Indiana Court Of Appeals Rules Oral Release Of Mortgage Unenforceable, But Leaves The Door Open For Potential Enforcement Of Oral Releases Under Doctrine Of Promissory Estoppel

In a recent opinion in Walter T. Yoost, et al. v. Irwin Zalcberg, Case No. 46A03-0908-CV-378, Indiana Court of Appeals discussed whether the doctrine if promissory estoppel can take an otherwise unenforceable oral release of a mortgage outside of the Statute of Frauds. In Yoost, the answer was no.

However, the opinion leaves open the possibility that under different facts, an oral release of a mortgage could be enforceable under the doctrine of promissory estoppel.
Walter Yoost worked for Irwin Zalcberg as a personal assistant/intern from 1999 to 2005. In 2002, Zalcberg and his wife lent Yoost approximately $67,000 to buy a house located in Michigan City, Indiana. Yoost stopped making payments to Zalcberg in 2004, and Zalcberg initiated a foreclosure action in 2006. Yoost alleged that Zalcberg orally agreed to release him from the mortgage in July 2004, and he continued to work for Zalcberg until March 2005 in reliance on that oral release. Accordingly, Yoost argued that Zalcberg was not entitled to foreclosure under the doctrine of promissory estoppel.

Affirming the trial court's grant of summary judgment, the court of appeals held that the doctrine of promissory estoppel did not remove Zalcberg's alleged oral release from the writing requirement of the Statute of Frauds because there was insufficient evidence of a reliance injury.

The full decision is available at http://www.ai.org/judiciary/opinions/pdf/04161003tac.pdf

Posted by: Michele Lorbieski Anderson

Categories: Bankruptcy & Banking Law