The Mystery of Equitable Estoppel
I love the doctrine of promissory or equitable estoppel. It has allowed me to win several appeals to the WV Supreme Court of Appeal and to save clients hundreds of thousands of dollars over the years. The trial judges I have appeared before have had great difficulty understanding the concept, which is based on fairness and second chances.
Judges prefer to apply rules, not to find exceptions to those rules. Perhaps that is why I have been to the WV Supreme Court as often as I have. Once a Supreme Court justice told me that my case had helped him to understand promissory estoppel.
Here is the history lesson. In some cultures if you even accidently killed a member of another person’s family, they got to kill one of yours. If you were telling the truth, you would float in a pool of water, and if lying, would sink.
As we came out of the “dark ages”, the law evolved. But, the laws were arcane, strict, and often unfair to particular cases. So, the King (I assume the English King; this lesson has no footnotes!) would hold sessions where his subjects could come to his “court” and plead special exceptions to the harsh laws.
The king alone determined whether the application of “the law” was unfair. If so, he attempted to apply “equity”.
So, there developed courts of law (the black letter, strict, rules), and equity, where exceptions were developed.
The two courts, law and equity, or chancery, were merged in WV many years ago, but the two separate outlooks prevailed. I could not find the citation to the classic example I found in law school, but here it is anyway.
A husband and wife sit on their porch, chuckling to one another and sipping tea, as their neighbor works away building a barn ON THEIR LAND.
As the neighbor prepares to drive his tractor into the garage, they stroll down, and post a “no tresspassing” sign. Of course, equity requires that the neighbor had a good faith belief that he owned the property where he built the barn. It is called “color of title”.
I like equitable or promissory estoppel because someone really screwed up, but is given a second chance because the person who would otherwise get the benefit of the mistake does not deserve it. He knew his neighbor was in the wrong but let him act “to his detriment” anyway. It is not fair a party to get a windfall from silence.
In the instance above, the barn builder reasonably relied on his neighbors’ forbearance in sitting quietly and not objecting.
Here are three examples of equitable estoppel from the real world.
I know because they involved my clients and me:
a. A couple selling their house could not deprive the realtor of a fee even though the written listing agreement (required in WV) had expired, because they chose to let him show the house and sold that house to the buyer he found for them.
b. An insurance company could not hide behind the two year statute of limitations because it approved an extension of three weeks requested by the plaintiffs’ lawyer, even though the lawyer had lost track of the statute of limitations deadline! And,
c. A mother could not sign a written agreement for the husband to take responsibility of one of the children, waive child support, and sue for full support later; to do so would severely prejudice the father who had foregone child support from the Mother AND believed he would get credit for raising the daughter. Therefore, her claim for $70,000 of overdue child support failed in spite of strong “rules” to the contrary.
So, here are the elements of estoppel;
a. A person changes her position to her detriment.
b. What she does is violative of someone else’s right (i.e. the barn on wrong property, not having a writing listing the property for sale, or not getting court approval for the change in custody. ); and
c. The other person does not act to stop the person, or lures the mistaken person into believing his rights are being protected.
When these factors exist, the person trying to take advantage of the other person’s mistake, is barred or “estopped” from asserting his claim or his defense.
PLEASE, do not expect the average lawyer to understand promissory or equitable estoppel. You see, I was the fellow who relied on the insurance adjustors assurances and missed a statute of limitation, and the lawyer whose client failed to get the sellers to sign a new listing agreement, and of the man who failed to get a court order approving the change of custody. It is experiences like that, and arguing estoppel dozens of times to trial and appellate courts, that allows the dotrine of estoppel to sink it.
THEREFORE, even if you screw up, TALK TO A LAWYER. Maybe your mistake is one the law will overlook!
This post was written by Burton Hunter
And note, from the three examples listed above, one of the “mistakes” was by an experienced lawyer in missing a statute of limitations, but two of them were by people who would have been saved months of agonizing litigation, and thousands of dollars in legal expenses, IF they had consulted their lawyer!