### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON Ja nuary 17, 200 6 S es sio n

JO HN MELT ON, R & J OF 

### TENNES SEE, I NC., AND 

### STA TE OF TENNES SEE, ON T HE R EL AT ION OF 

### J OHN 

### M ELTON AN D 

### R & J OF 

### T ENNES S EE 

### , I NC


### . v. CITY OF LEX INGTO N, TEN NES SEE

An Appeal f

romthe Circ uit Court for Henderson Coun ty No. 03093-3 Roge r A. P age, Judge

No. W2005-01167-C OA-R3-C V - F iled Jul y 20, 2006

Th is c a se inv olv e s e qu ita ble e sto pp e l a g a ins t a

mun ic ipa l g ov e rn me nt. I n 1 99 8, a re a l e state company develope d a lar g e re sidential subdivision j ust outside the defe ndant city . The c ity annexed the pr op e rty

a nd pr ov ide d servic e s to the are a . T he de ve lop e r l a te r b e c a me ins olv e nt andfaile d to pave one of the roa ds in the subdivisi on. Subsequently , th e p l ai ntiffs purcha sed lots in the subdivision fronting the unpa ved roa d and applied to the de fendant city for building permits for the lots. T h e c ity d e n ie d th e p e r mi ts in p ar t b e c a u s e th e r o a d in f r o n t o f th e lo ts w a s unpaved. T he plaintiffs filed this decla

ratory judgme nt action aga inst the city , arg uing that the city was e stopped fr om d e nying the bu ild ing pe rm its on the ba sis of the un pa ve d roa ds , an d tha t city wa s obli g a te d to pa ve the ro a d a nd to iss ue bu ild ing pe rm its to the plaint if fs . T he tr ia l c ou rt

c on c lud e d th a t th e c ity

wa s n ot e sto pp e d from enfo rci ng the re qu ir e me nt that th e ro a d b e pave d a ndwa s n ot o bli g a te d to pave the ro ad

. T h e plaintiffs now appe al. We aff irm, concluding that the evidenc e does not preponde rate ag ainst the trial court’s decision not to apply equitable e stoppel under the circ umstances of

this case.

Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Circ uit Court is Aff irm ed

H OL L Y M. K I RBY , J.
, d e li v e r e d th e o p in io n o f th e Co u r t, in w h ic h W. F RAN K C RAW FORD , P.J
., W.S
., and A L AN E. H I G H ERS , J ., joined.

Thomas F. Bloom and Daniel D. Warlick, Na shville, Tennessee , for the a ppellants, J ohn Melton and R & J of Tennessee , I nc.

J ohn D. B urleson and L atosha Mason D exter, J acks o n , T en n essee, for the a ppellee, City

of L exington, Tenne ssee.-2- OP IN ION

I n 1998, Walden Blan k en s h i p purcha sed prope rty west of the c ity

limit s of L exington, Tenne ssee, f

or the purpose of deve loping a residential subdivision. Bla nkenship’s intere st was later transfe rre d to a re al estate development c orporation called B lankenship Melton, I nc. L arry Melton (“ De ve lop e r” ) w a s a

dir e c tor a t B la nk e ns hip Me lto n, bu t app are ntl y he ld no ow ne rs hip int e re st i n the c omp a ny . L arry

Me lto n b e c a me the de ve lop e r f or the su bd ivi sio n known as the Wes t Po int e Subdivis ion (“West Pointe”).

At the beg inning stag es of the de velopment, the De veloper disc u s s ed wi t h David Jowers (“May or Jowers”), t h e m ay or of the D efe ndant/Appellee Cityof L exington (“City ”), and other

me mbe rs of the City B oa

rd the po ssi bil ity of the City a nn e xing the pr op e rt y

on wh ic h We st Po int e Subdivis ion was situated. At the time, May or Jowers was on the L exington Municipal Reg ional Pla nn ing Commis sio n ( “ Pla nn ing Com mis sio n” ). Th e De ve lop e r c la ime d th a t th e City a g re e d to

annex the prope rty

afte r he and/or his company had complete d certain tasks, one of w hich was paving the roa ds in the subdivisi on.

On Oc tob e r 8 , 1 99 8, th e City vo te d to a nn e x lots 1 th ro ug h 6 6 o f the Wes t Po int e Subdivis ion, refe rre d to as “Phase I ” of the projec t. Meanw hile, the Developer finished paving the roads in Phase I

. After the annexation, the Cityprovided services to the lots in Phase I , including water , elec tricity
, g as, fire hy drants, and police and fire protection. B uilding permits were issued f or those lots.

At some point, the Deve loper hire d Denny Bush to pre pare plats of the entire subdivision. The last of t he plats was completed by April 20, 1999. This included the plats for “Phase II ” of the projec t, which wer e all of the rema ining lots in West P ointe. The Deve loper submitt ed the plat of Phase I I to May or J ower s. The re cord c ontains no information on any further action on the plats for P h a s e II.

Th e De ve lop e r andCi ty of fi c ia ls d isc us se d th e a nn e xati on of “ Pha se I I ” of

the pr oje c t. Meanw hile, the Deve loper pa ved all of the streets in Phase I I except for a g rave l portion of Timber Ridge Drive be y ond lots 94 and 95, fronting lots 100 throug h 117. The Deve loper stopped paving at that point because De an Jackson, the manag er of the CityWater De partment, a sked him to delay f i n i s h i n g t h e p a v i n g u n t i l t h e u t i l i t y l i n e s w e r e i n s t a l l e d b y t h e C i t y.

