Opinion ID: 3010548
Heading Depth: 1
Heading Rank: 4

Heading: The Equitable Estoppel Claim

Text: Finally, Phillips and Vitale argue that the Borough is equitably estopped under New Jersey law from revoking the zoning permit issued by Rhodes on March 9, 1992, and the construction permits issued on March 18th. Specifically, they contend that they reasonably relied on those permits to their detriment by entering into the lease and by beg[inning] to renovate the property in order to prepare it for their contemplated use after receiving construction, electrical, and plumbing permits. 8. Phillips and Vitale argue that they should be entitled to an award of the counsel fees they paid in connection with their efforts to enjoin the 500 foot Ordinance even if they can prove no compensable damage from that Ordinance and even if they lose on their other federal claims. Their contention is based on the following catalyst theory: (a) the Borough adopted an unconstitutional 500 foot Ordinance and relied upon it to deny their application for a permit; (b) they challenged this Ordinance and demonstrated at an evidentiary hearing that it suppressed adult entertainment expression altogether; (c) as a result of their suit and their demonstration, the Borough Council repealed the 500 foot Ordinance; and (d) accordingly, they are prevailing parties under § 1988 at least to this limited extent. See, e.g., Baumgartner v. Harrisburg Housing Authority, 21 F.3d 541 (3d Cir. 1994); Dunn v. United States, 842 F.2d 1420, 1433 (3d Cir. 1988). Because the district court failed to address this catalyst theory and because it may ultimately be unnecessary to resolve the issues thus raised if Phillips and Vitale are otherwise successful, we express no view on those issues. 40 Appellants' Brief at 38. Without the zoning permit, they allege, they would have done neither. The district court rejected this argument in the course of denying Phillips' and Vitale's motion for summary judgment. It concluded that, under Lizak v. Faria, 476 A.2d 1189 (N.J. 1984), Phillips and Vitale could not demonstrate good faith reliance on the initial zoning permits and, accordingly, were not entitled to assert a claim of equitable estoppel. On appeal, Phillips and Vitale argue, inter alia, that Lizak is distinguishable and that they did rely in good faith on Rhodes' initial determination. The doctrine of equitable estoppel is well established in New Jersey. To establish a claim of equitable estoppel, the claiming party must show that the alleged conduct was done, or representation was made, intentionally or under such circumstances that it was both natural and probable that it would induce action. Further, the conduct must be relied on, and the relying party must act so as to change his or her position to his or her detriment. Miller v. Miller, 478 A.2d 351, 355 (N.J. 1984); see Carlsen v. Masters, Mates & Pilots Pension Plan Trust, 403 A.2d 880, 882-83 (N.J. 1979). A prerequisite of equitable estoppel is that such reliance be in good faith. Lizak, 476 A.2d at 1198. The doctrine of equitable estoppel is applied 'only in very 41 compelling circumstances,' 'where the interests of justice, morality and common fairness clearly dictate that course.' Palatine I v. Planning Bd. of Township of Montville, 628 A.2d 321, 328 (N.J. 1993) (citations omitted). In particular, equitable estoppel is rarely invoked against public entities, although it may be invoked to prevent manifest injustice. W.V. Pangborne & Co., Inc. v. New Jersey Dep't of Transportation, 562 A.2d 222, 227 (N.J. 1989); see O'Malley v. Dep't of Energy, 537
In Lizak, the Farias had applied for a zoning variance. 476 A.2d at 1191-93. After opposition from nearby residents, the Woodbridge Township Board of Adjustment denied the variance. Id. at 1191. However, the board failed to record its determination in writing. As a result the Farias, under New Jersey law, were entitled to an automatic grant of the variance. Id. at 1192. A day after the Woodbridge Municipal Clerk certified the grant of the variance, the Farias obtained a building permit, and ten days later they began construction. Within a month, the exterior of the building was completed at an estimated expense of $60,000, almost one-half of the estimated cost of the project. When a nearby resident realized what was happening, she filed an appeal to the Township Council seeking revocation of the variance and the permit and an order directing the removal of the construction. The Farias responded that they had relied on the issuance of a valid building permit in proceeding with the construction and that the municipality was 42 equitably estopped from ordering the removal of the existing structure. Id. at 1193. The New Jersey Supreme Court rejected the Farias' argument. Id. at 1198-99. After noting that good faith reliance is a prerequisite of equitable estoppel, the court explained: The Farias' conduct . . . does not so much bespeak good faith reliance as it reveals a hasty effort to attempt to acquire an unassailable position to which [they] equitably should not be entitled. They knew that their neighbors objected to the proposal and that the Board had orally disapproved their application. Consequently, they reasonably could have expected further opposition to the construction. They chose to rely on the advice of counsel that the Board's failure to reduce its decision to writing converted its oral denial into a statutory grant. Although that advice was correct as far as it went, the Farias' failure to publish a notice of approval left the variance subject to appeal for a reasonable time. In relying on their attorney's opinion while the underlying variance was still appealable, they took their chances. They should not now be heard to complain. Id. at 1198 (citation omitted). Phillips and Vitale, in this appeal, urge that there is a world of difference between their circumstances and those of the Farias. However, we reject appellants' effort to limit Lizak to its admittedly egregious facts. The driving force in that case was that parties who proceed with construction while their permits are still appealable [take] their chances. Id. As the trial court in Lizak explained, their reliance can not convert the permit into something not subject to administrative and judicial review. They could not reasonably 43 have relied upon the inviolability of municipal actions that were still subject to appeal. The . . . construction official's action assured [the Farias] that a permit was issuable, but not that [it] was not appealable. Lizak v. Faria, 434 A.2d 659, 664 (N.J. Super. 1981). To sustain appellants' position here would eviscerate the appellate process in land use applications. It would encourage recipients of zoning permits to launch into large-scale construction or renovation so as to present municipal authorities with a fait accompli before other affected parties have exhausted their opportunities to challenge the permit. We believe these considerations support the clear mandate of the highest court in New Jersey in Lizak.