is in effect presumed that he cannot prove facts at trial entitling him to relief. If the rule were otherwise, anyone with a breach of contract claim could open the door to tort damages by alleging that the promises broken were never intended to be performed. Presumably, it is this result that the Illinois rule seeks to avoid.
Id. The record falls short of establishing that the defendants never intended to give Bower a written contract, though they actually failed to do so. This failure may be ascribed to the fact that Bower was only at Fidelity for seven weeks, and the defendants’ attorney was on vacation for at least two of those weeks. Bower voluntarily began work without a written contract, and while the fact that he never received a written contract before being discharged is unfortunate for him, we refuse to infer bad intent on the part of the defendants based on this fact alone. See id. As Judge Pos-ner has observed in discussing a claim of promissory fraud, “A change of mind can be a breach of contract ... but it is not fraud.” Price,
A similar analysis applies to the third alleged promise, to employ Bower for a full year. Again, it is true that the defendants did not employ Bower for a full year, but that alone is insufficient to make out a claim of promissory fraud, since there is no proof that the defendants made the promise never intending to keep it. Without “specific, objective manifestations of fraudulent intent” there can be no promissory fraud. Hollymatic Corp.,
2. Breach of Oral Contract
Count II of the second amended complaint alleged that the defendants breached a separate oral agreement to reduce the employment contract to writing. He claimed that this agreement is a distinct
3. Promissory Estoppel
Count III of the second amended complaint sought to estop the defendants from pléading the statute of frauds in light of their earlier promises to employ Bower for a year and provide a written contract. Although the availability of promissory estoppel to preclude a statute of frauds defense is an interesting issue, and is apparently unsettled in Illinois, see Phillips v. Britton,
C. Dismissal of the Breach-of-Written-Contract Claim in the First Amended Complaint
Bower’s last argument contests the district court's dismissal of his first contract claim. As discussed in section A, supra, this claim alleged a contract with many specific provisions. The defendants admitted some, but not all, of these provisions in their answer to Bower’s first complaint. The court dismissed the claim under the statute of frauds because all of the terms of the alleged contract had not been admitted by the defendants. The rule in Illinois is that “a party seeking to enforce an agreement has the burden of establishing the existence of the agreement.” Commonwealth Edison Co. v. Industrial Comm.,
IY. CONCLUSION
In sum, we: (1) reverse the district court’s denial of Bower’s motion to add Count VIII to his second amended complaint; (2) affirm the denial of leave to add Count IX; (3) affirm the grant of summary judgment on the promissory fraud count in the second amended complaint; (4) affirm summary judgment on the breach-of-oral-contract count in the same complaint; (5) hold that the promissory estoppel claim has been waived, and (6) affirm the dismissal of the breach-of-written-contract count in the first amended complaint. Accordingly, this case is remanded for further proceedings.
Affirmed in part, Reversed in part, and Remanded.
Notes
. Fidelity is a Catholic magazine and had published many articles about Notre Dame and the state of Catholic higher education. The book would be a collection of these articles, along with other commentary.
. Actually, Bower contends that the draft contract in the record is not the exact same one shown to him, which he claims was marked up and had the blanks filled in. The copy of the draft produced in discovery is unmarked. However, neither party disputes that the terms in the produced draft are the same as in the draft Bower was shown.
. We also note that Bower had two prior opportunities to add an equitable estoppel claim to his complaint, yet neglected to do so. A repeated failure to cure deficiencies is sufficient reason to forbid a proposed amendment. Foman,
Concurrence in Part
concurring in part and dissenting in part.
I would affirm the judgment of the district court in full. Thus, I respectfully dissent from the majority’s reversal of the district court’s refusal to grant Bower leave to amend his second amended complaint to add Count VIII. In all other respects I concur.
I do not believe that the trial judge abused his discretion in refusing to allow the addition of Count VIII to the second amended complaint. That proposed amendment alleged that the agreement between Jones and Bower included several terms that Ultramontane failed to honor including
Count VIII was not Bower’s first breach of contract claim. In his first amended complaint he alleged that Ultramontane breached the employment agreement but the district court found that he had not sufficiently established an agreement regarding the disputed terms. Ultramontane maintains (and I agree with the district court that it was correct) that Count VIII in fact offered nothing new in view of the earlier rulings. Generosity of the court rules in allowing amendments certainly does not compel a trial judge to permit endless amendments simply to permit a party to stay in court. I would hold it was not an abuse of discretion here for the trial judge to have denied that leave. I do not see any probative evidence pleaded or legal theories advanced to support Bower’s earlier contract claims or any value therefor in trying to revive them through further amendment.
