The City of North Oaks commenced an action against Rajbir Sarpal alleging that his newly built shed violated the city zoning ordinance for a side yard setback and that the shed encroached upon a trail easement. The trial court ruled in favor of Sarpal and the court of appeals affirmed on the grounds that the city was equitably estopped from enforcing the zoning ordinance because Sarpal had relied on the misrepresentation of a city employee and the city’s approval of the permit. The City of North Oaks appealed the rulings of the two lower courts to the Supreme Court of Minnesota where they were reversed and remanded.
Respondent Rajbir Sarpal purchased property in 2003 from the North Oaks Company, who reserved an easement over the northwestern section of the property for a trial. After building a house on the property in 2004, the respondent wanted to construct a shed in 2006. In order to obtain a building permit for the shed the respondent needed to show the city an “as-built survey”. The respondent went to the city office where he was supplied with what he thought was an “as-built survey” but was really a survey of the land including a “proposed house” location. The city employee assured the respondent that the survey was the correct one he needed even though it was not. The respondent used the survey he was given to acquire a building permit and build the shed.
The constructed shed encroached upon the trail easement as well as the thirty foot setback described in the City of North Oaks Code of Ordinances. A year after the shed was completed the respondent received a letter from the city stating that the shed violated both the setback ordinance and the trail easement, and demanded it be moved. The respondent eventually realized the survey he obtained from the city and used for placement of his shed was not an “as-built” survey. After the respondent failed to move his shed the city brought suit, which the respondent pleaded several affirmative defenses to, including equitable estoppel.
After the trial court found in favor of the respondent and the court of appeals agreed, the Supreme Court of Minnesota overturned their decisions. The Supreme Court of Minnesota noted that the court of appeals used the wrong standard of review, stating the correct standard of review was whether the lower court had abused their discretion based on an erroneous view of the law. Once the Supreme Court of Minnesota applied the correct standard, they determined that the court of appeals did abuse its discretion when finding that the city was equitably estopped from enforcing its zoning ordinances and the trail easement. The Supreme Court of Minnesota established that for a party to get equitable estoppel against the government there must be four elements present. The four elements are: there must be “wrongful conduct” on the part of the authorized government agent, the party seeking equitable relief must reasonably rely on the wrongful conduct, the party must incur a unique expenditure in reliance on the wrongful conduct, and the balance of the equities must weigh in favor of estoppel. The court found that an erroneous government action is not necessarily “wrongful” and that it must constitute something more than a simple mistake. The court also noted that the city employee was acting in good faith when he gave the respondent the wrong survey. The city’s conduct was also not necessarily wrongful just because it granted the permit and approved the wrong plans. The city was merely relying on the documents that the respondent submitted as true. The Supreme Court of Minnesota found that since there was no wrongful conduct, the court of appeals abused its discretion when it determined that the city should be equitably estopped from enforcing the zoning ordinance and trial easement.
City of North Oaks v. Sarpal, 797 N.W.2d 18 (Minn. 5/11/2011).
The opinion can be accessed here