Posted by: Patricia Salkin | September 15, 2011

CT Supreme Court Reverses Lower Court and Orders New Trial Finding that Property Owner was Entitled to Claim Municipal Estoppel for Reliance on Board’s Assurances

The Connecticut Supreme Court upheld as valid a town land use ordinance prohibiting construction of multiple dwellings on a single lot, but remanded for a new trial a municipal estoppel claim filed by an impacted landowner who had engaged professionals to assist in building two additional dwellings on his lot before the challenged land use ordinance was enacted, allegedly with assurance from town officials that his project would not be affected by the new law.

Plaintiff, Scott Levine, brought this action against defendants, Town of Sterling and its building official, after the town refused to issue plaintiff building permits for two additional dwelling units planned for his ten-acre property.  In 2005, plaintiff began pursuing a plan to build two additional homes on his property and then to convert the parcel’s three homes into a planned unit development.  Plaintiff presented his plan to the town board in October 2005, and was told that he was “well within his rights” to pursue the plan but that none of the homes could ever be sold individually.  Plaintiff continued to pursue his plan, obtaining approval from the town’s inland wetland and watercourses commission and preliminary approval from the health district.

Soon after plaintiff discussed his plan with the town board, the board amended its land use ordinances, prohibiting the construction of multiple dwellings on a single lot.  The board’s amendment did not clearly state whether the changes applied to projects already under way, but when plaintiff asked about the applicability of the changes to his project, he was assured his project would be unaffected.  The board passed a resolution to that effect on Feb. 8, 2006, but later rescinded that approval at a Sept. 13, 2006 meeting, reserving the right to enforce the new land use regulations as they pertained to plaintiff’s project.  In the intervening months, plaintiff had hired and paid professionals to develop the project, and spent an estimated 400 hours of his own time working on the development.

When plaintiff applied for building permits to construct the two additional dwellings, his applications were denied, and plaintiff filed this claim.  The plaintiff alleged (1) that the town had improperly enacted a land use ordinance prohibiting construction of multiple dwellings on a single lot and (2) that he was entitled to declaratory and injunctive relief on the basis of municipal estoppel.  The trial court found in favor of the town on both counts, holding that the land use ordinance was properly enacted and that the plaintiff had failed to show a substantial loss necessary to prevail in a municipal estoppel claim.  Plaintiff appealed.

On appeal, defendants asserted that the court did not have subject matter jurisdiction over the claim because Levine had failed to exhaust his administrative remedies.  However, the court disagreed.  At the time the dispute first arose, the town had very recently established a zoning board of appeals by amendment, but at the time the plaintiff would have needed to bring his appeal, the board did not yet exist.  The court concluded that, in the absence of a zoning board of appeals, there were no administrative remedies available to Levine.  Thus, the court held that there was subject matter jurisdiction.

Plaintiff argued that the town’s enactment of the land use regulation was invalid, because the town had previously adopted chapter 124 zoning regulations under Connecticut General Statutes § 8-17a and that the new land use regulation passed by the board in October 2005 was superseded by those zoning regulations.  The court disagreed, noting that while the town had adopted chapter 124 zoning regulations in March 1990, it voted to repeal those regulations in November of the same year.  From that point until the regulation in question was passed, the town did not have any zoning regulations, therefore the October 2005 regulation was not superseded.  Thus, the court held that the town had validly enacted its ordinance.

On the municipal estoppel claim, the court sided with the plaintiff, finding that the trial court had improperly applied the substantial loss test.  In order to prove municipal estoppel in Connecticut, the court noted an aggrieved party must prove that (1) an authorized agent of the municipality has acted in a way intended to lead the party to believe certain facts, and to act on that belief; and (2) the party had exercised due diligence in attempting to ascertain those facts, and had no other convenient means of finding those facts; and (3) the party changed his position in reliance on those facts; and (4) the party would incur a substantial loss.  The trial court held in favor of the plaintiff on the first three elements of this test, but concluded that because the plaintiff could not demonstrate that improvements he made to his property would be “rendered useless” and because construction on the homes had not yet begun, the plaintiff had failed to prove a substantial loss. 

The Connecticut Supreme Court held that, by focusing only on capital investments not made to the property, the trial court had improperly applied a stricter version of the substantial loss test than was required.  The appellate court held that “the primary consideration in determining whether a party will suffer a substantial loss is whether the party has made significant expenditures in reliance upon the representation of a municipal official.”  Plaintiff demonstrated that he had invested money and time into the project, both his own and that of the professionals he retained.  The trial court’s conclusion that he failed to put forth sufficient evidence of loss for his municipal estoppel claim was therefore erroneous.

Finally, the Defendant claimed that, even if plaintiff did incur a loss due to his reliance on the board’s assurance that the ordinance would not apply to projects already in development at the time, his reliance on that statement was not reasonable since the board’s interpretation was “clearly erroneous.”  The court rejected this argument, finding that the ordinance was not clear as to the question of retroactivity and that the plaintiff acted reasonably in seeking the advice of, and believing, the board appointed to interpret such ordinances. 

On the municipal estoppel question, the Connecticut Supreme Court reversed the lower court’s decision and remanded the case for a new trial.  On all other matters, the lower court’s judgment was affirmed.

Levine v. Town of Sterling, 2011 WL 1161751 (Conn. 4/12/2011)

The opinion can be accessed here:

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