ND Supreme Court Holds Insufficient Evidence Existed to Invoke Estoppel with Regard to Property Owners’ Claim Against Township for Refusing to Renew a CUP

This post was authored by Matthew Loeser, Esq.

Property owners Cameron and Mary Susan Arnegard brought an action against the Township, alleging claims for breach of contract, actual fraud, equitable estoppel, negligence, and deceit with regard to the Township’s refusal to renew a conditional use permit (CUP) for the construction of temporary workforce housing in an agricultural-zoned area. The District Court, McKenzie County, denied township’s motion for summary judgment, dismissed property owners’ claims for breach of contract, actual fraud and equitable estoppel, granted township a directed verdict on the deceit and negligence claims, granted property owners a directed verdict on their due process claim, awarded damages of $1, and did not submit any issue to the jury.

The record reflected that the Township followed statutory procedure by publishing notices for both the January regulations and the March 2012 amendments in the official County newspaper. The Township also posted notices for both matters in Arnegard City Hall and the City of Arnegard’s post office. The Township held public hearings for both matters, and the parties did not dispute that citizens of the Township were afforded the opportunity to be heard. The court therefore found the Township validly enacted both the January zoning ordinances and March 2012 amendments.

On appeal, the Arnegards claimed the CUP was a contract, and the district court erred by finding no evidence of a contract and granting summary judgment dismissing their claims for breach of contract, actual fraud and equitable estoppel. Here, however, the district court found no authority interpreting CUPs under contract principles and ruled the breach and actual fraud claims failed without a contract. The court determined that a CUP is issued under zoning ordinances, and an issuing body therefore not free to give its consent in the required sense of a contract. Accordingly, the district court did not err by dismissing the Arnegards’ breach of contract and actual fraud claims.

The Arnegards next contended that the district court incorrectly dismissed their claim for equitable estoppel based on the lack of a contract. Here, the Arnegards did not present evidence of substantial expenditure, but claimed only lost opportunity or diminution in value. This claim arose from alleged lost opportunities based on development or sale negotiations, which the Arnegards conceded never amounted to a final agreement. Thus, while the dismissal of an equitable estoppel claim for lack of an underlying contract was a misapplication of the law, the court nevertheless concluded that the Arnegards’ claim was properly dismissed as they failed to show substantial reliance sufficient to invoke the protection of estoppel.

Lastly, the Arnegards alleged that the district court abused its discretion in denying their motion to amend the complaint to include a 42 U.S.C. § 1983 claim for violation of due process. Specifically, the Arnegards claimed the district court erred by granting the Township’s motion in limine to exclude evidence of offers to sell the property, as they intended to use this evidence to show diminution in value for damage calculations. However, as the court affirmed the dismissal of the underlying claims, it found this issue did not need to be addressed. Accordingly, the judgment regarding the Arnegards’ due process claim and the award of nominal damages was reversed and remanded.

Arnegard v Arnegard Township, 908 NW2d 737 (ND 3/22/2018)