*2 GARZA, Bеfore WILLIAMS GARWOOD, Judges. Circuit GARZA, Judge. Circuit requires diversity case us to consid- apply er and the doctrine of detrimental Louisiana reliance as it relates to law. Our litigation of this focuses on second review question whether a owner was removing building from the justified in repre- in reliance on the commercial market employ- employee that his sentations agreed to formalize lease terms er would employer. We are asked by the owner and district court also to consider whether the awarding dam- clearly erroneous ages to the owner estoppel. promissоry basis I. tacted an up plans, architect to draw floor signmaker logo sign, create Pohoriles, In July Eugene draper and interior decorator about fur- general former manager nishings. In an October 12 letter Offshore Services Breaux, expressed satisfaction (“Schlumberger”), sent construction coordi- with the choice property, of Breaux’s nator, Nicholls, T.C. to Lafayette, Louisi- *3 urged Breaux to mail the written lease ana to locate suitable space office for a stated, In part, the letter “The new Schlumberger division. Because a I your building more see оf the Imore feel market, rise in space trade in oil the office we made an excellent choice. We wait- are in Lafayette great inwas demand and les- your lease contract which allow will space sors easily, virtually could rent while us to move in January after 1.” setting their terms. own Nicholls reviewed various plans and discussed lease terms 15, On October Breaux mailed Schlum- with buildings, including owners of several berger a proposed lease Huey Henry (“Breaux”). Breaux been agent, had drafted Breaux and his preferred property negotiat- Breaux’s and Robert pаge Marceaux. thirteen doc- ed informally. Although with Breaux Nic- incorporated previously ument the terms engineer holls was a senior with Schlum- negotiated: years, a term of five at $16.00 berger and with company had been the for per square $95,- foot or an annual rent of years, he informed Breaux that final 336.16, January date, a 1 move-in and approval would have to come from his su- area encompassing all of the second floor. periors Schlumberger. Because occupied Nicholls was when the arrived, document remained it on his desk
Accordingly, Pohoriles visited Breaux’s days unread for being several instead of building expressed approval of the lo- processed in the usual manner. Two property. cation and the He told Nicholls transpired events then which changed the again. 16,1981, contact Breaux On parties’ agreement. First, due to a crisis indicating Nicholls sent a letter to Breaux Lafayette oil industry, a became les- had Pohoriles “selected” Breaux’s see’s market and the demand for office building Schlumberger for the office in La- Second, space diminished. Pohoriles fayette. The letter Schlum- “confirmed” replaced vice-president at Schlumber- berger’s agree- “intention to enter a rental ger.2 course, Of the new ment” for the second and of the first disapproved of Further, property, prefer- Breaux’s requested floor. Breaux for- ring larger centrally-located and more of- ward a written “for considera- fices. tion signature.”1 responded by promising all to cease efforts to rent the 13, impatient On November with Schlum- subject holding space, space until berger’s delay signing agreement, projected date January move-in Breaux wrote a letter to Nicholls threaten- ing a suit to Schlumberger force con- following weeks, Nicholls,
In the summate the response, with transaction. In knowledge, Schlumberger Breaux’s deposit informed a Lafay- other offered to hold the premises ette lessors that open February had decided until while the pursue on Breaux’s and would not company January looked elsewhere. options. Additionally, other Nicholls con- rejected offer floor, Typed Schlumberger stationery, that letter and the on both areas sides pertinent part: stated in way entrance on the lower us. floor for Pohoriles, ****** Gene our Vice President and Gen- Manager, your eral has selected new office sending Please time for select the best opera- as the most suitable our for agreement to us actual rental for considera- years. tion for the next several This will signature. tion agree- confirm our intention to enter a rental your company regarding ment with the office 2. Pohoriles died before the trial and before Congress now under construction on opportunity depose Breaux had an him. you upper Street. We hold ask the entire reliance, again specific per- suit the court once brought diversity for detrimental $124,069.64. fig- later When awarded formance. amended his on the difference ure was based between premises, leased other plea damages. paid complaint include would have what under began immediately Although Breaux lease and what Breaux was able to tenants, unable searching other he was other lessees. receive building on terms as favorable to lease the Schlumberger deal.
as those in the
II.
