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Current Developments in the Commercial Divisions of the
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Posted: January 23, 2020

Promissory Estoppel Claim Dismissed for Failure Adequately to Allege a Promise and Reliance

On January 14, 2020, Justice Borrok of the New York County Commercial Division issued a decision in 32 W. 39th Midtown Props. v. Zee Co. Apparel Corp., 2020 NY Slip Op. 30129(U), dismissing a promissory estoppel claim for failure adequately to allege a promise or reliance, explaining:

The elements of a claim of promissory estoppel are: (1) a promise that is sufficiently clear and unambiguous; (2) reasonable reliance on the promise by a party; and (3) injury caused by the reliance. In this case, the complaint alleges that Michael Rosenberg informed Midtown Properties that he wanted his company, Zee Co., to take over the lease for the Premises when Miss Elaine, Inc.’s lease expired, and that he or Zee Co. would timely make all required rent payments. At oral argument the plaintiff conceded that the alleged promise was not as set forth in the papers. To wit, to the extent that the papers indicate a proposed term of five years with a five year extension, the plaintiff indicated that it might have been three years. More importantly, the papers don’t in any way identify how much the defendant is alleged to have promised to pay or to whom the promise was allegedly made. Put another way, the complaint fails to plead a clear and unambiguous promise. In sum and substance, the complaint merely alleges that Michael Rosenberg represented to Midtown Properties that Zee Co. wanted to take over the lease for the sixth floor. In addition, there does not seem to be any reasonable reliance which has been plead. To be sure, the complaint does allege that prospective tenants were turned away, but merely expressing representing an interest in space does not sufficiently allege a basis for promissory estoppel.

(Internal citations omitted).

Promissory estoppel is a claim based on rights under a promise that, for whatever reason, did not result in a binding contract. As this decision shows, it is a narrow doctrine. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where there is a dispute over payment for work that was not covered by a contract.

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Posted in Commercial, Contracts
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