Opinion ID: 1988115
Heading Depth: 1
Heading Rank: 5

Heading: philip's claim

Text: This court recognized over 100 years ago that a party can estop itself from relying on time-based defenses if it induces its opponent's delay in prosecuting the action. In Phoenix Ins. Co. v. Rad Bila Hora Lodge, 41 Neb. 21, 59 N.W. 752 (1894), an insurance policy contained a 6-month statute of limitations for suits against the company on the policy. In holding that the insurance company could not rely on the limitation if it induced the delay, the court wrote: Persons undoubtedly authorized to represent the company to some extent and for some purposes in the adjustment of the loss were shown to have conducted negotiations and made proposals for settlement until after the expiration of six months. We have no doubt that if [the six-month limitation clause] is of any validity the company may, by its conduct, estop itself from claiming the benefit thereof, and that when the company by holding out prospects of an amicable settlement induces the plaintiff to forbear suit until after the expiration of the time limited, the company is thereby estopped from claiming the benefit of the special limitation. Id. at 30, 59 N.W. at 755. The situation facing the court today is remarkably similar to that in Phoenix Ins. Co. v. Rad Bila Hora Lodge, supra . If the appellee in this case were a private party, there is no doubt that summary judgment would have been improper, given the allegations of inducement to delay made to the Woodards. The City, as an appellee, is not a private party, however, but, rather, a political subdivision, and as such is subject to suit only through the Act. We stated in Bohl v. Buffalo Cty., 251 Neb. 492, 498, 557 N.W.2d 668, 673 (1997), that [t]his court has never applied, and will not apply in this case, the doctrine of equitable estoppel to excuse a plaintiff's failure to comply with the Political Subdivisions Tort Claims Act. In Bohl v. Buffalo Cty., supra , Bohl had signed a partial payment agreement, drawn by an adjuster for Buffalo County's insurance carrier, which erroneously stated that the relevant statute of limitations was 4 years instead of 2. Bohl filed suit more than 2 years after the accident giving rise to her injuries, and the trial court granted Buffalo County's motion for judgment on the pleadings. This court held that Bohl inadequately pled the elements of equitable estoppel and thus that the trial court had properly granted the motion. The court declined to answer the question whether equitable estoppel could ever be invoked to excuse failure to comply with the Act. Other Nebraska cases have held that the state or one of its political subdivisions may be subject to equitable estoppel under compelling circumstances, where right and justice so demand in the interest of preventing manifest injustice. Inner Harbour Hospitals v. State, 251 Neb. 793, 559 N.W.2d 487 (1997); Willis v. City of Lincoln, 232 Neb. 533, 441 N.W.2d 846 (1989); Jennings v. Dunning, 232 Neb. 366, 440 N.W.2d 671 (1989). We also note that other jurisdictions have applied the doctrine of estoppel against political subdivisions under circumstances similar to those present in this case. See, Black v. Lexington School Dist. No. 2, 327 S.C. 55, 488 S.E.2d 327 (1997); Molinar v. City of Carlsbad, 105 N.M. 628, 735 P.2d 1134 (1987); Jarvis v. City of Stillwater, 732 P.2d 470 (Okla.1987). We find no reason to place the tort claims acts outside the reach of the doctrine of equitable estoppel. Thus, we hold that the state and its political subdivisions can be equitably estopped from relying on the statute of limitations found in the tort claims acts upon a showing that the elements of equitable estoppel have been met, as well as compelling circumstances, where right and justice so demand in the interest of preventing manifest injustice. This court has set forth six elements that must be satisfied for the doctrine of equitable estoppel to apply: (1) conduct which amounts to a false representation or concealment of material facts or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; (3) knowledge, actual or constructive, of the real facts; (4) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (5) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (6) action or inaction based thereon of such a character as to change the position or status of the party claiming the estoppel. Bohl v. Buffalo Cty., supra . The first prong of this test, which was the basis of the Court of Appeals' decision, is met when one lulls his or her adversary into a false sense of security, thereby causing that person to subject his or her claim to the bar of the statute of limitations, and then pleads the very delay caused by his or her conduct as a defense to the action when it is filed. See State Farm Mut. Auto. Ins. Co. v. Budd, 185 Neb. 343, 175 N.W.2d 621 (1970). The majority opinion of the Court of Appeals acknowledged that the City's conduct arguably can be said to have lulled the Woodards into a false sense of security that this case would be settledno matter what or when, but distinguished our holding in State Farm Mut. Auto. Ins. Co. v. Budd, supra , as requiring `trickery and dishonesty.' Woodard v. City of Lincoln, 7 Neb.App. 11, 25, 578 N.W.2d 892, 900 (1998). The Court of Appeals stated that it could find no allegation