Following
trial in December
a bench
January 1,
Effective
after the com-
court
district
concluded
filed,
litigation
plaint in this
Louisi-
Nicholls,
through
оrally
Schlumberger,
provide
ana Civil Code
amended
building. Although a writ-
leased Breaux’s
remedy for a
distinct
detrimental reliance
agree-
contemplated,
oral
ten lease was
enforcing obligations.
action for
cause of
*4
1)
binding
principal
because:
ment was
provides:
Article 1967
finalized;
2)
lease were
terms of the
obligated
promise
party
by
A
be
a
to
manifested their intent
parties
both
had
or
he knew should have known
acting upon
to
agreement
by
be bound
promise
party
would induce the other
possible
given that
the fullest extent
rely
on it
his detriment and the
yet
not
finishеd. Schlumber-
building was
party
relying.
other
in so
implied
ger’s
to the
consent
Recovery may
expenses
be limited to the
letters and actions. While
from Nicholls’
damages
incurred or the
suffered as a
authority
no actual
to bind
Nicholls had
promisee’s
result of the
reliance
apparent authority due to
company, he had
gratuitous prom-
Reliance
promise.
on a
letters,
compa-
the content of the
the use
required
made without
formalities
ise
position
company,
ny stationery, his
in the
reasonable.
not
dealings
companies
with outside
and his
(West 1985).
Ann.
La.Civ.Code
art. 1967
аrchitect, signmaker, and other
such as the
new,
Although purporting to be
this article
Lafayette.
Judgment was ren-
lessors in
nothing
codify existing prac
more
did
than
of Breaux in the sum of
dered in favor
agree with
court
tice. We
the district
$124,069.64, together with interest.
necessary
it is not
to determine whether
1986,
16,
January
summary calen-
On
a
1967 is
since
Article
retroactive
Louisiana
ruling
judg-
this Circuit
dar
reversed
recognized
have
a cause of action
courts
that,
ment
district court. We ruled
of the
Article
detrimental reliance under
exist,
although an oral lease did in fact
part,
provides:
In relevant
Article 2315
apparent authority
no
to enter
Nicholls had
“Every act whatever of man that causes
into
lease
with Breaux.
a
obliges
by
him
damage to another
whose
Serv.,
Breaux v.
Offshore
happened
repair
it.”
fault
La.Civ.
(5th Cir.1986)
85-4230,
op.
7
slip
No.
[781
(West 1986).
Ann. art. 2315
“For
Code
(table)].
February
On
F.2d 901
courts,
century,
nearly a
Louisiana
a
Court,
reviewing Breaux’s Peti-
this
while
situations,
variety of factual
have enforced
Rehearing,
tion
remanded the
for Panel
ground
promises on the
of detrimental re
court
case
district
for consideration
to the
Herman,
Detrimental Reliance
liance.”
theory of detrimen-
of Breaux’s alternative
Present,
Past,
in Louisiana
Law —
tal
The detrimental reliance theo-
reliance.
(?):
Perspec
The Code
Future
Drafter’s
Breaux,
by
ry, although pleaded
tive,
707,
(1984).
Tul.L.Rev.
Detri
58
715
in the
upon
decided
district court.
reliance,
promis
also referred to as
mental
remand,
accepted
is an
sory estoppel,
court
that Breaux
vital
On
found
See
relied,
detriment,
of Louisiana.
jurisprudence
to his
on Nic- of the
justifiably
State,
Contractor,
Bailey
Inc. v.
439
John
indicating
holls’
letter
that Schlum-
16
(La.1983);
Simmons v.
1055,
berger
binding lease
1059
to enter a
So.2d
intended
Inst., 470 So.2d
913,
Technical
922
Sowela
agreement. Finding
prov-
Cir.1985).
(La.App.3d
en
of a
of action for
the elements
cause
ed,
The
to state
essential elements
a detri
because the landlord’s assent
to the
theory
mental reliance
in Loui
subsequent
lease and
telegram led the ten-
(1)
representation
by
siana are:
conduct
ant
to believe that he had reached an
(2)
thereon;
word;
justifiable
or
Id. at 885.
