Court Opinion

ID: 9573071
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:47:33.717811+00
Date Added: 2024-06-11T12:36:48.224284
License: Public Domain

VOSS, Presiding Judge,
dissenting.
In affirming the trial court, the majority finds a vested right where one cannot exist, and reaches for a remedy, equitable estop-pel, which was never pled or tried at the administrative or trial court level. I dissent.
*585BACKGROUND
Neal owned a McDonalds restaurant in Kingman, Arizona. As a businessman who knew the value of advertising, Neal applied for a sign permit to construct a billboard advertising his business. Neal knew that the traffic flow on 1-40 was much greater than that on Highway 66 and his intent from the beginning, as shown by his acts and testimony, was to construct a sign that would orient to the highest number of customers, those traveling on 1-40. A problem arose, however, when the city advised Neal that the location for his sign was within the 200 foot “sign corridor” for Highway 66. This corridor involves the 200 feet on either side of a roadway, measured from the centerline. Signs erected in the “sign corridor” of a particular highway must, by ordinance, be “oriented” to that highway. In Neal’s case this meant that he could only obtain a permit to erect a sign that would orient to Highway 66, rather than the busier road, 1-40. The advice of city officials and the clear requirements of the ordinance that the sign orient to the roadway for which the permit was issued notwithstanding, Neal erected a sign, the proximity and orientation of which are best illustrated by the diagram admitted into evidence that was prepared by a Registered Land Surveyor. The diagram, which appears in the text of the majority opinion, illustrates that Neal’s sign (Site No. 2 on the diagram) is almost perpendicular, 84 degrees, to 1-40 and only 33 degrees to Highway 66.
ORIENTATION OF THE SIGN
The majority, in holding the sign ordinance constitutional, holds in part that the term “orient” is not vague or ambiguous. The majority concedes that the sign is more readable from 1-40 than Highway 66 and thus, it is, “oriented to 1-40 and not Highway 66.” At the Board of Adjustment hearing, Neal described his approach to “orientation”, “Ah, when I read that [sign code] it tells me that I have a lot of latitude and angle, orient gives me a lot of degrees and angles to set that sign. The sign is set to do the best job for the position that it is in.” Neal continued, “I didn’t put that sign up there to hide it. I put it up there to get the highest exposure rate that I could get, and the highest exposure rate has to do with all directions of traffic around me.” The trial court, in its ruling on summary judgment stated:
As to issue number two, the Court has reviewed the record of the meeting of the Board of Adjustments of August 7, 1986 and concludes that there is no disputed issue of fact. The board’s determination that plaintiff’s sign was not oriented to Highway 66 was not arbitrary, capricious or an abuse of discretion. There was ample evidence before the board to support their determination that city employees had made a proper determination.
I cannot conceive how Neal could properly orient his sign to 1-40 through a permit to build on and orient to Highway 66. City officials informed Neal on several occasions that if he received a permit for a Highway 66 sign, the sign was to be oriented to Highway 66 and not 1-40. The permit specifically warned: “Cannot orient sign to 1-40.” The unique convergence of the two highways presented Neal with the opportunity to advertise on 1-40, where traffic was much greater but a permit unavailable, through a permit for Highway 66. To take advantage of the opportunity Neal simply had to ignore the requirements of the ordinance and the prohibition on the permit and orient the sign to 1-40, which he did.
THE INSTRUCTIONS
The city also objected to the instructions given by the court. The court instructed the jury that the issue it was to decide was whether Neal had acquired a vested right to the sign. Both Neal and the city objected to the instruction which attempted to define vested right. It was apparently drafted by the trial court as it is not consistent with anything submitted by the parties. The instruction reads:
Plaintiff maintains that he has acquired a vested right in the billboard as presently *586constructed. A person may acquire a vested right if:
1. a building permit is issued;
2. the permittee acts in reasonable reliance upon the terms of the permit;
3. as a result of the reliance the per-mittee incurred considerable expense;
4. it would be a serious injustice if the permittee is now required to change or remove the structure; and
5. the public interest would not be unduly damaged if the structure is permitted to remain.
