Opinion ID: 2049120
Heading Depth: 1
Heading Rank: 15

Heading: Zoning Estoppel

Text: MRA urges that, if Harford County was not equitably estopped from applying Bill 91-10 to MRA, we should hold that specific principles of zoning estoppel apply here. In Sycamore Realty Company v. People's Counsel of Baltimore County, 344 Md. 57, 64, 684 A.2d 1331, 1334 (1996), without recognizing the doctrine of zoning estoppel in Maryland, we acknowledged its use in some other states, and described its character: A typical zoning estoppel scenario arises when the government issues a permit to a citizen that allows him or her to develop property in some way. Commonly, after the citizen has incurred some expense or has changed his or her position in reliance upon the permit, the property for which the permit was granted is rezoned so that the citizen's intended use is illegal. In such a situation, many courts allow the citizen to assert zoning estoppel as a defense to the government's attempt to enjoin the property use that violates the new zoning scheme. The traditional, black-letter definition of zoning estoppel is: A local government exercising its zoning powers will be estopped when a property owner, (1) relying in good faith, (2) upon some act or omission of the government, (3) has made such a substantial change in position or incurred such extensive obligations and expenses that it would be highly inequitable and unjust to destroy the rights which he ostensibly had acquired. David G. Heeter, Zoning Estoppel: Application of the Principles of Equitable Estoppel and Vested Rights to Zoning Disputes, URB. L. ANN. 63, 66 (1971). Zoning estoppel was derived from equity principles and was intended to prevent the government from repudiating its prior conduct to the detriment of the property owner who relied on that conduct. URB. L. ANN. at 64-65. The cases in which zoning estoppel is most often invoked and allowed ... fall into four factual categories. They involve reliance upon (1) a validly issued permit; (2) the probability of issuance of a permit; (3) an erroneously issued permit; or (4) the non-enforcement of a zoning violation. URB. L. ANN. at 67. We have reviewed the article by David G. Heeter relied upon in Sycamore, as well as more recent articles, [9] and have found the Heeter writing to be the most helpful in explicating the doctrine of zoning estoppel, and how it differs from the doctrine of vested rights. Heeter said that although some courts will blend the doctrines of zoning estoppel and vested rights, the origins of the two defenses are quite different. The defense of estoppel is derived from equity, but the defense of vested rights reflects principles of common and constitutional law. Heeter, supra, at 64 (footnotes omitted). See Sycamore, 344 Md. at 67, 684 A.2d at 1334 (quoting Heeter's distinction between vested rights and zoning estoppel). Heeter also parsed the element of good faith by the property owner: The first element of zoning estoppel requires that the property owner relied in good faith on the conduct of the government. In essence it focuses upon the mental attitude of the owner when he acted.    In category one, the courts will find that a property owner acted in good faith, if, knowing that rezoning was at least possible, he did not accelerate his development or increase his investment or obligations in an effort to establish such an apparent degree or amount of reliance as to prevent the rezoning. It is probably accurate to paraphrase this test as requiring that the owner act with honest intentions. Heeter, supra, at 77-78. The third element of zoning estoppel, substantial reliance is the one which most often determines the outcome of the cases. Heeter, supra, at 85. According to Heeter's research in 1971, A majority of the courts utilize what may be described as the set quantum test. Under this test, an owner is entitled to relief if he has changed his position beyond a certain set degree or amount, measured quantitatively. The problem with this test is that the courts have not set the requisite degree or amount with any precision. The majority of the courts appear to require some physical construction to establish substantial reliance. Id. That lack of precision is evident in more written decisions as well. As one commentator wrote in 2000: Courts have used two tests in their substantial reliance inquiry, the first being the proportionate/ratio test, which examines the percentage of money spent or obligations occurred as compared to the total cost of the completed project. A second test, known as the balancing test evaluates the public interest against the right of the property owner to make use of the land, as well as the land owner's expenses and obligations already incurred. While the proportionate/ratio test and the balancing test offer greater opportunity for achieving an equitable result than the building permit test, they are totally subjective in character and thus less reliable as precedent. John J. Delaney, Evolving Voices in Land Use Law: A Festschrift in Honor of Daniel R. Mandelker: Part IV: Discussions on the State and Local Level: Chapter 7: Federalism: Vesting Verities and the Development Chronology: A Gaping Disconnect?, 3 Wash. U. J.L. & Pol'y 603, 608-09 (2000). We have not explicitly adopted the doctrine of zoning estoppel, but we recognize that as zoning and permitting processes become more complex, the need for such a doctrine grows. Today, land use is much more highly