Court of Appeals (Ind.) Says Promissory Estoppel Claim Should Have Been Allowed to Proceed By Dealer Against Floorplan Lender

In Swl v. Nextgear Capital, No. 18A-CC-2955, 2019 Ind. App. LEXIS 387, at *14-19 (Ct. App. Aug. 28, 2019), the Court of Appeals held that the trial court should not have granted summary judgment to a floorplan lender against the dealer on the dealer’s promissory estoppel claim.

Dealer also asserts that the trial court erred when it entered summary judgment on NextGear’s claim for breach of contract because there are genuine issues of material fact concerning Dealer’s affirmative defense of promissory estoppel. Promissory estoppel “is a judicial doctrine sounding in equity.” Brown v. Branch, 758 N.E.2d 48, 51 (Ind. 2001). Promissory estoppel is based on the underlying principle that “one who by deed or conduct has induced another to act in a particular manner will not be permitted to adopt an inconsistent position, attitude, or course of conduct that causes injury to such other.” Id. at 52. That is, where the parties may have believed they had a contract but in fact did not, promissory estoppel may apply to hold the parties to their representations to each other. See Ind. Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 359, 367 (Ind. Ct. App. 2008). To demonstrate that the doctrine of promissory estoppel applies, Dealer must show: (1) a promise by the promissor; (2) made with the expectation that the promisee will rely thereon; (3) which induces reasonable reliance by the promisee; (4) of a definite and substantial nature; and (5) injustice can be avoided only by enforcement of the promise. Hinkle v. Sataria Dist. & Packaging, Inc., 920 N.E.2d 766, 771 (Ind. Ct. App. 2010).  Here, again, in support of its opposition to NextGear’s motion for summary judgment, Dealer designated the February email and Lollar’s affidavit. In the February email, Lee stated that NextGear was “going to pay off” stock numbers 510 and 513, “putting the funds in unapplied funds.” Appellant’s App. Vol. II at 140. And in his affidavit, Lollar stated that Lee had proposed “a plan” to keep SWL’s business, which plan called for SWL to pay off two vehicles and, in exchange, NextGear would refinance those vehicles and place the funds in Dealer’s unapplied funds account for Dealer to use to make the next curtailment payments. Id. at 136. Lollar also stated that Lee had told him that “the plan had been approved by the ‘front end risk manager'” for NextGear and that he “had received assurances” from Lee about her plan. Appellant’s App. Vol. II at 136, 137. Lollar further stated that he had “accepted” Lee’s proposed plan and that Dealer paid off the two cars “pursuant to” the plan but that NextGear failed “to follow through on [its] promise to refinance those units,” which caused Dealer to be “unable to make the next scheduled curtailments payments, which resulted in NextGear’s  repossession of the vehicles. Id. at 136, 137. Based on the February email and Lollar’s affidavit, Dealer designated evidence that shows that genuine issues of material fact exist as to whether NextGear made Dealer a promise, that it made that promise with the expectation that Dealer would rely on it, and that Dealer actually relied on that promise to its own detriment.  Still, NextGear asserts that Dealer has not demonstrated that NextGear made Dealer “a promise of a ‘definite and substantial nature.'” Appellee’s Br. at 48. Specifically, NextGear contends that, because Dealer’s payments were delinquent on several vehicles at the time Lee emailed Lollar and because Lee’s email only addressed two of those vehicles, “there is no evidence in the record addressing how [Dealer] intended to pay the other” delinquent payments. Appellee’s Br. at 49 (emphasis in original). In essence, NextGear contends that any purported promise by Lee was not definite and substantial because Dealer was in default on other vehicles not addressed by Lee’s email.  We agree with NextGear that it designated evidence to demonstrate that Dealer’s “payments were delinquent” on several vehicles prior to the date Lee sent Lollar the email. Appellant’s App. Vol. II at 149. However, in response to NextGear’s motion, Dealer designated Lollar’s affidavit as evidence. In that affidavit, Lollar affirmed that Dealer “was not in default” prior to the date that NextGear repossessed its vehicles. Id. at 138. Additionally, Lollar stated that Lee had proposed the plan to keep Dealer in business after Lollar had informed Lee that Dealer wanted to liquate its stock and pay off its debt. Lollar’s affidavit is sufficient to raise a factual issue regarding whether Dealer was in default prior to Lee’s email. See Hughley, 15 N.E.3d at 1004.  NextGear also contends that the February email demonstrates that Dealer was in default at the time Lee sent it to Lollar. In support of that contention, NextGear relies on the language in the email that Dealer has “gone from outstanding of $203k to 97 balance” and that NextGear “need[s] to move this direction and continue working with dealer to get back current.” Appellant’s App. Vol. II at 140. However, Lollar’s affidavit is sufficient evidence to create a genuine issue of material fact concerning whether Dealer was in default when Lee sent Lollar the February email. And even if Dealer were in default as of February 24, 2016, the designated evidence suggests that, because Dealer had a “lengthy impeccable history,” NextGear proposed a course of action to cure any default and for Dealer to maintain its good standing. Id. We therefore cannot say as a matter of law that NextGear did not make a definite and substantial promise to Dealer. Rather, Dealer designated evidence in its opposition to NextGear’s motion for summary judgment to show that genuine issues of material fact exist as to its affirmative defense of detrimental reliance and promissory estoppel.  In sum, Dealer designated evidence to demonstrate that genuine issues of material fact exist with respect to both of its affirmative defenses. Accordingly, the trial court erred when it entered summary judgment for NextGear on its breach of contract claim. We therefore reverse the trial court’s grant of summary judgment for NextGear on that claim. And because there is a question of fact regarding Dealer’s affirmative defenses and whether SWL breached the Contract, there is also a genuine issue of material fact as to whether Lollar breached the individual guaranty. Accordingly, we also reverse the trial court’s grant of summary judgment in favor [*19]  of NextGear on its breach of guaranty claim.