Rumble in the Jungle: Promissory Estoppel vs. Statute of Frauds

In DK Arena, Inc. v. EB Acquisitions I, LLC (SC10-897), the Florida Supreme Court reaffirmed the Florida rule that promissory estoppel does not create an exception to the Statute of Frauds. The Statute of Frauds, codified in Florida since 1828, provides in pertinent part that no one may bring an action against another involving the sale of lands (and under certain other circumstances) unless there exists a writing that memorializes the agreement and is signed by the person against whom enforcement is sought. Section 725.01, Fla. Stat.
In 2004, EB Acquisitions I, LLC (“EB”) contracted with DK Arena, Inc., (“DK Arena”), a corporation wholly owned by boxing promoter Don King, to purchase a jai alai fronton in Mangonia Park, Florida. The contract provided in part for the deposit by EB of $1 million into an escrow account, and a 60 day period during which EB could perform all the due diligence necessary to examine the desirability of the purchase. EB could cancel the purchase any time during that period. A failure to cancel the purchase would be deemed an acceptance of the property as is, and the escrow deposit would be released to DK Arena. DK Arena in turn agreed to participate in any efforts to obtain government approval for EB’s development proposal for the property.
On the day the 60 day review period was to expire, the parties met and discussed the fact that EB needed more time to obtain support from the local government for its development plan. EB later claimed that at the meeting the parties agreed to extend the review period indefinitely, while DK Arena contended that the extension was for a period of one week. No writing was created. The next day, Don King personally appeared at a town council meeting along with EB, and sought to get support for the EB development proposal. The council did not make a decision, and scheduled another meeting for about two weeks later. The day before the following meeting, DK Arena faxed a demand to the escrow agent to release the escrow funds, stating that the original 60 day period had expired. Don King did not appear at the second town council meeting. The meeting apparently did not go well for EB; the following day, EB received notice of the demand for the escrow funds, and directed the escrow agent not to release the funds to DK Arena.
DK Arena filed suit against EB for breach of contract for failure to release the escrow funds; EB filed counterclaims alleging a breach of contract as well. Relying on Blue Paper, Inc. v. Provost, the trial court found for EB, holding that a written contract could be modified by an oral agreement if accepted and acted upon by the parties in a manner that would work a fraud on either party if the modification was not enforced. 914 So.2d 1048 (Fla. 4th DCA 2005). The trial court also held that Don King’s refusal to participate in the second meeting constituted a breach of the contract, and that the oral agreement reached at the expiration of the 60 day review period constituted a joint venture agreement.
On appeal, the Fourth DCA held that due to EB’s detrimental reliance on Don King’s agreement to extend the review period, DK Arena would be estopped from arguing that the agreement was invalid for failing to comply with the Statute of Frauds.
The Supreme Court made relatively short work of the promissory estoppel argument. The Court noted that the Statute of Frauds has been codified by legislative act, and historically Florida courts have not created any promissory estoppel exception to the plain language of the statute. The Court cited a long string of cases affirming this principle, including Tanenbaum v. Biscayne Osteopathic Hospital, Inc., 190 So.2d 777 (Fla. 1966), where the Court found that an employment contract for 5 years could not be enforced absent a writing, even though the employee moved from out of state in reliance of the promise of employment.
The Court concluded that the oral extension of the contract in this case would not be binding in spite of detrimental reliance by EB, as there was no writing. Nevertheless, the Court remanded the case for the determination of several outstanding issues, including whether DK Arena waived the delivery of the deposit and whether DK Arena breached the contract by failing to provide the support for EB’s development plan as it agreed to do.