regulated than it was fifty years ago-environmental concerns abound, and vehicular traffic demands seem to mushroom every year. Thus, a property owner who seeks to build or develop may well incur sizable expenses for experts in engineering, various environmental fields, traffic flow, archeology, etc., before putting a spade into the ground. With increasing public appreciation for open space and environmental protection causing apprehension about new construction, the likelihood a developing landowner will face serious opposition is high. Indeed, a developer faces quite a tortured process. See Karen L. Crocker, Vested Rights and Zoning: Avoiding All-or-Nothing Results, 43 B.C. L.Rev. 935, 936-7 (2002) (discussing developers' expenses and governmental interests). But we also cannot ignore a local government's responsibility to its residents, and thus, Maryland courts should not apply the doctrine casually. As open space disappears, and scientific knowledge about the adverse environmental impact from people's use of land grows, local governments struggle to balance the legitimate interests and rights of landowners wishing to develop against equally legitimate environmental and community concerns. Due to the delicacy of this balancing act, and the overriding need to protect the public, local government cannot always chart a steady course through the Scylla and Charybdis of these disparate interests. Land developers must understand that, to a limited extent, the local government will meander, and before they incur significant expense without final permitting, they must carefully assess the risk that the government will shift course. On the other hand, there may be situations in which the developer's good faith reliance on government action in the pre-construction stage is so extensive and expensive that zoning estoppel is an appropriate doctrine to apply. Yet, we stop short of adopting zoning estoppel in this case as the facts set forth in this record do not support its application. For decades Maryland has maintained a stricter stance than most other states in protecting government's right to downzone in the face of planned construction. See 9-52D Patrick J. Rohan & Eric Damian Kelly, Zoning and Land Use Controls § 52D.03 (2009) (comparing Maryland to other states). Although we may sometimes adopt a new principle of law in a case in which the facts do not fit the doctrine, the doctrine of equitable estoppel is so fact-specific that it would be imprudent to depart from this history before we are faced with a case presenting circumstances for its application. We think that zoning estoppel must be applied, if at all, sparingly and with utmost caution. See, e.g., Bauer v. Waste Mgmt. of Connecticut, Inc., 234 Conn. 221, 662 A.2d 1179, 1193 (1995) (In municipal zoning cases, however, estoppel may be invoked (1) only with great caution, (2) only when the resulting violation has been unjustifiably induced by an agent having authority in such matters, and (3) only when special circumstances make it highly inequitable or oppressive to enforce the regulations.). Squaring with this cautious approach, we conclude that the burden of establishing the facts to support that theory must fall on the person or entity claiming the benefit of the doctrine. This burden of proof will come into play as we don the cloak of the doctrine to assess its fit to the facts in the record. In doing so, we conclude that ultimately, zoning estoppel does not fit these facts because there was no substantial reliance by MRA. Although Heeter and some courts treat good faith and reliance as separate elements, we discuss them together, as they are so closely entwined. Under the theory of zoning estoppel, if the developer has good reason to believe, before or while acting to his detriment, that the official's mind may soon change, estoppel may not be justified. Robert M. Rhodes, et al, Vested Rights: Establishing Predictability in a Changing Regulatory System, 13 Stetson L.Rev. 1, 4 (1983) (emphasis added). At the heart of establishing good faith is proof that the claimant lacked knowledge of those facts that would have put it on sufficient notice that it should not rely on the government action in question. See Heeter, supra, at 77-82. Many facts were available to MRA at the time of its February 1990 purchase of the Property that should have alerted them to the real possibility that its plans for a rubble landfill would not come to fruition. On November 14, 1989, the County Council voted for the inclusion of the Property in the SWMP by a favorable vote of four council members, with two members abstaining because they felt they had inadequate information, and one member abstaining because his son was the president of MRA. Thus, the inclusion in the Plan was achieved by a fragile majority, and MRA knew, as did the Council when it voted, that MRA had no permit from the MDE and many additional steps had to be taken before MRA could actually construct the rubble landfill. Inclusion of the Property in the County SWMP was a necessary, but not a sufficient step in the process of obtaining a state rubble fill permit from MDE. See Md.Code (1982, 2007 Repl.Vol.), § 9-210 of the Environment Article. Even at the November 14 hearing, the Council President told MRA that what we are doing tonight is approving a process. We are not exactly approving the landfill site. We are approving a step in a process. As MRA president Schafer acknowledged at the hearing below, there was