On Ma y 4, 19 99
, the a nn e xati on or din a nc e fo r Pha se I I c a me be fo re theCity B oa rdfo r a fi rs t

rea ding. T he ordina nce pur ported to anne x “the total a rea of Hende rson County Tax Map 72, Parce l 55 dated 8- 97.” A. D. War d (“Ward” ), an a lderman, obje cted to the or dinance beca use the portion of the roa d in Phase I I , ref err ed to above, had not y et been paved. May or J ower s told the B oard that t h e D ev el o p erh ad p ro m i s ed t o fi n i s h p av i n g t h e ro ad s

. T h e o rd i n an ce p as s ed o n t h e f i rs tre ad i n g.T houg h i r r el eva nt t o t he i s s ues on appeal
, i t appear s B l ank ens hi p M el t on/ Lar r y M el t on vi ol at ed T enn es s ee 1

C o d e A nno t at ed § 1 3

- 3

- 4 1 0 (a) (19 9 9 ) by sel l i ng the l and in t he d evel o p m ent be fo re ob t ai ni ng ap p roval o f t he P l anni ng C o m m issio n

.

“ I t i s t h e f

u n ct i on a n d du t y of

a r eg i on al pl an n i n g commi s s i on t o mak e an d a dopt a g en er al r eg i on al pl an for 2

t h e ph y s i ca l de v el opmen t of t h e t er r i t or y of

t h e r eg i on

. ” T

. C. A. § 13- 3- 402( a) ( 1) (1999)

. T h e Pl an n i n g Commi s s i on i s a l s o e mpowe r ed t o “ adopt r eg u l at i on s g ov er n i n g t h e s u bdi v i s i on of l an d w i t h i n t h ei r j u r i s di ct i on

. ” T

. C. A. § 13- 3- 4 0 3 (a) (19 9 9 ).

-3- As the de ve lop me nt p ro g re sse d, the De ve lop e r ap pa re ntl y e nc ou nte re d f

inanc ia l di ff

ic ult ie s. I n Aug ust 1999, the Developer sold L ots 100 through 117 at auction. He ne ver c ompleted paving 1 the portion of Timber Ridg e Drive fronting lots 100 through 117.

A month later, on Septembe r 7, 1999, the annex ation ordinanc e for Phase I I came befor e the City Bo ar d for a

second a nd final re ading . Ward made the same objec tion reg arding the unpave d portion of Tim ber Ridg e Drive, but the ordinanc e passe d by a vote of five to one. Thus, Phase I I was annexed bef

ore Timber

Ridge Drive w as complete ly paved.

The Planning Commi ssion had rec ommended to the Citya Plan of Servic es re solution (“Plan of Service s”), pr epar ed by the CityPlanner, Chris Pate (“ Pate”) , for se rvice s to be extended to the

ann ex ed are a

. Th e Pla n o f S e rv ic e s, by its ow n te rm s, app lie d to “ Wes t Po int e Sub div isi on L ots 2 66 throug h 99 and an 11.70 acr e tract and a ny rema inder of H ender son CountyTax Map 72, Parce l 55 Date d 8 -9 7. ” L ots 10 0 to 11 7 w e re no t sp e c if ic a lly me nti on e d in the Pla n o f S e rv ic e s, a ndtho se lots are not within the 11.70 ac re trac t mentioned in the Plan. Howeve r, lots 100 to 117 would be withi n the “r emainder ” of the map re fer ence d in the Plan. The Plan of Servic es included a subsection on “Stree ts,” which stated:

The development is outside the pl anning reg ion. Road standards cannot be e nforc ed. Ma int e na nc e c os ts w ill be a ssu me d w he n a c c e pte d b y the City B oa rda s a c ity str e e t. * * * Annexation will be c ontinge nt upon the securing of a bond by the initial developer s to e ns ur e that st

re e ts a re c on str uc te d to L e xing ton stand ard s.
On September

7, 1999, the day

the anne x ation ordinanc e for Phase I I passed, the Plan of Service s fo r theare a

inc lud ing Pha se I I

wa s a do pte d by

the City . A lso on that day , a fi na l pl a t of

the Wes t Pointe Subdi vision S ection 5, which inc ludes lots 100 to 117, was recor ded in t he Reg ister’s Of fice of He nderson County

. Although the Plan of Service s was adopted, the City did not follow th ro u gh wi t h t he

reco mm end ati on th at i t s ecur e a bo nd by th e Dev elo per to ens ure th e com pl eti on of th e st reet s. By the time the Cityapprove d the Plan of Service , the prope rty had already

been sold at auction. Ne ve rthe le ss, the City

be g a n p ro vid ing se rv ic e s to P has e I I , e xten din g to l ots 10 0 to 11 7, in

acc ordanc e with the Plan of Servic es. The Cityinstalled elec tricity , water , natura l ga s, and fireM e lto n o w n s the m a jo rity o f t h e sto c k in R & J o f T e n n e sse e , In c

. 3

-4- hy dr a nts , a ndthe City ’s po lic e de pa rt me nt and fi re d e pa

rt me nts inc or

po rate d th e are a

int o th e ir

re sp e c tiv e jurisd ic tio ns

.
Th e City a lso iss ue d b uil din g pe rm its fo r s ome lot s in Pha se I I . App ro xima te ly nin e pe rm its

we re iss ue d, inc lud ing a pe rm it fo r lot 10 0, on e of the lot s tha t fr on te d the un pa ve d roa d. Th e City also beg an to collec t ta x es fr om the new r esidents of Phase II , and the public be g an to use the a rea , including the unpaved portion of Timber Ridge Drive.

