Daily Development for Wednesday, February 26, 2003

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

Here are two new cases on this thorny and difficult to prove issue that appear to take different approaches, although clearly the case for estoppel in the New Jersey case is stronger than in the Alaska case.

ZONING AND LAND USE; EQUITABLE ESTOPPEL: When a municipality is aware of long-established but unlawful use and implicitly approves it by referring to it as apparently lawful in public documents, the municipality is equitably estopped from challenging the expanded use as against a good faith purchaser of the property.

Bonaventure International, Inc. v. Borough of Spring Lake, 350 N.J. Super. 420, 795 A.2d 895 (App. Div. 2002).

Property owners challenged the use of neighboring property as a restaurant and as a commissary for off-premises catering. The restaurant, located within a hotel, was considered a legal conforming use until the area was rezoned to permit only residential uses. The restaurant and hotel were exempted from the new zoning requirements originally because the restaurant was at that time were open to hotel patrons only.

Over time, however, the restaurant's seating capacity was expanded and then opened to the general public. The previous owners never applied for the necessary variances to expand use of the property, but did apply for a business license and for a variety of other land use determinations. In each case, the recorded documentation referred to the restaurant as a 96 seat nonconforming use (apparently meaning a lawful one). Further, several successive owners had direct discussions with zoning officials who told them that the restaurant was a lawful nonconforming use as a 96 seat facility operating year round time. The public officials apparently assumed for many years that the restaurant was a lawful preexisting nonconforming use, never taking into account the fact that it had evolved considerably from the operations that were happening at the time that the property was rezoned.

When the neighboring property owners requested that the municipality issue a cease and desist order prohibiting the restaurant from operating until it received the missing variances, the municipal zoning officer determined that, since the previous owners of the hotel and restaurant always operated the restaurant (even if only seasonally), it was continually in use as a restaurant and was a valid legal non-conforming use that did not require a variance. The neighbors then asked the planning board to intervene.

After numerous public hearings, the planning board determined that the restaurant was an unlawful nonconforming use. It discussed in some detail the fact that the expansion from a seasonal operation to a year round operation was an impermissible expansion. The board noted that the restaurant owner owner had failed to obtain the necessary variances, the municipality's complicity in permitting the restaurant to operate and its failure to compel the owners to seek a variance for so many years barred the municipality from challenging its current use. The neighboring owners challenged in court the planning board's determination.

The trial court held that the municipality was barred by estoppel from challenging the number of seats in the restaurant, but that the planning board failed to consider whether the restaurant owner had improperly expanded and intensified the non-conforming use by adding banquet operations and offsite catering.

The Appellate Division affirmed. It agreed with the lower court that the use was not a lawful preexisting nonconforming use. Although the court admitted that some intensification of a preexising nonconforming use was permitted, the expansion here was well beyond tolerable limits, both as to the change from seasonal use and the change to the nature of and intensity of the food and entertainment being provided.

As to the issue of whether the municipality was equitably estopped from challenging the expanded use, the appeals court agreed that, over time, the municipality had become aware of the expanded seating and implicitly approved it. The restaurant already had an expanded seating capacity and year round use when the current owner purchased it. Several determinations of the local Board of Adjustment on the public record identified the property as a lawful nonconforming use, and municipal planning officers apparently concurred. So there was no reason for the purchaser to assume that there was a need for a use variance.

On the other hand, there was such no reasonable expectation that could be justified regarding the catering operation or use as a banquet hall. The restaurant had never provided those services, so there was no reason to expect it could do so without seeking a variance.

Comment 1: The case is a strong one because of all the erroneous assumptions set forth in the public record. The fact remains, however, that the historical use differed from that which arose following the rezoning, and the use was unlawful. It is unusual for a court ever to conclude that representations of public officials will estop an agency from pursuing appropriate land use goals as against an unlawful use. The court acknowledges this principle, but seems to conclude that the case for estoppel here was overwhelming. In fact, it seems almost apologetic in concluding that it cannot provide an estoppel defense for the catering and banquet use.

Comment 2: Note the emphasis on the reliance by the purchaser on the references in public documents. Anyone who has these facts would want to hammer hard on this part of the case in arguing that it stands as authority. You'll find few other cases that are quite so strong in finding municipal estoppel.

ZONING AND LAND USE; ESTOPPEL: Issuance of building permit for a part of landowner's project does not constitute an "assertion of a position" with respect to other aspects of the project sufficient to invoke equitable estoppel permitting the project to proceed. Ogar v. City of Haines, 51 P.3d 333 (Alaska 2002).

Landowner who purchased real property with structures that encroached the city's right of way and violated city zoning and setback requirements brought an action claiming that the city was equitably estopped from requiring her to remove the portion of the structures that were not in compliance with the city codes and from collecting money damages for the land that the city vacated to accommodate the remaining structures.

The trial court granted summary judgment for the city and the landowner appealed.

The Supreme Court held that the four elements required to claim equitable estoppel re: 1) assertion of a position by conduct or word; 2) reasonable reliance on such asserted position; 3) the reliance on the asserted position resulted in prejudice to the claiming party; and 4) justice requires that estoppel be enforced. It concluded that the landowner had failed to establish the first required element of equitable estoppel, that the city made assertions that would equitably estop it from enforcing its zoning and setback requirements. The Court did not agree with the landowner that an incomplete vacation request supposedly granted by the city coupled with the issuance of a building permit for a new garage amounted to positive assertions or acts by the city that the landowner was entitled to rely upon regarding the encroachment issue.

The court found that the issued permit did not authorize the encroachment.

The Supreme Court stated that the equitable estoppel claim could not rest solely on the city's failure to detect and abate the offending structures' incursions into the right-of-way and setbacks. Since the first element of equitable estoppel was not met, the Supreme Court affirmed the lower court's grant of summary judgment.