strong public opposition to the rubble landfill by hundreds of persons at the November 7 and 14, 1989 hearings. [10] Shortly thereafter the membership of the County Council changed when Council President Hardwicke resigned and Jeffrey Wilson replaced him in January 1990. Both of these events occurred before MRA closed on its purchase on February 9, 1990. [11] Mr. Hardwicke was one of the four council members who voted on November 14 to include the property in the SWMP. The Hearing Examiner found: At a County Council meeting on February 6, 1990, the Council again debated the terms of the rubblefill's acceptance into the [SWMP]. He also found: At some time during this period in February 1990, Council President Jeffrey Wilson informed John Schafer, Richard Schafer's father, and [who was] a fellow Council Member, that he planned to take steps to remove MRA from the County [SWMP]. MRA purchased the Gravel Hill property on February 9, 1990. [12] Richard Schafer denied speaking to his father or to other council members about Wilson's plan, but did not state that he was unaware of Wilson's intent. The Hearing Examiner did not make a specific finding on the question of whether MRA president Shafer knew that there was no longer a majority of members on the newly constituted County Council who supported locating a rubble fill on the Property. This absence is not critical because the knowledge of these facts was certainly available to MRA, even if it did not have actual knowledge. See Bauer, 662 A.2d at 1194 (holding that party claiming zoning estoppel must exercise due diligence to ascertain the truth and not only lac[k] knowledge of the true state of things, but also had no convenient means of acquiring that knowledge). Certainly, MRA failed to prove that it exercised due diligence to ascertain the facts or that it had convenient means of acquiring those facts when local people were in full possession of them. Additionally, the closing on MRA's purchase of the Property is not the definitive mile-marker in a zoning estoppel analysis. Generally, purchase of land, by itself, is insufficient to constitute substantial reliance. See Heeter, supra, at 86 n. 81. (listing cases following this rule). To hold otherwise would mean that a purchaser could lock in the zoning of any parcel simply by the act of purchasing property and asking for a permit. For us to decide that the good faith reliance element of zoning estoppel is established by proof that an entity purchases land for the purpose of constructing a highly controversial rubble landfill based on a vote by the County Council approving one step in the State permitting process, while knowing that the new membership of County Council likely opposes that use, would disregard the caution with which we approach such a doctrine. Thus, MRA must prove substantial reliance by something other than its purchase of the Gravel Hill property. It attempts to do so by focusing on the expenses it incurred for engineering fees during the period of its alleged good faith reliance. As Heeter said, most zoning estoppel cases turn on the element of substantial reliance, which the majority of courts define as a party's changing position in reliance on the government beyond a certain set degree or amount, measured quantitatively. See Heeter, supra, at 85. As MRA is claiming reliance on the vote taken at the November 14, 1989 hearing, we examine what facts it brought forth to prove its reliance on that vote. Although MRA asserts in its brief that, relying on the County's action, it proceeded to spend over a million dollars on the purchase of the property and on engineering fees[,] it gives us no extract references to support this statement. We know that the land cost $732,500, but as we have said, land purchase is not sufficient to prove detrimental reliance, and MRA gives us no specifics about the balance of the alleged costs. [13] We have searched the record extract ourselves and find only the following:  John Wirth, engineer hired by MRA was first contacted about the Gravel Hill property in August 1989. According to Wirth, it may have been November of '89 when he began work on Phase II.  MDE gave Phase I approval to MRA's project on November 20, 1989.  MRA filed Phase II Engineering Report with MDE on November 28,1989.  Wirth sent a letter to the MDE containing an addendum to the Phase II report on 1/8/90. Richard Schafer testified that MRA spent $25,000 on Phase I engineering fees, and in excess of $300,000 on Phase II & III engineering fees, but did not specify when. The evidence in the record only shows that MRA expended $25,000 on engineering fees for work done sometime between August 1989 and November 20, 1989, the date MDE gave its approval for Phase I. These fees could well have been incurred before the November 4 hearing date. This record does not suggest, let alone prove, that the $25,000 was spent in reliance on the vote for inclusion in the SWMP at the November 14 hearing. As for the additional $300,000 allegedly spent on engineering fees, there was just no testimony or any exhibit that would show when MRA incurred liability for that amount, i.e., when the work was done by the engineering firm. The record shows that work for Phase II (or some of it at least) was done sometime between August 1989, and November 28, 1989, when Wirth sent the Phase II report to MDE. We have found no evidence about how much of this Phase II work was done before November 14, 1989, and how much after. Any work done