Hoffman v. Red Owl Stores, Inc. Case Brief Summary | Law Case Explained

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Hoffman v. Red Owl Stores, Inc. | 133 N.W.2d 267 (1965)

But you promised! How many times have children said that when an adult actually never promised anything and, instead, merely indicated that something was a possibility? But what about adults who rely on another’s words that were considered to be a promise? Can words short of a legally enforceable promise ever result in money damages if the person who spoke them doesn’t follow through? The Wisconsin Supreme Court addressed this issue in Hoffman versus Red Owl Stores, Inc.

Joseph Hoffman and his wife owned a bakery in Wautoma, Wisconsin. He entered negotiations to buy a franchise grocery store from Red Owl Stores. A Red Owl agent, Edward Lukowitz, repeatedly told Hoffman that he only needed $18,000 for a franchise. Lukowitz also told Hoffman that it was a good idea to purchase a smaller, independent grocery store and operate it before buying a larger Red Owl store. Hoffman did so, and after three months of operating it successfully, Lukowitz advised Hoffman to sell the store and the bakery in preparation for acquiring a larger franchise store. Hoffman did so.

Lukowitz also advised Hoffman to move to a new town, Chilton, where the franchise store would be located. The Hoffmans moved to a town closer to Chilton. Lukowitz further advised Hoffman to purchase a vacant lot in Chilton on which the franchise store would be constructed. Hoffman paid $1,000 for an option to purchase a lot in Chilton. Thereafter, Red Owl officials told Hoffman that he would need around $34,000 to purchase the franchise. At that point, the negotiations fell through.

The Hoffmans filed a lawsuit against Lukowitz and Red Owl Stores in state court for damages based on the Hoffmans’ detrimental reliance on the promise of a franchise store for $18,000. The jury found that, although the parties didn’t enter into an enforceable contract, the Hoffmans reasonably relied on representations from Red Owl officials and were damaged in various ways. Damages included losses resulting from the sale of their grocery store and bakery, the costs of moving to a new town, and the cost of the option to purchase a lot. The trial court ordered a new trial solely on the issue of the proper amount of damages based on the Hoffmans’ sale of their grocery store.

Hoffman and Red Owl Stores each appealed to the Wisconsin Supreme Court.

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