Promissory Estoppel for Unwritten Multi‑Year Equity Promises Requires Pleading “Unconscionable Injury,” Not Mere Lost Equity

Introduction

In Jun Young Lim v. Radish Media, Inc. (2d Cir. Feb. 5, 2026) (summary order), Plaintiff-Appellant Jun Young Lim sought to recover an alleged equity interest in Radish Media (and its predecessor, Byline Media) that he contended was promised to him as part of his employment compensation. Lim alleged that the company’s co-founder and CEO, Seung Yoon Lee, offered him an equity stake (first 1.2%, later 1.5%) that would vest over four years, with initial vesting after one year.

The central issues on appeal were (1) whether Lim’s promissory estoppel claim could proceed despite the statute of frauds, and (2) whether the district court properly denied leave to amend after multiple failed pleadings.

Although the panel’s disposition is a non-precedential summary order, it provides a clear roadmap of how the Second Circuit applies New York’s “unconscionable injury” requirement when promissory estoppel is used to circumvent the statute of frauds.

Summary of the Opinion

The Second Circuit affirmed dismissal of Lim’s Second Amended Complaint, which asserted only promissory estoppel. The court held that:

  • The alleged equity promise was subject to the statute of frauds because it could not be fully performed within one year (vesting began after one year and continued thereafter).
  • Where promissory estoppel is invoked to overcome the statute of frauds, New York law requires pleading an unconscionable injury, not merely expectation damages from the unenforceable promise.
  • Lim pleaded only the loss of the promised equity (i.e., expectation damages), which is insufficient as a matter of law.
  • Denial of leave to amend was not an abuse of discretion because Lim had already been told to plead unconscionable injury, failed to do so, and could not identify a curative amendment.

Analysis

Precedents Cited

  • Lim v. Radish Media, Inc., No. 22-1610, 2023 WL 2440160, at *1 (2d Cir. Mar. 10, 2023)
    This earlier appeal framed the case’s procedural posture. The Second Circuit previously agreed that Lim failed to plead a viable breach of contract theory and that his claims were barred by the statute of frauds, while remanding on statute-of-limitations/futility issues. The 2026 order effectively continues that trajectory: absent a signed writing for a multi-year equity-vesting promise, Lim’s path depended on promissory estoppel—and thus on satisfying the heightened “unconscionable injury” standard.
  • Koch v. Christie's Int'l PLC, 699 F.3d 141, 148 (2d Cir. 2012)
    Cited for the appellate standard of review: dismissal under Rule 12(b)(6) is reviewed de novo. This allowed the panel to independently assess whether the complaint pleaded the necessary elements (particularly unconscionable injury).
  • Cyberchron Corp. v. Calldata Systems Development, Inc., 47 F.3d 39, 44 (2d Cir. 1995)
    Provides the canonical New York elements of promissory estoppel—(1) clear and unambiguous promise, (2) reasonable and foreseeable reliance, and (3) injury caused by the reliance—and also recognizes that when the claim confronts the statute of frauds, New York imposes an additional requirement: the injury must be “unconscionable.” The panel uses Cyberchron as the doctrinal bridge between the basic promissory estoppel framework and the statute-of-frauds limitation.
  • In re Estate of Hennel, 29 N.Y.3d 487, 489 (2017)
    Serves as the New York Court of Appeals anchor for the proposition that, when promissory estoppel is used against the statute of frauds, the injury must be unconscionable. The Second Circuit treats this as controlling New York law.
  • Merex A.G. v. Fairchild Weston Sys., 29 F.3d 821, 826 (2d Cir. 1994)
    Supplies the key limiting principle: “unconscionable injury” must go beyond “that which flows naturally (expectation damages) from the non-performance of the unenforceable agreement.” The court relies on Merex to conclude that Lim’s claimed harm—the lost equity he says he was promised—is exactly the kind of expectation loss that cannot satisfy unconscionability.
  • Odonata Ltd. v. Baja 137 LLC, 171 N.Y.S.3d 93, 96 (1st Dept. 2022) and Martin Greenfield Clothiers, Ltd. v. Brooks Bros. Grp., Inc., 107 N.Y.S.3d 83, 85 (2nd Dept. 2019)
    These Appellate Division decisions rebut Lim’s procedural argument that unconscionability is categorically a fact question that cannot be resolved on a motion to dismiss. The panel cites them to show New York courts do dismiss promissory estoppel claims at the pleading stage when unconscionable injury is not adequately alleged.
  • Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012)
    Establishes abuse-of-discretion review for denial of leave to amend, framing the appellate lens for Lim’s Rule 15(a) argument.
  • Chunn v. Amtrak, 916 F.3d 204, 208 (2d Cir. 2019)
    Provides the futility standard: leave may be denied where amendment would “fail[] to cure prior deficiencies” identified by the court. The panel applies this directly, emphasizing that Lim had been explicitly instructed to plead unconscionable injury and did not.

