Pub. 10 2015-2016 Issue 2

July/August 2015 25 Extraordinary Service for Extraordinary Members. Nebraska Court Update Nebraska Supreme Court holds promissory estoppel is not an exception to the credit-agreements statute of frauds. Andrew Koszewski & James Kritenbrink, Woods & Aitken LLP B U I L D I N G S T R O N G C L I E N T relationships is generally high on the list of priorities for financial lenders. A close relationship leads to better customer service and further increases the po- tential for repeat business. That said, a longstanding banking relationship provides the opportunity for misun- derstandings caused by informal con- versations—especially when one party believes an assurance or promise has been provided either orally or inwriting. Unfortunately, suchmisunderstandings can lead to disputes and, ultimately, litigation. This article provides a sum- mary of a recent Nebraska Supreme Court case and discusses a few things to keep in mind when communicating with all customers—particularly those with whom you have a strong informal relationship. In February, the Nebraska Supreme Court held that promissory estoppel 1 was not an exception to the credit- agreement statute of frauds. 2 So what does this mean for a lender? It means that a borrower may not maintain an action against a lender for promissory estoppel based on oral promises or com- mitments to extend credit made by an employee of a lender. 3 Statutes of frauds require certain types of agreements to be memorialized in writing for them to be enforceable. The application of statutes of frauds to credit agreements has been statutorily enacted in 41 states. 4 These statutes were enacted in the late 1980s and early 1990s in response tomultimil- lion dollar judgments entered against banks and other lenders on the basis of alleged oral commitments to lend money, refinance a loan, or forbear from exercising remedies available under a loan agreement. 5 Six of the 10 largest judgments awarded in 1988 were from lender liability claims. 6 Some of these claims were in excess of $100 million. 7 In response to the increase in liability of lenders, state legislatures responded by enacting statutes of frauds that applied to credit agreements. 8 The credit-agreement statutes of frauds were motivated by the same concerns as traditional statute of frauds 9 and the need to protect lenders frompotentially disastrous liability. In 1989, Nebraska enacted its version of such a statute. As a result, a lender in Nebraskamay receive significant protec- tion from Nebraska Revised Statutes § 45–1,112 through § 45–1,115. These  Court Update — continued on page 26