The instruction is erroneous. It confirms that Neal’s claim is one of vested right but then goes on to state some elements of equitable estoppel. As the majority states, “The matter was presented to the jury on a combined theory of vested rights and equitable estoppel.” The result is that the jury was incorrectly instructed and asked to decide a vested right claim based on an erroneous instruction.
VESTED RIGHT AND EQUITABLE ESTOPPEL
This case is distinguishable from the Arizona cases that apply the vested right rule. The cases cited by the city demonstrate that the vested right rule only applies where there has been a change in an ordinance or law that affects a previously issued permit. In those cases the court permitted the parties to act under the permit, and the law in effect at the time it was issued, if there was some type of substantial reliance on the permit and the law it encompassed. Gulf Leisure, 27 Ariz.App. 600, 557 P.2d 532. However, if there was no permit, even though there may have been substantial reliance on old law, or if there was a permit but minimal reliance, the new law was controlling. Arizona Mortuary, 34 Ariz. 495, 272 P. 923; Verner, 77 Ariz. 310, 271 P.2d 468; Canyon Ford, 12 Ariz.App. 595, 473 P.2d 797; Burroughs, 150 Ariz. 570, 724 P.2d 1239. Here, there was no change in the law. The city simply is trying to enforce the sign ordinance in effect when Neal received his permit.
The majority’s reach for an alternative theory belies its reliance on a vested right to affirm. The majority reaches equitable estoppel by stating, “It does not matter, however, what Neal calls his claim if both parties tried the case and submitted it for decision on a theory of law that fits the circumstances.” (Emphasis added.) I am certain it comes as a surprise to both parties that this case was tried as an equitable estoppel case.
Equitable estoppel was not raised at the Board of Adjustment or trial court. The May 11,1987, court order confirms that the only issue surviving the motion and cross motion for summary judgment was that of vested right. Only one issue was listed by the parties in the joint pretrial statement as a contested issue of law and fact, and that issue was: “Does Richard Neal have a vested right ... to the sign.” During the hearing settling instructions, Neal’s counsel stated, “The issue as I understand it before the jury and the Court at this point is one of vested rights____” Neal’s counsel objected to the court’s instruction as not properly reflecting the elements of vested right. Paragraphs 4 and 5 of the vested right instruction contain “serious injustice” and “public interest” language. Regarding this language, Neal’s counsel stated, “They are not part of any proposed jury instructions and did not grow out of the evidence presented at trial____” The judgment signed by the trial court, which is the subject of this appeal, states one reason as the basis for its ruling: “Wherefore, the Court finds ... that the plaintiff has a vested right ... to the billboard____” Even the majority, in justifying the de novo aspect of the trial, states, “The trial court here was not reviewing an administrative decision; it was trying the ‘vested interest’ issue for the first time.” The majority opines that the trial court was correct in trying the vested right issue de novo as Neal was prohibited from trying the issue before the board. No such argument can be made with respect to equitable estoppel. The trial court in a statutory special action to review action taken by a municipal board is limited to the record. Robertson v. Superior Court, 136 Ariz. 440, 666 P.2d 540 *587(App.1983). “[T]he Superior Court, in reviewing a decision of the Board of Adjustments, is limited to finding error and not to substitute its opinion of the facts for the Board’s, and if the evidence supports the Board’s decision it should be affirmed.” City of Phoenix v. Superior Court, 110 Ariz. 155, 515 P.2d 1175 (1973). The words “equitable estoppel” do not appear anywhere in the record before the Board of Adjustment. The trial court clearly erred in drafting new pleadings for the parties, over their objections, after the close of evidence. It is a great understatement to say that the court here went beyond its jurisdiction.
a. Equitable estoppel does not apply.
The majority concedes, equitable estop-pel “generally ... does not apply to the state or its agencies or subdivisions____” However, a governmental entity may be estopped, “when necessary to prevent a manifest injustice, and the exercise of governmental powers will not thereby be impaired.” Shafer, 83 Wash.2d at 620, 521 P.2d at 738. The general rule is that equitable estoppel is applied to municipal corporations with great caution and only in exceptional cases. Bullock, 632 P.2d at 720. The majority relies on Freightways, 129 Ariz. 245, 630 P.2d 541, to support its holding. Freightways is the only Arizona case cited by the majority in which the doctrine of equitable estoppel was applied.