I n Marc h 2001, Plaintiff/Appellant J ohnny Melton (“Me lt on”), w ho is unrelated to the Deve loper L arry

Melton, and Plaintiff/Appellant R & J of Tenne ssee, Inc. (“ R & J”), purcha sed ten lots in P hase II

— lots 101, 102, 106, 107, 108, 109, 111, 112, 113, and 116 — fr om individual lot

ow ne rs

. Al l of

the lot s p ur c ha se d f

ro nt the un pa ve d p ortio n o f T imb e r R idg e Drive . Wh e n th e lot s 3

wer e orig inally

being financ ed by

the Deve loper throug h the B ank of L exington (“B ank”) , Melton was the B ank’s br anch ma nag er a nd helped f acilitate those loa ns. Be cau s e of his pre vious involvement with the projec t, Melton felt familiar with the development and believed that he did not need to conduct a title check on the properties. Melton did not investi g ate to dete rmine whe ther the lots were w ithin the jurisdiction of the Pl anning Commi ssion or whether the plat for the subdivision had bee n approve d by

the Planning Commission.

I n J anuary

2003, Melton applied to the City building insp ec t o r, Gre g Bird ( “B ird”), f or bu ild ing pe rm its fo r a ll t e n lo ts. B ir d c on su lte d w ith City Pla nn e r Pa te re g ard ing Me lto n’ s p e rm it

re q u est. On F ebrua

ry 18, 2003, Pate sent a me morandum to Bir d, the Planning Commission, and other City repr esentatives advising the Citynot to issue the building permits t o Melton because the Pla nn ing Com mis sio n h a d n ot app ro ve d a plat of the su bd ivi sio n, a s r e qu ir e d b y statut e , a ndbe c aus e the roa d in front of the lots was not pa ved. See T.C.A. § 13-3-402 ( 1999). He n o t ed i n the memorandum that, althoug h the Developer had told the P lanning Commi ssion that the development was not in the Planning Commi ssion’s reg ional boundary
, “[l] ater phases a ppear to have e ncroa ched into the Planning Reg i o n

. ” P ate e x presse d conce rn over how to resolve the problems, noting dif fi c ult le g a l i s s u e s r e g ar d i n g t h e o w n e r s h i p o f t h e s tr e e t s a n d t h e r e s p o n s i b i l i t y f o r t h e m

. P a te

r e c o m m e n d e d t h a tt h e C i t y o b t a i n a l e g a l o p i n i o n o n t h e i s s u e s h e r a i s e d i n h i s m e m o r a n d u m

. In

a c c or da nc e wi th P a te ’s re c omm e nd a tio n, B ir d de nie d Mel ton ’s re qu e st fo r the pe rm its . Af te r that, Me lto n a lle g e dly

los t se ve ra l pe nd ing c on tr a c ts f or the sa le of

the lot s.

On Se pte mbe r 4 , 2 00 3, Me lto n a ndR & J (c oll e c tiv e ly , “ Pla int if fs ” ) f ile d a pe tit ionfo r a

writ of manda mus ag ainst the City , alleg ing that the Cityhad arbitrarily ref used to pave or maintain the unpaved portion of Timber Ridge Drive. They asked the trial court to direc t the Cityto pave the r oad and then issue the reque sted building permits to Me lton. I n response , the Cityadmitted that it was responsible for

the maintenanc e costs for public streets wh i ch h av e bee n properly dedicated and

acc epted by

the City . I t claimed, howe ver, that the unpaved portion of Tim ber Ridge Drive wa s not

a “ pu bli c str e e t” that ha d b e e n p ro pe rl y de dic a te d a nd a c c e pte d by the City . F urthe rm or e , th e City maintained that the r oad fe ll within t h e l o ca l planning r eg ion and that the orig inal Deve loper ha dH e d escri b ed a plan of s ervi ce as a general outl i ne o f s ervi ces pro vi d ed by t he C i t y , wi t h t i m e est i m at i o ns and 4

c o sts inv o lve d

.
-5- failed to submit a s ubdivision pl at to the Planning Commission for approva l, as requir ed by statute,

a ndthat he faile d to fi nis h pa vin g the ro a d, a re qu ir e me nt i n th e su bd ivi sio n r e g ulatio ns . B e c aus e of thi s, the City c la ime d, state la w d id n ot p e rm it i t to ma int a in the ro a d o r i ssu e bu ild ing pe rm its
, despite the fa ct that the ar ea ha d been annexed.

P r i o r t o tr i a l
, t h e p ar t i e s s t i p u l a t e d t h a t a w r i t o f m a n d a m u s w a s n o ta n ap p r o p r i a t e r e m e d y, but that the Plaintiffs stated a cla im for a de clar atory judgme nt. There fore
, at the trial, the Plaintiffs soug ht a dec laration from the trial court that Phase I I was prope rly

annexed, that the unpave d portion of Timber Ridg e Drive was properly dedicated, and that the City is responsible for ma intaining or paving the roa d in acc ordanc e with L exington standards. The Plaintiffs a rg ued that if the City

wer e order ed to maintain the roa d, it would have no re ason not to issue the building pe rmits.

