Estoppel Case Analysis

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The decision is a welcome one, at least compared to that of the court of appeals. By concluding that estoppel could not lie because the County relied on its counsel’s advice rather than the actions of the Village, that decision created a perverse disincentive to seeking the advice of counsel.

However, the court should have gone even further, and held that the issue of whether one party relied on another’s actions should be judged without regard to the advice of counsel.

If seeking the advice of counsel is to be deemed relevant to the inquiry, the rule should be as follows: if the party’s counsel advises it that a course of action is lawful, then the case for the reasonableness of the reliance is bolstered; if counsel advises against an action, and a party goes forward anyway, the case for reasonableness is weakened.

The advice of counsel does not concern reliance; the issue to which it is relevant is the reasonableness of the reliance. If a party acts to its detriment in reliance on another’s actions, in spite of the advice of counsel not to, then the party has not acted reasonably.

However, if, as in the case at bar, the party follows its counsel’s advice, it has a stronger argument that its reliance was reasonable. However, the question of whether the first party relied on the other party’s actions should not be affected one way or the other.

No court should ever hold, as the court of appeals did, that because a party followed the advice of counsel, the case for reliance on the actions of the opposing party is weakened. Had the court of appeals’ decision remained governing law, parties would be discouraged from seeking counsel, and placed in a Catch-22: if counsel says go, then the party would be found to have relied on counsel, rather than the opposing party; if counsel says stop, then there would be reliance, but it would be unreasonable.

However, instead of establishing the bright line rule suggested above, the Supreme Court allows vestiges of the court of appeals’ holding to remain as a discouragement from seeking counsel. The Supreme Court wrote, "The issue regarding the meaning of and reliance on the corporation counsel’s letter remains in dispute. The court of appeals may have misinterpreted, and thus overemphasized, the County’s reliance on the advice given by its corporation counsel. A fair reading of the letter does not necessarily lead to the conclusion that the corporation counsel asserted that there was no zoning problem."

By failing to relegate advice of counsel to the question of reasonableness only, and allowing it to remain part of the question of reliance generally, parties remain discouraged from seeking counsel.

The lead opinion’s failure to address footnote 12 of Justice Prosser’s concurrence is also troubling.

Prosser emphasized that the County did not rely on the actions of a mere individual village officer, but on the actions of the Village Board, "the highest municipal body."

Prosser wrote, "Individual municipal officers may act roguishly. The Village Board’s imprimatur lends an added sense of credence to individual officers’ representations."

If there was no mention of the issue in either opinion, one could infer that the court deemed it self-evident that the case for reasonable reliance is stronger in a case such as this one, compared to one where the party acts in reliance on the representations of a mere individual official.

However, the lead opinion does not even address the footnote. Also, the opinion fails to make any explicit reference to the status of the government officials or bodies in the cases which it cites.

For example, the court notes that, in Willow Creek Ranch v. Town of Shelby, 2000 WI 56, par. 50, 235 Wis.2d 409, 611 N.W. 693, the court held a municipality was not estopped from asserting a violation of an ordinance, holding, "Binding municipalities to every representation made by subordinate employees would produce severe results for the municipalities (emphasis added)."

Likewise, in City of Milwaukee v. Leavitt, 31 Wis.2d 72, 76-77, 142 N.W.2d 169 (1966), the municipality was not estopped from enforcing its ordinance, even though the party relied on "erroneous acts of municipal officers."

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One would expect some acknowledgement in the lead opinion that the case at bar involves the actions of the Village Board, not a village flunky, as well as guidance to the circuit court that this is a factor weighing in favor of finding reasonable reliance on the County’s part.

The lead opinion not only fails to address footnote 12 of the concurrence, however; it fails to address the concurrence, at all.

The concurrence interprets the lead opinion as follows: the only way a party can use equitable estoppel against a municipality is to violate the ordinance, and invoke estoppel as a defense if the municipality enforces it; the party cannot seek declaratory judgment that estoppel bars the municipality from enforcement; the party can only seek money damages. The concurrence calls this "nonsensical as a principle of law."

If the majority disagreed
with this assessment, one would expect some acknowledgement of it in the lead opinion, and an explanation why it is not correct. The absence of any acknowledgement suggests that the majority agrees that this is, in fact, the dilemma the property owner faces, but inexplicably disagrees with the concurrence’s opinion that the result is "nonsensical."

– David Ziemer

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David Ziemer can be reached by email.