Thus,
the landlord
(3) change
to one’s detri was liable to the
tenant for
under
Bailey
reliance. John
ment
because
2315. Id.
Article
Stewart does
Although
Contractor,
State,
Inc. v.
326,
425 So.2d
illustrate the
promises
enforcement of
aff'd,
(La.App.3d
reliance,
based on detrimental
it does not
(La.1983).
inevitably lead to the conclusion that
Schlumberger’s promise
binding
enter a
study
Our
of the law has not re
lease
orally
in the future on terms
assented
provides
vealed
case that
direct
authori
to can justify
reliance.
detrimental
Find-
ty.
The district court relied
two Louisi
Stewart,
guidance
some
in-
it is
appellate
ana
decisions in
Schlum
us
upon
apply
cumbent
review
berger
appellate
Breaux. As an
liable
requisite
facts to the
factors stated above
court,
review a
court’s
we
distriсt
conclu
to determine whether a cause of action
de
law novo. We
sions of
are
bound
its
exists.
fact, however,
findings
clearly
unless
See Pullman-Standard
erroneous.
first
factor
must
be identi
Swint,
456 U.S.
102 S.Ct.
fied to establish detrimental reliance is a
(1982). Schlumberger
to lish a detrimental reliance action is whether tions. changed position his his detri of his reliance on Nicholls. theory
Under the of detrimental re ment because liance, however, original on As in the district court’s we focus Nicholls’ ac stated fact, findings all efforts employee Schlumberger. Breaux ceased tions as an floor of the theory, this tort need to rent the second Under July 16 At nothing separate apart upon receipt of the letter. do time, Lafayette By a lessor’s market. employee. of its need be actions slumped oil scope employ industry of his December of only in the course and Lafayette transformed into a les ment occurred. Schlumber tort ger in- see’s December Schlumber- itself not have authorizеd or market. On ger ples Schlumberger’s that it informed Breaux felt that it unjust reliance on to a binding agree- misplaced. not committed itself enrichment cases is Immediately, attempted ment. claiming In an unjust action en mitigate damages. agreed his One tenant richment, damages generally are recovera second floor space rent 65% only ble to the extent of the benefit con provided terms March 1982. The for ferred. The authorities cited Schlum 4,707.93 square that tenant to rent feet at berger do not limit Breaux’s recovery be per square years foot three $16.00 be- theory cause a detrimental of lia ginning May 1982. Other leases were bility an unjust differs from enrichment later entered into for remainder of the theory liability. Coleman, See second floor. The district court determined Moreover, So.2d at 447. Coleman not does damages and that Breaux’s lost rentals for Schlumberger’s support reading. narrow $45,- years 1982-1986 successive were: Coleman, permitted recovery In the court 1983; $15,620.01 1982; 118.24 in in unjust on an theory. enrichment In dic $23,722.60 $6,868.23 1984; projected in in tum, suggested that a detrimental re 1985; $32,740.56 projected in 1986. available, theory might liance also be change Clearly, Breaux did that, casе, in such a would extend upon repre- his detriment based Nicholls’ out-of-pocket expenses at a minimum. sentations. any The court did not foreclose other meth computing damages. fact,
od of
Id.
in
Distrib., Inc.,
Sanders v. United
405 So.2d
III.
denied,
writ
proved
After
that Breaux
a cause
(1982),
the court awarded
promissory estoppel,
of action for
the dis-
only damages
not
for out-of-pocket ex
damages
trict court
awarded
lost rent-
penses,
damages
but additional
because the
$124,069.64.
als in the sum of
The court’s
plaintiff detrimentally relied on mistaken
opinion provided
authority
no
or reason for
representations.
selecting
figure again
remand,
this
but
Louisiana law forbids an award of
apparently the
for this
basis
determination
speculation. Dousson,
based on
testimony
rested on
record that
However,
429 So.2d
compensation
at 469.
July of
market
1981 a lessor’s
existed in
profits
for lost
need
be determined with
Lafayette.
court
The trial
must have as-
precision.
mathematical
Reasonable cer
sumed
could
that Breaux
have leased the
tainty suffices
permit
court to deter
party
to another
on the same
damages.
mine the extent of
Seе Ellwest
the Schlumberger
terms as those in
deal
Theatres,
Davilla,
Stereo
Inc. v.