prior to November 14 clearly would not support MRA's estoppel theory. But the timing is critical even with respect to engineering work done after November 14. If MRA continued to incur engineering fees, on Phases II or III in the face of public actions by the County Council to block the rubble fill, the decision to do so must be considered an increase [in] his investment or obligations in an effort to establish such an apparent degree or amount of reliance as to prevent the rezoning. Heeter, supra, 78. In short, all we glean from the record is that MRA closed on the land on February 6, 1990, after the council's November 14, 1989 vote to include the Property in the SWMP. There was insufficient evidence to show how much, if any, of the engineering fees were incurred after and in good faith reliance upon the results of the November 14 hearing. Bald allegations and general testimonial statements that MRA spent $300,000 on engineering fees are simply insufficient to meet MRA's burden to prove the fact and extent of its reliance on the County Council's action. Accordingly, MRA has failed to establish the necessary good faith reliance on the County Council's vote to include the Property in its SWMP either through purchase of the property or engineering expenses, or both. For all of the above reasons, MRA has not proven zoning estoppel against the County according to the criteria used in states that have adopted that doctrine. 4. Zoning Violations through Landfill Operation MRA further argues that the operation of a rubble landfill would not violate Harford County zoning provisions aside from those contained in Bill 91-10. Because we hold that MRA is subject to the terms of Bill 91-10, we need not reach this issue. 5. Non-Conforming Use MRA argues that the use of its property prior to the Board's ruling was a valid, nonconforming use, and therefore insulated MRA's planned landfill from further zoning regulation. This argument is without merit. It is long settled in Maryland law that a property is only protected against re-zoning by non-conforming use status if the property owner demonstrates that substantially all of the property was being used in a permissible means before a zoning change was enacted. See, e.g., Bd. of Zoning Appeals of Howard County v. Meyer, 207 Md. 389, 394, 114 A.2d 626, 628 (1955). Here, MRA has failed to prove this point. In arguing for protection under a non-conforming use theory, MRA relies on an Industrial Waste Permit it received from Harford County in 1986, claiming that the use of the property pursuant to the Permit is sufficient to establish the valid, non-conforming use. The terms of the Permit itself illustrate the flaw in MRA's theory. The Permit applies to twenty-four acres of the property only, leaving a remainder of thirty-one acres that could not legitimately be used for the storage of industrial waste. Even assuming that MRA's use of the property under the terms of the Permit was identical to the use they pursue as a potential rubble landfill  which is by no means certain  MRA could not have used substantially all of the property for the indicated purpose. Therefore, MRA could not claim non-conforming use status for the property at the time of 91-10's passage. 6. Grading Permit MRA argues that Harford County improperly failed to issue a grading permit to MRA. Because we hold that MRA is not entitled to relief from Bill 91-10 on grounds of preemption, constitutional violation, or estoppel, this argument is moot. We thus do not reach this issue. 7. County Site Plan Approval Finally, MRA argues that the Board erred in prohibiting MRA from relying upon the 1989 County Site Plan approval. As we note in our discussion of vested rights, Part II.2, supra, rights in development do not vest under Maryland law unless a party has both obtained and exercised a permit or occupancy certificate. See Powell, 368 Md. at 411, 795 A.2d at 102. The Site Plan Approval did not cause MRA's rights to vest. This is an inadequate basis for relief, and we need not reach this issue. DECISIONS OF THE CIRCUIT COURT FOR HARFORD COUNTY IN BOTH CASE NO. 143 AND CASE NO. 144 ARE AFFIRMED. COSTS TO BE PAID BY PETITIONER. HARRELL, J., dissents and files opinion in which BELL, C.J., joins. Dissenting Opinion by HARRELL, Judge, which BELL, C.J., joins. The Court of Appeals again wimps-out on adopting the doctrine of zoning estoppel, the contours of which are well-established in a number of our sister states. In this latest missed opportunity, Appellant, Maryland Reclamation Associates, Inc. (MRA), contends compellingly that we should embrace the principles of zoning estoppel and hold that Appellee, Harford County, is estopped from applying the provisions of Harford County Bill 91-10 [1] to Appellant's proposed operation of a rubble landfill on Appellant's property. The Majority opinion rebuffs Appellant's argument. I disagree with the Majority opinion in this regard and would hold, under zoning estoppel principles, that Appellee is estopped from applying the provisions of Bill 91-10 to Appellant's proposed rubble landfill, based on Appellee's prior approvals of Appellant's Site Plan, its inclusion of Appellant's rubble landfill in the County's Solid Waste Management Plan (SWMP), the official assurances it gave to Appellant that construction could proceed, and Appellant's substantial expenditures made in good faith reliance upon such assurances. Thus, I would reverse the judgment of the Circuit Court for Harford County.