In Freightways, the Arizona Corporation Commission issued a motor carrier certificate of public convenience and necessity to Louis Schade on June 4,1924- The certificate was renewed by the Commission and passed through many successive owners. On December 21, 1979, fifty-five years after the certificate was originally issued, Freightways, then the user/owner of the certificate, applied to the Commission to transfer the certificate to United Couriers, Inc. The Commission declined to honor the request stating that the certificate had expired on December 31, 1928, because of Schade’s failure to comply with a November 30, 1928, general order of the Commission. Before this time neither Freightways nor any of its predecessors had any knowledge of any alleged defect in the certificate. Without addressing the requirements of the general order allegedly breached some fifty-five years before, the court concluded that it was incumbent upon the Commission to enforce its own orders, and it was the Commission which erred in issuing the annual renewal certificates. The court stated, “We believe that not only did the Commission know the facts, but expected the certificate to be used by Schade and his successors in interest and recognized by the public. The certificate holders and the public did exactly that for over fifty years.” Id. at 247, 630 P.2d at 543.
While acknowledging that estoppel in the usual sense is not generally applicable against a sovereign, the court in Freight-ways was impressed with the temporal facts of the case.
Admittedly, we base much of our decision on the long period of time that has elapsed between the defect in the issuance of the certificate and the attempt by the Commission to cancel it. How much time is necessary before a void certificate can ripen into a valid certificate we do not consider at this time. That will have to be determined on a case by case basis, but we have no hesitancy in saying that a half century is sufficient.
Id. at 248, 630 P.2d at 544. (Emphasis added.)
Here, the city did not have the type of knowledge possessed by the Commission in Freightways. Upon learning of the violation, the city acted in a timely manner to red tag the project. The majority attributes knowledge to the city which the record does not support: “Neal’s construction of the sign was the subject of some dispute from the beginning and the construction took place under the eyes of city officials without any attempt to correct Neal’s interpretation of the permit until it was too late. The case ... simply did not involve a mistake of which the city was unaware.”
There was no mistake. That the requirements of the ordinance and sign permit *588required the sign to be oriented to the highway for which it was issued — Highway 66 — is undisputed. There was one inspection of the foundation, the hole in the ground, which was conducted contemporaneously by the City of Kingman building inspector and the state building inspector. Neal testified at trial that he asked the inspectors if he could go ahead and start construction and they said he could pour the concrete. Neal testified that the inspection represented his “only contact with any official.” At that inspection, there were no violations that would allow red tagging. The majority incorrectly concludes from the record that the city was aware from this inspection that Neal would thereafter install the mounting pole and attach and orient the sign virtually perpendicular to 1-40. The majority relies on Neal’s assertion that the pre-drilled holes at the top of the mounting pole served as notice to the city of Neal’s intent regarding orientation. The conclusion is untenable. The record does not indicate that the pole was even on the job site when the city made its foundation inspection. Even if it were, the location of the holes does not dictate the sign’s orientation once the pole is placed in the concrete. Mr. Duranceau described what led to the ultimate red tagging of the project:
Q. Did you have any way of knowing prior to the sign faces actually being placed on the sign whether or not that sign was being constructed legally?
A. Well, since they build the sign from the bottom up starting with the foundation, you see the pole of the sign' at both locations first, and basically you don’t know which way the sign is going to be pointing until the superstructure itself goes up.
Q. Now, there is — let’s cover a couple of things, but let’s make sure this location was an okay location for the sign.
A. This location was legal in all respects.
Q. However, if I — I’m understanding correctly, it was a Highway 66 sign?
A. Yes. That’s what I set out here, that it was in the corridor of Arizona 66, not the corridor of Interstate 40, and therefore it should be oriented to Arizona 66.
Q. Could Mr. Neal have put that sign in the corridor for 1-40?
A. No, it didn’t meet — there were already — all the locations were all taken for 1-40 in that area.
Q. When was the next contact you had concerning this matter?
A. [Ajbout the first week of July, that’s when I saw that the superstructure had been put up for both signs ... and I saw that the superstructure for the sign nearest to the McDonald’s had been put up and it appeared to me that the sign had been put up directed toward 1-40 and not Arizona 66 as I had put on this particular sheet. At that time I then stopped the car, got out, went up to the sign because everything wasn’t finished but you could see that the superstructure itself was going up and taped a red tag to the sign.