*7
damages
because the
of
measure
is the
1285,
Cir.),
denied,
1288
writ
Schlumberger fig-
difference between the
(La.1988).
ure and what Breaux
received views a district court’s assessment of dam
subsequent
from the
lessees.
ages
“clearly
under the
erroneous” stan
247,
Corp. Broyles,
contends that
is
dard.
749
NCH
F.2d
(5th Cir.1985).
entitled to
of his out-of-pocket
study
restitution
Our
of the record
expenses
zero,
that,
1981,
only,
amount to
late
and
indicates
in the
summer of
not to
profits
lost
because it
in Lafay
would be
commercial market condition
spеculation.
based on
It
booming.
cites
ette was
There is
Coleman v.
evidence that
City,
(La.1974),
Bossier
in Lafayette
and
lessors
could lease office
Clary,
(La.App. space nearly
buildings
Haskins v.
January
conclusion,
In
we find that the dis
fig
testimony, exhibits and
The
clearly
court was not
in
trict
erroneous
its
regarding
by Breaux
the ex
ures tendered
holding
judgment
Schlumberger vicariously
damages
were received
the dis
tent
for the tort of
liable
detrimental reliance.4
disputed.
trict court and were not
We
respondeat superior,
Under the doctrine of
damaged to the
agree that Breaux was
responsible
for the ac
losing future
which had been
extent of
rent
Nicholls,
employee,
tions of its
as he acted
certainty.
calculated with
scope
employ
within the course and
of his
Moreover,
diligently mitigated judgment
ment. The
of the district court is
damages upon being informed that Schlum
in
respect. Regarding
AFFIRMED
backing
berger was
out of the deal. How
damages,
judgment
the award
ever,
agree
only
can
with the calcula
we
is
in part
district court
AFFIRMED
and
damages
years
tion of
for the
in
provided
REVERSED
as
herein.
damages
1984. The actual
sustained in
and
The case is REMANDED to the district
$15,-
$45,118.24
years
in
those
were:
damages,
court for a determination
if
$6,868.23
in
in 1984. The
620.01
any,
years
for the
1985 and 1986.
$67,-
damages
years
for these three
total
GARWOOD,
Judge, dissenting:
Circuit
606.48,
will not be dis
award
respectfully
I
dissent.
court,
The
on Breaux’s
turbed.
based
cal
culations,
damages
majority
also awarded estimated
The
holds that Nicholls can bind
$23,722.60
$32,740.56
for
for
to Breaux
under the doctrine
exactly
1986. The estimated
for those
of detrimental
reliance for
$56,463.16,
totalling
yeаrs,
recovery
two
is vacated
same
as would
if
be available
court lacked
apparent authority
because the
sufficient infor Nicholls had had
to ob-
ligate Schlumberger
property,
mation to make that determination. We
to lease the
despite
to the
must remand this case
district court
the fact that Nicholls had no such
more, solely
purpose
authority.1
for the
once
of deter-
For his
under “detri-
riles,
Judge
apparently
Garwood’s dissent
miscon-
and asked
to remove the
demanding
strues the focus of our review. We do not hold
from a
market.
addition to a
architects,
allege
proof
signmaker,
that one can
less
for a detrimental
interior decorator and
theory
apparent authority
than
theo-
Nicholls contacted other local lessors and told
ry
expect
damages.
agree
space
recover
We do
them that he had leased office
in Breaux’s
panel
building.
being
with the dissent’s statement that both this
While the
com-
prior panel
pleted,
people
prem-
reviewed the same evidence.
several of these
visited the
however,
prior panel,
focused
Schlum-
ises and worked
with Breaux to conform the
berger's
compa-
Schlumberger’s
specifications.
actions and determined that the
ny
apparent
did not clothe Nicholls with
author-
Based on these facts and the current state of
Moreover,
Louisiana,
ity.
panel explicitly
promissory estoppel
remanded
Schlumber-
ger,
pass
principal,
responsible
the case
the district court
must be held
question
justifiably
acting
of whether Breaux
relied on
the actions of its
who was
within
Clearly,
scope
employment.