The trial was held on J une 21, 2004. At the outset, the City Planner, P at e, t es t i fi ed. As backg round, Pate said that he had been a staf f planne r with the City

since 1996, c onsulting with the Planning Co mm is s io n a n d th e Ci ty

. H e e xp lain e d th a t th e Pl a n n in g Co mm is s io n makes

rec ommendations to the Cityreg arding z o n i n g an d annexation issues, and that the Planning Com mis sio n h a s th e auth ority to a do pt, a dmi nis te r, a ndre vie w s ub div isi on plats that f a ll w ith in i ts jurisdiction. One of Pate’s responsibilities wa s to ove rsee subdivision re g ulations. He stated that any one developing a subdivision was require d to submit for approva l a preliminary plat, followed by a fina l plat. Pate asserted that there was no indication a plat for the West Pointe Subdivi sion had

ever been submitted for

approva l with the Planning Commissi on.

Pate said that the Pl an n i n g C o mmissi on is involved in the Cit y ’s anne x ation proce ss by making rec ommendations on zoni ng and plans of service s for the a rea proposed f

or anne x ation. He

4 stated that, even if the P lanning Commi ssion rec ommends a plan of services and an area is annexed, approva l of t h e p l at i s still require d. He stood by the re commendation in his Fe bruary 2003 memorandum a dvising the City that a “r efusa l to follow[ ] t he Subdivision R eg ulations [ would] establish a costly

prec eden t ,” bec ause if de veloper s thought that the r eg ulations could be ig nored, they would sell lots and develop them without providing the p ro p er improvements under the

su bd ivi sio n regulatio ns . H e a sse rt e d th a t th e Pla int if fs in t his c a se sh ou ld b e re qu ir e d to g e t a

reme dial subdivision pl at bef ore the y can be issued building permits. Pate conce ded, howeve r, that he ha d a dv ise d B ir d th a t it wo uldbe dif

fi c ult to r e fus e bu ild ing pe rm its fo r l ots 66 to 9 9, be c aus e those lots we re specifica lly ref ere nced in the Plan of

Service , and the Planning Commi ssion, there fore , “should have fig ured out that ther e wa s a subdivision plat for those lots.”

Pate was que stioned at le n g th a b o u t w hether

the planning reg ion of the Planning Commi ssion included West Point e Subdivision, p ar t i cular ly lots 100 to 117. Differe nt maps of the planning reg ion of L exington wer e submitted as evidenc e. P ate testified that the planning reg ion had p r e v i o u s l y

b e e n d e f i n e d a s t h e c o rp o r a t e C i t y l i m i t s p l u s a

f i v e

- m i l e r a d i u s f

r o mt h o s e l i m i t s

. In-6-

1988 and 1989, howe ver, the planning reg ion was re duced to include only a one- mile radius ar ound the City ’s limits

.

P a t e s t a t e d t h a t , w h e n h e r e c o m m e n d e d t h e P l a n o f S e r v i c e s f o r t h e a n n e x a t i o n o f

P h a s e II in 1999, it applied only to lots 66 to 99 beca use he did not know that lots 100 t o 117 even e x isted. Consequently , Pate did not intend for the Plan of Service s to a pply to lots 100 to 117. He e x plained that in t h e P l an h e made the statement that “ [t ]he development is outside the planning reg ion,” beca use he b el i ev ed at t hat time that the subdivision was outside the boundary , based on repr esentations of the Deve loper a nd other c ircumstance s. I n approximately Fe b ru ar y

2003, howeve r, Pate rece ived a call fr om a building of ficial, pre sumably

Bird, w ho told him t hat a building permit had be en re quested for lots that were not named in the annexation or the Plan of Service s, and he aske d for a

rec ommendation from Pate on whe ther the reque st c ould be g rante d. I t later turne d out that lots 100 t o 11 7 we re i n fa ct within the reg ional boundarie s of the Planning Commi ssion. S inc e the re wa s n o a

pp ro ve d p la t f

or the su bd ivi sio n, Pa te c on c lud e d th a t th e bu ild ing pe rm its sh ou ld

no t be iss ue d, a ndhe dr a ft e d th e F e br ua ry 20 03 me mor a nd um t o th a t e ff e c t.

The De veloper , L arry Melton, also testified. The D evelope r stated that he was a direc tor of Bla nkenship Melton, the re al estate development c ompany that owned the property , and that he w as the deve loper of the West Pointe Subdivis ion. The Developer claimed that he assembled a plat for the ar ea and g ave it to May or J ower s for a pproval, but admitted that he ha d no evidenc e that the plat

was e ver a

pproved.