This testimony is undisputed in the record. Neal testified that he relied on the inspection. His reliance was justified because at that stage of the construction he had acted in accordance with the permit. As soon as Neal began installing the superstructure — the first point at which orientation of the sign could be determined — the city red tagged the sign. The facts here are not even remotely analogous to Freightways.
The majority also cites cases from other jurisdictions where the courts applied the doctrine of equitable estoppel against governmental entities in zoning cases.
Schneider, 685 P.2d at 97, is cited as a case where the doctrine was applied, “when the elements of estoppel are present and the public will not be significantly prejudiced.” The doctrine was applied in Schneider; it was not, however, applied under facts remotely analogous to those here. In 1982, Schneider was sued by the municipality for maintaining two detached dwelling units on a parcel which was zoned for the construction of up to eight units, provided the units were incorporated into a single structure. The litigation was resolved through a settlement agreement. *589The agreement resulted in the issuance of a permit that allowed Schneider to construct an additional three units to connect the two units. Schneider spent $24,000 in reliance on the permit. In 1983, the municipality discovered that prior to the settlement agreement and the issuance of the permit for the three units, the zoning on Schneider’s property was changed restricting the total number of dwelling units to two. No one involved in the settlement knew of this change. The municipality then revoked the permit issued through the settlement agreement and Schneider filed a second suit.
The court, in applying equitable estoppel, emphasized the strong public policy of settling disputes and enforcing settlement agreements. “Failure to apply an estoppel theory in this case would only serve to re-open a lawsuit that both parties believed was settled.” Id. at 98. Schneider was correctly decided because of the settlement agreement on which Schneider reasonably and foreseeably relied. The record here shows no comparable involvement by the city or justifiable reliance by Neal.
The majority also cites “other types” of cases, cases in which the courts permitted estoppel against a governmental entity to prevent a manifest injustice when the exercise of governmental powers would not be impaired by the application of the doctrine. Shafer, 83 Wash.2d 618, 521 P.2d 736; West, 21 Wash.App. 577, 586 P.2d 516; Land-of-Sky Regional Council, 336 S.E.2d 653 and Board of Regents of the University of Washington, 108 Wash.2d 545, 741 P.2d 11. I do not dispute that, in exceptional circumstances, equitable estoppel may be applied against a governmental entity. I merely contend that the facts here are not exceptional and the cases cited by the majority, because the holdings are based on exceptional circumstances or they are not zoning or building permit cases, are inapposite.
Shafer is a tort action that arose when a plaintiff tripped over a wrinkled rug in a liquor store. The case involved the statutory claim requirements for filing tort claims against the State. The court concluded that while normally estoppel is not allowed against the sovereign, in tort actions where the legislature has decided to treat the state as if it were a private citizen, estoppel may be applied.
West involved the responsibility of a mother to pay child support for her children after they had been placed in foster care. The court held that the department charged with administering the foster care program was estopped from charging West child support because it had not specifically advised her of her continuing support obligation.
Land-of-Sky is also not a zoning case. In 1971, the parties, and others, formed a regional planning and economic development commission. In 1984, after Henderson County withdrew from the commission, Land-of-Sky sought to recover contributions from Henderson County which represented Henderson County’s proportional share of the costs of operating the commission. Henderson County defended by alleging that there never had been a joint resolution of the members reflecting the method of determining each member’s participation and contribution responsibility as required by law. The court applied equitable estoppel against Henderson County.
Applying the equitable principals above, we conclude that defendant ratified its actions as a member of plaintiff. From 1971 through February 1982, defendant participated as a member in plaintiff’s activities. Defendant attended meetings, workshops and received the benefits of plaintiff’s plans and services. During this time defendant made full payments of its proportionate share of plaintiff’s budget as set forth in plaintiff’s Bylaws.
Land-of-Sky, 336 S.E.2d at 657.