Nicholls’ actions to his detriment.
the. course and
of his
justified
relying
our review differs
focus оf
because the nature
Breaux was
on the actions of
*8
Schlumberger
going
occupy
of the actions differ.
Nicholls that
to
building,
and the evidence shows that he
exception
We also take
to the dissent’s state-
representations
reasonably relied on these
to his
ment that Nicholls’ actions were unauthorized.
detriment.
study
the
Our
of
record indicated that Nicholls
necessary authority
was vested with
to find a
majority quotes
paragraph
1.
the final
of our
engage
location for a new division and
in a
opinion
prior appeal.
Also relevant is
company.
leаse on behalf of the
Nicholls had
immediately preceding portion
the
of that earli-
thirty years
been with
for over
opinion,
er
viz.:
engineer
compa-
and worked as a senior
for the
"Here,
ny.
initial
He
we find no evidence of action on the
He made the
solicitations.
sent
July
confirming
principal, Schlumberger,
16 letter
that
to Breaux
arrangement
on behalf of
Poho-
would lead Breaux to believe that Schlumber-
reliance,”
words,
in
mental
other
employee.2
Breaux is
rized
The common
ana-
law
required
prove
anything
to
he is not
logues of detrimental
appаr-
reliance are
required
prove
“appar-
recover under
ently promissory estoppel, see Restatement
ent authority”;
the elements of the two
(Second)
Contracts
misrep-
tortious
§
same,
causes of
exactly
action are
ex-
resentation,
(Second)
see Restatement
cept only
that
must have
525, 526, 530, 544, 552, 552C,
Torts
res-
§§
employee
clothed its
Nicholls with indicia
titution of benefits
proper-
conferred on or
authority
“apparent
of
for an
authority”
ty
another,
see Restatement
transferred to
recovery, but not for a “detrimental re-
Restitution
apparent
au-
§§
recovery. Significantly,
liance”
there is no thority.
(Second) Agency
Restatement
difference in
recovery:
the measure of
in
Only
here,
the latter is applicable
§
promissory,
each case it is
being based on yet
already
we have
held
require-
that its
what Breaux
have
would
received had ments
proved.
have not been
Promissory
Schlumberger executed and fulfilled the
estoppel speaks
authority,
not to want of
then,
seeking
lease. Who
recovery
but to want of consideration. Restitution
principal
promise
from a
on a
madе in his
inapplicable,
recovery
here
is not
by
name
employee,
his unauthorized
will
sought
any
thing
benefit conferred on or
ever seek to
“apparent
recover under
au-
transferred to the defendant. See Restate-
thority,” when “detrimental reliance” will
ment
Restitution
comment
§
/
get
always
money
as much
but with less
(transfer
to an unauthorized
does not
proof. Why
higher
climb the
hill or carry
allow
from
principal
if not
superfluous baggage?
essence,
principal);
ratified or received
56§
cases,
employee
all
the Louisiana doctrine
(items
anticipation
trаnsferred in
of a con-
apparent authority
vastly
has been
tract with the transferee
be recovered
changed
longer
so that it is now no
neces-
from the
if
transferee
the contract is not
sary
prove
something
principal
out).
formed or carried
That
tor-
leaves
did made it
believe that the
misrepresentation.
tious
Recovery for mis-
employee
only
authority; provided
had
representation
op-
of future intention —as
pleader
judge
and the district
use
posed
misrepresentation
existing
magic
words “detrimental
reliance.”
(or opinion
facts)
facts
respecting existing
This,
submit,
I
is an elevation of form over
—is limited to
misrepresenta-
fraudulent
substance —of
labels over content—in
(Second)
tion. Restatement
Torts §§
which the Louisiana courts
in-
would not
526, 530, 544, 552, 552C. There is no evi-
dulge.
any existing
dence here that
opin-
fact —or
I do not believe Louisiana would invoke
concerning
existing
ion
fact —was mis-
the doctrine of detrimental
reliance to
represented.
There is no
of fraud
change
make such a vast
respect-
its law
negligence.
or even of
principal
when a
can be bound to a
promise
made in his name
Acсordingly,
his unautho-
I respectfully dissent.
ger
had
(La.App.
consented to a lease or authorized