The De veloper

testified that he had had an ag ree ment with the Citythat the Citywould annex the p r o p e r ty a f

te r h e h a d
, a mo n g o th e r th in g s , p a v e d th e r o a d s

. U ti li ty r e p r e s e n tati v e s , howeve r, asked him to ref

rain fr om paving the g rave l portion of Timber Ridge Drive until the utilities were la id. Th e City , th e De ve lop e r c la ime d, “ jumpe d th e g un ” a ndwe nt a he a d a nda nn e xedthe pr op e rt y prior to him completing the roads, so he did not finish the job

. He testified that he pre sumed that the City wa s a c c e pti ng the su bd ivi sio n “ a s is” — un pa ve d. He a lso a llo we d th a t he be lie ve d th a t, afte r the prope rty

was a nnexed, Blanke ns h i p Melton still had an oblig ation to pave the r oad. The Deve loper wa s prese nt at the auction of t he prope rty in Aug ust 1999 and maintained that he had not told any one that the r oad in front of the lots would be paved. The Deve loper indicated that he wa s ins olv e nt anda dd e d th a t he ha d s e ve ra l sizea ble jud g me nts a g a ins t him in oth e r u nr e la te d la ws uit s.

J ohnny Melton testified at trial. Melton said that he lived in the West P ointe Subdivis ion, and th at h e was a real est ate dev elo per hi ms elf

. He sai d th at all of t he l ot s o wne d b y hi m an d R &J

w e r e p u r c h a s e d f

r o m in d iv idu a ls
, n o t f

r o m th e D e v e lo p e r

. Wh e n M e lt o n p u r c h a s e d th e lo ts , he knew that the r oad in front of them was unpa ved. He sai d that he did not have title sea rche s conducte d when he purcha sed the prope rty beca use, as branch mana g er of the B ank that did the ini tia l f inanc ing fo r the De ve lop e r, he ha d b e e n in vo lved i n th e fi na nc ing a ndhe kn e w that ti tle

sear ches w ere completed at that time. He did not contact a ny City officia l b ef

o re p u rcha sing the property to determine why the stree t was not pave d, nor did he c heck w ith the Cit y to see whe ther the lots were contained in a n approve d subdivision plat. He did, howeve r, che ck to make sur e a plat had bee n filed at the Reg ister’s Offic e. Melton said he had not ma de a claim ag ainst the Deve loper,-7-

beca use he unde rstood that the Deve loper wa s insolvent. Melton testified t hat he was tol d that the permits he re quested wer e denied beca use the Planning Commi ssion ha d not approve d a plat for that section of the subdivision, and bec ause the road w as not pave d.

F orme r M a y or

Jowe rs te sti fi e d at trial

. Du ri ng his te nu re a s May or , b y statut e , h e wa s a member of

the Planning Com m i s s ion. He re called his de aling s with the Deve loper re g arding the West P ointe Subdivis ion, but he did not remember b ei n g given the plat to the subdivision. He speculated that he would not have let a subdivision be approve d by the Planning Commission and annexed by

the Cityhad he not at least looked at the plat. He state d that, in his ex perie nce, he had

never seen a plan of service a

pproved w ithout the plat first being approve d. May or Jowers rec alled that th e De ve lop e r h a d a ssu re d h im that th e ro a ds in the su bd ivi sio n w ou ld b e pa ve d, bu t a t th e tim e of trial he did not know whe ther the r oads had, in fa ct, bee n completed. He explained that if an ar ea is inside the planning r eg ion, streets have t o be built acc ording to the Planning Commission standards. I f an a

rea is outside the planning r eg ion, a deve loper doe s not need to consult with the Planning Commission but deals only with the county

highw ay department.

The dire ctor of City

utilit ies, Dean J ackson ( “Jackson”), te stified as we ll. Du ring the re levant time period, Jackson was the g ener al manag er of the CityWater De partment. He confirme d that

some u ti li ti e s h a d b e e n e xte n d e d a lo n g th e g r a v e l p o r ti o n o f T imb e r Ri d g e D r iv e a c c o r d in g to an
arr a ng e me nt that th e City ha d w iththe De ve lop e r. He e xpla ine d th a t it wa s to the City ’s be ne fi t to have the utilit ies laid befor e the r oads we re pa ved in orde r to avo i d cu t t i n g t h roug h the roa d or drive way s at a

la te r t ime . T hat c omp le te d th e e vid e nc e su bmi tte d at tria l.

On J une 22, 2004, the tria l court issued a le tter opi n i o n

. I n t h at opinion, the trial court dete r mi n e d th a t th e Ci ty w a s e q u it ab ly e s to p p e d f r o m r e q u irin g Pl a in ti f

f s to p u r s u e a re medial platting pr ocess in orde r to obtain building permits for the lots in question. The trial court rea soned that sever al permits had alrea dy been issued in Phase I I

of the development, including one for lot 100 wher e no pave d road ex ists, and that the C ity had alr eady provided va

rious service s to the are a, had collecte d rea l estate taxes from the a rea , and had g ener ally benef itted f rom the annexation of

the ar ea. The trial c ourt also re lied on the fa ct t hat “the develope rs partially complied with applicable law by filing a copy of the subdivision plat in the Reg ister’s Of fice of He nderson County .” Thus, the tria l court c oncluded:

[I ]t would be unfair to r equire Petitioners or any other simil arly situated lot owners to g o th ro ug h a

remedi a l pl a tti ng pr oc e ss w he n o the r l ot o wn e rs in the sa me ph a se of the su bd ivi sio n ha ve no t done so

. Th e princ ipa l of e sto pp e l c le arl y

app lie s to thi s situatio n. Exc e pti on a l c ir c ums ta nc e s e xist s uc h th a t th e do c tr ine of e sto pp e l sh ou ld be invoked.