Finally, in Board of Regents of the Univ. of Wash., the State of Washington acquired title to certain property in downtown Seattle in 1861. Thereafter, the University of Washington, through its Board of Regents, managed the property for the benefit of the University. In 1906, the City of Seattle condemned certain easements on the subject property for street purposes. No one appeared and a default judgment was tak*590en. The city asserted certain rights against Washington through the title taken in the condemnation action, including payment of street use fees and regulation of a pedestrian sky bridge which had been constructed over one of the roadways. Washington brought an action challenging the city’s actions. One assertion, by Washington, was that the original condemnation action, in 1906, did not establish title of the subject property in the city and therefore the city’s actions were without authority. Citing not only the condemnation action itself, but the numerous disputes, agreements, and years of silence by the parties regarding the subject property, the court held that Washington was estopped from disputing the 1906 condemnation.
The passage of time, thirteen years, fifty-five years and over seventy years, played a significant role in the decisions of the above courts to apply the doctrine of equitable estoppel. The involvement in the dispute of the entity against which the court granted equitable estoppel was substantial. These cases, in my opinion, are authority to deny equitable estoppel in this case, had it been properly presented below.
I also disagree with the majority’s attempt to distinguish National Advertising, 126 Ariz. 542, 617 P.2d 50. Melvin Genser Outdoor Advertising, Inc., after obtaining a permit to erect a billboard, placed it incorrectly by a distance of more than a couple of football fields. Genser promptly sold the sign. When the new owner, National Advertising, was advised that the sign was in the wrong place and had to be moved, it argued that the Arizona Department of Transportation (ADOT) was estopped to order removal of the sign because they should have known initially that the sign was in the wrong place and five years had passed since its installation. National also argued that it was an innocent purchaser. The court disagreed with National’s arguments. As to location, the court stated that ADOT had the right to assume that Genser would erect the sign at the site authorized by the permit. As to time, the court recited the clear law that the state cannot be estopped from pursuing statutory remedies available to it because of the alleged dilatory conduct of its officers in acting to enforce a remedy. The court stated that the innocence of National was irrelevant; what is relevant is the state of mind of the entity constructing the sign, Genser. The court stated:
One of the elements of estoppel is that the party claiming to have been misled or deceived by the concealment of facts on which he relied must have been without knowledge of or the duty of inquiring further as to the real facts. (Citations omitted.) Before the sign was purchased, appellant could have checked to see if it was where it was supposed to be. The temporary nature of the permit should have alerted appellant to the tenuous nature of the rights he was purchasing.
Id. at 545-46, 617 P.2d at 53-54.
The facts of National go well beyond those of the instant case. National, like Freightways, articulates the law in Arizona of equitable estoppel as applied to a municipality. I believe the cases clearly show that equitable estoppel is to be applied sparingly and only in the clearest of factual circumstances. National and Freightways prohibit, not allow, the result reached by the majority.
CONCLUSION
This case represents a major change in the type of facts necessary to raise the issue of equitable estoppel against a plaintiff government. Here, the issue of equitable estoppel was first raised during the settling of instructions. The judgment appealed from provides that vested right is the sole basis for the decision. This record notwithstanding, the majority relies heavily on equitable estoppel to support its decision. Such action clearly deviates from Arizona law, which requires that statutory special actions that contest action taken by a municipality, be limited to the record of the Administrative Board and whether the boards action is supported by the evidence.
Neal was the party with the information. He tried to obtain a permit to build a sign to advertise his business on 1-40. He was *591told he could not get a permit for 1-40 and that the location where he wanted to put the sign was in the “sign corridor” for Highway 66. Undaunted, he acquired a permit to build on Highway 66. The ordinance that the majority upholds as constitutional requires that the sign be oriented to the roadway on which it is placed. The permit required that Neal orient the sign to Highway 66 and not to 1-40. The city could not tell which direction Neal would orient the sign until he actually placed the superstructure on the supporting pole. Up to that time, all Neal’s actions were in accordance with the permit. When Neal put the superstructure on the pole and, everyone agrees, oriented it to 1-40, the inspector red tagged the structure. It is no wonder, with the results thus far obtained by Neal, that he has sold his Mc-Donalds and gone into the sign business.
I would support the rulings of the Board and reverse the trial court’s judgment that Neal had a vested right to the sign.