Legal Reasoning

  1. Statute of frauds applicability (one-year rule)
    The court treated the promise as one “that cannot be fully performed within one year” under N.Y. General Obligations Law § 5-701(a)(1). Because the alleged equity could not begin vesting until one year after employment commenced (and continued monthly thereafter), the agreement’s performance necessarily extended beyond one year. Lim’s “renewal” theory did not change this; a renewed promise to deliver the same multi-year vesting equity still falls within the statute.
  2. Promissory estoppel’s “unconscionable injury” gatekeeper
    Once the statute of frauds applied, the panel required Lim to plead an injury so severe that it would be unconscionable to allow the statute of frauds to defeat the claim. Citing In re Estate of Hennel and Merex A.G., the court treated this as an element that must be plausibly alleged—not a discretionary equitable gloss to be developed later.
  3. Expectation damages are not enough
    Lim’s alleged harm was essentially: “I worked and relied, and therefore I should receive the equity I was promised.” That is the value of the bargain—classic expectation damages. Under Merex A.G., this “flows naturally” from nonperformance and cannot qualify as unconscionable injury. The court underscored the point by noting that, at oral argument, Lim declined to identify any unconscionable injury he could plausibly claim.
  4. Pleading-stage dismissal is permissible
    The court rejected the notion that unconscionability must always be resolved as a fact issue. Because Lim failed to plead an essential element, dismissal at the Rule 12(b)(6) stage was appropriate—consistent with Odonata Ltd. v. Baja 137 LLC and Martin Greenfield Clothiers, Ltd. v. Brooks Bros. Grp., Inc..
  5. Denial of leave to amend for futility
    Applying Chunn v. Amtrak and reviewing under Anderson News, L.L.C. v. Am. Media, Inc., the panel held that the district court acted within its discretion. Lim had multiple opportunities, was expressly told that unconscionable injury must be pleaded, did not do so, and offered no concrete, curative facts.

Impact

Practically, this decision reinforces a recurring New York/Second Circuit reality for employment-compensation disputes involving unwritten equity arrangements:

  • If the alleged equity compensation vests over time beyond one year, plaintiffs should expect a statute-of-frauds challenge under § 5-701(a)(1).
  • Promissory estoppel is not a general “backup contract” claim; when used to evade the statute of frauds, it demands pleading non-routine, extraordinary injury beyond losing the promised upside.
  • Courts may treat “unconscionable injury” as a pleading requirement and dismiss at the motion-to-dismiss stage.
  • Repeated failure to plead that element can justify with-prejudice dismissal and denial of further amendments.

Doctrinally, the order is non-precedential, but it is likely to be cited for its straightforward synthesis of In re Estate of Hennel + Merex A.G. in the specific context of employee equity vesting promises.

Complex Concepts Simplified

  • Statute of frauds (one-year provision): Certain agreements must be in writing to be enforceable. Under N.Y. GOL § 5-701(a)(1), if an agreement cannot be fully performed within one year, an oral promise is generally unenforceable.
  • Promissory estoppel: A claim that can sometimes enforce a promise even without a contract, when someone reasonably relies on that promise and is harmed as a result.
  • Unconscionable injury: In this setting, it means an exceptional harm—something more severe than “I didn’t get what I was promised.” The court treats ordinary lost profits or lost equity value as insufficient.
  • Expectation damages: The value of the promised bargain (here, the equity stake Lim expected to receive). These damages are typically not enough to overcome the statute of frauds via promissory estoppel.
  • Vesting: Equity does not become fully owned immediately; it “vests” over time according to a schedule. A vesting schedule extending beyond one year often triggers statute-of-frauds issues for oral equity promises.
  • Futility (leave to amend): Courts need not allow another amended complaint if the plaintiff cannot fix the legal deficiency, even with more facts.

Conclusion

Jun Young Lim v. Radish Media, Inc. affirms that, under New York law, promissory estoppel cannot rescue an unwritten, multi-year equity-vesting promise unless the plaintiff plausibly alleges an unconscionable injury—and the mere loss of the promised equity (expectation damages) does not qualify. The decision also underscores that courts may resolve this defect at the pleading stage and may deny further amendments where the plaintiff cannot articulate facts that would meet the unconscionability threshold.