I n a dd iti on , th e tr ia l c ou rt de c lare d th a t a ll o f the str e e ts ande a sem ent s in the Wes t Po int e Sub div isi on ha d b e e n d e dic a te d b y the orig ina l D e ve lop e r t o th e City by e sto pp e l, andthat th e City owned the stre ets in the West Poi nte Subdivisi on.A l t houg h t he part i es appear t o as s ume t hat mai nt ai ni ng t he r oad a ccor di ng t o Lexi ng t on s t andar ds means t hat 5

t he r oad sh oul d be paved, we do not deci de t hat i s s ue.

-8- The trial c ourt furthe r held, howe v er , that Melton was re quired to fulfill all other prer equisites for obtaining a building pe rmit, including building and paving “a suitable street to g ive

acc ess to the disputed lots . . . .” The trial c ourt determined that the Citywas not re quired to pave the re mainder of

Timber Ridg e Drive, re asoning that the Plaintiffs knew that the stre et was unpa ved when they

boug ht the lots, a nd that to require the Cityto do so under these circ umstances would be a windfa ll for the Plaintiffs. The trial court held that the road in question “must be built according to ‘ L exington standards’ befor e the City of L exington shall be re quired to issue building pe rmits.” 5 The trial c ourt said t hat i ts decision was not aff ecte d by the fact that permits wer e g rante d for other lots in P hase II , beca

use the lo t s fo r wh i ch permits were g rante d, except for one , wer e on pave d roads. Althoug h the Cityowned the r oads in the subdivision, the trial court stated, the City was not require d to issue building permits for the l ots in question until the street was c ompleted to L exington

s tandar ds, i.e.
, p a v e d

. T h e tr i a l c o u r t f o u n d t h a t i t w a s u n n e c e s s ar y t o d e t e r m i n e w h e t h e r the lot s in question were inside or outside of the bounda ries o f t h e Planning Commi ssion, and noted that those boundarie s were “at lea st ambiguous a nd disputable.”

On May 6, 2005, the trial court entere d an orde r consistent with its letter opinion and incorporating it by

ref ere nce. From this order, the Plaintiffs now a ppeal.

On appe al, Plaintiffs state the iss u e as, “W hether the trial court erre d in holding that [the] doctrine of

estoppel ap plies only

to the platting r equire ments and not to the other subdivision reg ulations, inc luding the require ment that the roads be paved and the issuance of building pe rmits.” T h e y s e e k a d e c l ar a t i o n t h a tt h e C i t y i s r e s p o n s i b l e f

o r m a i n t a i n i n g t h e u n p a v e d r o a d i n P h a s e II

acc ording to “L exington standards,” i.e.
, paving the roa d, and that the City should not be permitted to d e n y t h e m b u i l d i n g p e r m i t s b a s e d o n t h e f a c t t h a t t h e r o a d s ar e u n p a v e d

. I n r e s p o n s e , th e City do e s n ot c ha lle ng e the tr ial cou rt’ s a pp lic a tio n o f e qu ita

ble e sto pp e l to the platti ng re qu ir e me nts

. I t a sse rt s th a t th e tr ia l c ou rt app ro pria te ly

app lie d th e do c tr ine sp ari ng ly a ndratio nally , a ndit contends that the t rial court was corre ct i n ref using to apply

the doctrine with respec t to the building permits, to the paving require ment, and to the City ’s responsibility for maintaining and/or pa ving the road in que stion.

We re vie w thetr ia l c ou rt ’s fi nd ing s o f f a c t de novo
, with a presumption that the trial court’s f a c tu a l f in d ings a r e c o rr e c t, u n le s s th e e v id e n c e p r e p o n d e r a te s o th e r w is e

. T

. R. A

. P. 1 3 ( d )

. We revie w the trial c ourt’s conc lusions of law de novo , with no such presumption of cor rec tness. Id.

Un d er Tenne ssee law , the doctrine of equitable estoppel is g ener ally disfavore d. Fa us t v. Me tro . Gov ’t

of Na shv ill e , No

. M2 00 3- 00 29 6- CO A- R3- CV
, 20 06 WL 11 84 20 6, a t *2 1 ( Te nn . Ct

. App. May

3, 2006); Shahan v . Fr ank lin C ount y , N o

. M 2 0 0 2

- 0 0 7 2 5

- CO A

- R3

- CV
, 2 0 0 3 WL 23 09 38 36 , at *3 (T e nn . Ct. App . De c . 30, 20 03 ). A p art y se e kin g to i nv ok e thedo c tr ine of e qu ita ble estoppel has the bur den of pr oving that the defe ndant (1) e ng ag ed in conduc t which amounts to a fa lse re pr e se ntati on or

c on c e a lme nt o f m a te ri a l f a c ts o r, a t le a st, c on du c t w hic h is c a lc ulate d to-9-

c on ve y the imp re ssi on that th e fa c ts a re oth e rw ise than, a ndinc on sis te nt w ith , th os e wh ic h th e pa rt y subsequently

attempts to assert; (2) had an intent or a n expectation that such conduc t would be ac ted upon by the other party ; and (3) had actua l or constructive know ledg e of the rea l fac ts. Consu m er Cre dit Union v . Hi

te , 801 S.W .2d 822, 825 (Tenn. Ct. App. 1990). The party seeking to invoke the doctrine must (1) have a

