S & P Brake Supply, Inc. v. STEMCO LP

S & P Brake Supply, Inc. (S&P) (plaintiff) remanufactured brakes for semitrucks. STEMCO LP (defendant) made parts for replacement brakes. In March 2011, the two companies orally agreed that STEMCO would sell its brake parts to S&P for S&P to use in remanufacturing its brakes and that S&P could hold itself out as a STEMCO authorized remanufacturer. STEMCO further gave S&P the right to sell remanufactured brakes to multiple STEMCO authorized distributors for five years, including to a distributor named Kenworth. S&P then invested a large amount of money in expanding its business, based on STEMCO’s assurance it could sell to Kenworth for five years. But a year and a half later, Kenworth began buying remanufactured brakes from a different STEMCO remanufacturer instead of S&P. This resulted in S&P needing to lease a warehouse it no longer required. S&P also had excess inventory and suffered lost sales. S&P sued STEMCO for breach of contract, and a trial took place. All the parties agreed that the Uniform Commercial Code (UCC) applied to the breach-of-contract claim. STEMCO attempted to introduce a jury instruction directing the jury to find that the statute of frauds barred the case if the jury found the agreement was an oral contract. S&P disagreed, arguing that promissory estoppel applied as an exception to the statute of frauds. The trial court accepted S&P’s arguments and refused to tender the jury instruction. The jury found in S&P’s favor. STEMCO appealed to the Montana Supreme Court.