by the Woodards of trickery or dishonesty, and that any such implication was negated by the fact that the City made several substantial settlement offers after the expiration of the statute of limitations. Id. The dissent in Woodard v. City of Lincoln, supra , would have found the evidence sufficient to allow the inference that the City had indicated that formal legal proceedings and rules were not going to govern the Woodards' claim and that the claim was going to be resolved without insisting that the strict letter of the law be followed. Id. The dissent viewed the series of settlement offers put forth by the City after the statute of limitations had expired as substantive evidence of the City's intentions in this regard. We agree with the dissent's analysis to the extent that we find that under the facts of this case, whether equitable estoppel is to be applied to Philip's claim is a question of fact which precludes the granting of summary judgment in favor of the City and Wells. Philip must be given the benefit of all reasonable inferences deducible from the evidence. The letter of understanding stated that it reserve[d] the rights of Mr. and Mrs. Philip Woodard to claim damages in the future. While the Court of Appeals rightly found that this language alone does not raise an inference that the City intended to convey the impression that the statute of limitations would not apply to Philip's claim, it is not inconsistent with such an inference. More probative are statements found in Philip's affidavit. Philip stated that he was led to believe by the letter of understanding that he had reserved his right to file an action when and if a voluntary final settlement could not be made. He also stated that the letter was a formalization of the agreement that he would ... negotiate a settlement of the claims with the City upon condition that he not obtain legal representation and that the City gave him repeated assurances that the City would voluntarily settle without litigation. We find that in combination, these statements give rise to the reasonable inference that the City intended to convey to Philip that his claim would be settled rather than litigated. As the filing of a petition is unnecessary if there is to be no litigation, it is a reasonable inference that the City also intended to convey the impression that no petition need be filed at all. Certainly the concept that no petition need be filed at all includes the concept that no petition need be filed within the statute of limitations. By raising the statute of limitations as a defense, the City is subsequently and inconsistently asserting that Philip did have to file a petition within the statute of limitations in order to recover for his injuries. This is sufficient to meet the first prong of the test for equitable estoppel. We distinguish the situation where mere attempts to settle are made. [T]he mere pendency of negotiations during the period of a statute of limitations, which are conducted in good faith with a view to ultimate compromise, is not of itself sufficient to establish an estoppel. Turner v. Turner, 582 P.2d 600, 603 (Wyo.1978). However, ordinary settlement negotiations contain the implicit notion that if settlement is not reached, then litigation may be necessary. It is the City's conveyance of the impression that litigation would not be necessary that, if proved to the finder of fact, establishes the level of misrepresentation necessary for equitable estoppel. If the City behaved in the manner in which Philip alleges, we find that such conduct meets the standard of compelling circumstances where right and justice so demand in the interest of preventing manifest injustice. Inner Harbour Hospitals v. State, 251 Neb. 793, 804, 559 N.W.2d 487, 495 (1997). In comparison to Bohl v. Buffalo Cty., 251 Neb. 492, 557 N.W.2d 668 (1997), where the alleged misrepresentation was a single statement erroneous as a matter of law, Philip alleges a long-term course of conduct conveying a representation of fact that Philip need not file a petition within the statute of limitations. As the dissent in Woodard v. City of Lincoln, 7 Neb.App. 11, 25, 578 N.W.2d 892, 900 (1998), stated, Woodard was lulled into a sense of security over the course of some 3 years, and then, with the period of limitation comfortably behind it, the City changed rules and transformed from magnanimous sovereign into litigious adversary. Id. at 28, 578 N.W.2d at 902. Such behavior, if allowed, would work a manifest injustice, and thus, if Philip can satisfy the elements of equitable estoppel to the fact finder, such estoppel must be allowed. We expressly note that today's holding creates no duty on the part of political subdivisions or any other party to inform an adversary of the existence of a statute of limitations or other nuances of the law. We merely hold that the evidence presented by Philip raises a reasonable inference that the City conducted itself so as to represent that the filing of a petition within the statute of limitations was not to be a requirement in Philip's case and that if such an inference can be proved at trial, then it would be manifestly unjust to allow the City to rely on the statute. Accordingly, summary judgment was inappropriate on this issue and the judgment of the trial court must be reversed with regard to Philip's claim.