lack of knowledg e and la ck the means to gain knowledg e of the truth; (2) have r elied upon the c onduct of the pa rty who is estopped; and (3 ) have acte d in relianc e on the estopped p ar t y ’s conduc t so as to have pr ejudicially chang ed the position of the party claiming estoppel. Faus t , 2006 WL 1184206, at *21. The S upreme Court has ex plained that “[i]t is essential to estoppel that the person claiming it was him self not only destitute of knowledg e of the fac ts, but wi tho ut a va ila

ble me a ns of

ob ta ini ng su c h kno wl e dg e ; f or th ere canbe no e sto pp e l w he re bo th parties have the same me ans of a scertaining the truth.” Rambe au v . Fa rri s , 212 S.W .2d 359, 361 (Tenn. 1948)
, quoted in Faus t , 2006 WL 1184206, at *22.

I n addition, the doctrine of equitable estoppel i s not applicable to a local g overnme nt to the

same e x tent as it might apply to a private individual. Shah an , 2003 WL 23093836, at *3. Rather, the doctrine of equitable estoppel applies to a g overnme ntal subdivision only in “ very exceptional circ umstances.” Id. ; se e Pa duc h v . City of Jo hnso n Cit

y , 896 S.W .2d 767, 772 (Tenn.1995) . Such circ umstances a

re those in whic h “the p u b lic body took affirmative ac tion that clear ly induced a private p ar ty

to a c t t o h is o r

h e r d e trim e n t, a s d is ti n g u is h e d f r o m s il e n c e , n o n

- a c ti o n or acquie scenc e.” Shah an , 2 0 0 3 W L 2 3 0 9 3 8 3 6
, at* 3 (q u o t i n g Bledsoe Coun ty v. Mc Reynolds , 703 S.W .2d 123, 125 (Tenn. 1985) ). This Court has also held that “e quitable estoppel may be invoked ag ainst g overnme ntal ag encie s only when the ag ency induced the party to g ive up property or a right in exchang e for a promise.” Id. at* 4 (c i t i n g Tho mpson v . D e p’ t of Cod e s Ad min. , 20 S.W .3d 654, 664 (Tenn. Ct. App. 1999); a nd Elizabeth ton Hou s. & D ev. Agency, Inc. v. Price , 844 S.W .2d 614, 61 8 ( Te nn . Ct . A pp . 1 99 2) ). Th e re fo re , “ a pa rt y ma y inv ok e e qu ita

ble e sto pp e l agai nst a g overnme ntal ag ency

only when the f

acts c lear ly

establish the exist ence of an i m p l i ed contr act or that the g overnme nt has induced a party to relinquish a cause of a ction.” Id.

I n th is c a se , th e Pla int if

fs arg ue that the tr ia l c ou rt c or re c tly app lie d th e do c tr ine of

e qu ita ble

e sto pp e l to re lie ve the m of the platti ng re qu ir e me nts , b ut e rr e d inre fu sin g to ap ply the do c tr ine to relieve them of t he subdi vision reg ulation requiring that the roa d be pave d. The Plaintiffs contend that the equities of the c ase require that the City be require d to maintain the unpaved r oad ac cording to L exington standards, i.e. , pave the road, and to issue building permits for the lots in question.

I n support of the a

rg ument that the Cityshould be requir ed to p av e t h e roa d, the Plaintiffs

assert that it was g rossly unfair for the Planning Commi ssion to first state that it had no jurisdiction over the road in que stion at the time of the annex ation in 1999, and then f our y ear s later de clar e that it had such jurisdiction for the purpose of enfor cing the s ubdivision reg ulation that the roa d be pave d. The Plaintiffs ar gu e t hat the City knew its only

reme dy to ge t the road pa ved wa s ag ainst the insolvent Develope r, and so it attempted to impose the Deve loper’s oblig ation on the Plaintiffs by ref using to pa ve the r oad and r efusing to g rant the Plaintiffs building pe rmits until the roa d was paved. T he Plaintiffs i mply that the Planning Commission and the Cityconspired to impose the obligation to pave the roa d on the owners of t he lot s by asserting jurisdiction over lots 100 to 117T h e trial c o u rt’s ho ld ing in this r e g a rd is no t ch a llen g e d o n a p p e a l. 6

A t ora l ar gu ment , t he P l ai nt i f f s as s er t ed t hat t he C i t y s houl d be re qui r ed t o m ai nt ai n t he r oad b as ed on an 7

un i dent i f i ed C i t y ordi nan ce t hat r equi r es t he C i t y t o m ai nt ai n r oads t hat ha ve been dedi cat ed. N o s uch ar gu ment was

m a d e in the ir a p p e llate b rie f. T h e a rg u m e n t o n a p p e a l is b a se d so le ly o n a p p lica tio n o f t h e d o c trine o f eq u itab le e sto p p e l. (c o n tinu e d ...)

-10- for the first time in Fe bruary 2003. They char acte rize Pate’s alleg edly inconsistent repre sentations as a f limsy , transpar ent, af

ter-the -fa ct a t tempt to assert jurisdiction where none existed. As of September 1999, the Plaintiffs arg ue, any rea sonable pe rson would have thought that the Planning Commi ssion did not have jurisdiction over the a rea , and that the origina l Develope r wa s obligated to pave the road. The ref ore, the Plaintiffs maintain, they had a r easona

ble expectation that they would be able to acquire building permits for their l ots, espec ially since the Cit y had alr eady

issued such a pe rmit for lot 100.

The Plaintiffs do not make a substantial arg ument that lots 100 to 117 are , in fac t, outside the planning reg ion of the Planning Commi ssion. The only evidenc e at tria l on the subject wa s Pate’s testimonyand the phy sical evide nce submitted in support of his testimony showing that the l ots were ins ide the Pla nn ing Re g ion

. Th e Pla int if fs ’ arg ume nt fo c us e s mor e on the tim ing of the c ha ng e in Pate’s position, insinuating that Pate and the Cityrepr esentatives asserte d jurisdiction over the property in a disinge nuous eff

ort to avoid paving the stree t. The trial court appar ently found no such siniste r motives on the part of these of ficials, and w e cannot say that the evidenc e pre ponderates ag ainst its conclusion.

I n holding that the City

was e stopped from e nforc ing the platting require ment, the trial court

re lie d o n th e fa c t th a t th is re qu ir e me nt ha d be e n not be e n e nf or c e d a g a ins t othe r p ro pe rt y ow ne rs in the subdivision, and also that various servic es we re a lrea dy being provided to the a

rea and taxes had been c ollected f

rom the ar ea. In addition, the Deve loper pa rtially perf ormed by filing the plat in the county Reg ister’s Of

fice and this was re lied upon by the purchaser s of the lots. There fore , it was not ob vio us to the Pla int if

fs that th e platti ng re qu ir e me nt h a d n ot b e e n me t. 6

I n contra st, reg arding the paving require ment, t h e fa ct that the roa d was unpa ved wa s ob vio us , a ndthe Pla int if fs kn e w that th e ro a d w a s u np a ve d at th e ti me of pu rc ha se . D e sp ite kn ow le dg e of

thi s f a c t, the Pla int if

fs didno t se e k inf

orma tio n r e g ard ingwh o h a d th e re sp on sib ili ty to pave the r oad. The Citydid not repre sent to the Plaintiffs that it int ended to pa ve the r o ad
, nor did any of i ts ag ents promise t hat t he road would be c ompleted. The undisputed e vidence shows that the City e xpe c te d th e De ve lop e r t o p ave the ro a d, a ndthat th e De ve lop e r w a s a wa re of thi s ob lig a tio n bu t faile d to fo llo w thr ou g h. I n su m, the City too k no “ a ff ir ma tiv e a c ti on th at cle arl y induced [Plainti ffs] to act to his or her detriment,” an element which is require d to apply the doctrine of equitable estoppel ag ainst a g overnme ntal entity such as the City

. Shah an , 2003 WL 23093836, at *3 (r ef u s i n g to apply

the doctrine when de veloper claimed that c ounty

repr esentative promised to take over responsibility of the road under certain conditions). There fore
, we find no err or in the trial court’ s decision to decline to r equire the City to pa ve the road in question based on the doc trine of e qu ita ble e sto pp e l. 7(

. . . con t i n u ed) 7

T h u s, a n y a rg u m e n t b a se d o n th e u n id e n tif ie d o rd ina n c e m u st b e d e e m e d to h a v e b e e n w a ive d

. Se e Chi l dr es s v
. U ni on Realt y Co.
, 97 S.W

. 3 d 57 8 ( T enn. C t

. A p p

. 20 0 2 ).

-11- I n a related arg ument, the P laintiffs contend that the t rial court err ed in ref using to apply

the do c tr ine of

e qu ita ble e sto pp e l to e sto p th e City fro m e nf or c ing the pa vin g re qu ir e me nt a s a prer equisite for the issuance of building permits. I n this a rg ument, the Plaintiffs c ontend that they relied on Pate ’s statement in the 1999 Plan of Ser v i ce s t h at “[ t ]he development is outside the planning reg ion,” and that “[r]oad standa rds can not be enfor ced.” Howeve r, there is no evidence in the rec ord that the Plaintiffs knew a bout the statement i n the 1999 P lan of Servic es, or that Pate’ s statement caused them to expect that they would rec eive building permits in spite o f the unpave d road. A g ain, the City

made no promises reg arding the issuance of building pe rmits to the Pl aintiffs or any other similarly

situated landowne r. The f act that the City

err oneously

issued a permit to l ot 100, which is also unpaved, is a fac tor, but not an “e x treme c ircumstance ” or “ aff irmative ac tion” that w ou ld j us tif

y e sto pp ing the City

fr om e nf or c ing the re qu ir e me nt f

or the oth e r l a nd ow ne rs . It is undisputed that the Plaintiffs w ere awa re when they purcha sed the lots that the r oad wa s not paved. Under all of the c ircumstance s, we find no e rror in the trial court’s de cision to decline to apply the do c tr ine of

e qu ita ble e sto pp e l to pr e vent th e Ci ty fr om e nf or c ing the pa vin g re qu ir e me nt a s a prer equisite for the issuance of building permits. All other issues not addre ssed in this Opinion are prete rmitted.

The decision of t he trial court is affirmed. Costs on appea l are to be taxed to Appellants J ohn M e l t o n a n d R & J o f

T e n n e s s e e , a n d t h e i r

s u r e t y, f o r w h i c h e x e c u t i o n m a y i s s u e , i f n e c e s s ar y.

___________________________________ HOLL Y M. KI RBY, JUDGE