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Wednesday, July 27, 2016

Typically the doctrine of equitable estoppel is not applied to a governmental entity exercising a governmental function or correcting of an administrative error


Typically the doctrine of equitable estoppel is not applied to a governmental entity exercising a governmental function or correcting of an administrative error 
Palm v Tuckahoe Union Free School Dist., 2016 NY Slip Op 05558, Appellate Division, Second Department

The doctrine of equitable estoppel is typically raised in an effort to bar Party A from acting in a manner inconsistent with Party A’s earlier position concerning a matter where its change of position is to the detriment of Party B, who acted in reliance of Party A's earlier position. Equitable estoppel was one of the arguments advanced by the plaintiffs in this Article 78 action, contending that such a change in  defendant's position was to Plaintiffs' detriment.

Stephen Palm brought this action on behalf of himself and certain owners of units [Plaintiffs] in a 28-unit condominium complex against the Tuckahoe Union Free School District [Tuckahoe] alleging that Plaintiffs had elected to exercise their statutory right to designate Tuckahoe as their school district pursuant to Education Law §3203(1)* and that Tuckahoe had wrongfully deprived them of that right.

In support of their claim, Plaintiffs argued that certain condominium unit owners had paid school taxes to Tuckahoe and had relied on Tuckahoe’s representations that this right of election was available to them pursuant to Education Law §3203(1). In the alternative, Plaintiffs argued that Tuckahoe was equitably estopped from depriving them of the right to designate Tuckahoe as their school district.

After a jury trial, the jury returned a verdict in favor of Plaintiffs that, in effect, held that certain owners of the condominium units were [1] entitled under Education Law §3203(1)(b) to elect Tuckahoe as their school district of choice and that [2] Tuckahoe should be equitably estopped from depriving the condominium unit owners who testified at the trial of their right to designate Tuckahoe as their school district of choice.

Tuckahoe then asked the court for a judgment in its favor notwithstanding the jury’s verdict as a matter of law. Supreme Court granted Tuckahoe’s motion and Plaintiffs appealed. 

The Appellate Division ruled that Supreme Court properly granted Tuckahoe’s motion to set aside the jury’s verdict that declared that the Plaintiffs could designate Tuckahoe as their school district pursuant to Education Law §3203(1).

Addressing Supreme Court’s granting Tuckahoe’s motion to set aside the jury verdict in favor of certain Plaintiffs as a matter of law, the Appellate Division said that "[a] motion for judgment as a matter of law … may be granted only when the trial court determines that, upon the evidence presented, there is no valid line of reasoning and permissible inferences which could possibly lead rational persons to the conclusion reached by the jury upon the evidence presented at trial….”

That said, the Appellate Division concluded that there was “no rational process by which the jury could find in favor of the [Plaintiffs]" as a matter of law.

As to the issue of the application of the doctrine of equitable estoppel, the Appellate Division, citing Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30, affirmed Supreme Court’s granting that branch of Tuckahoe’s motion to set aside the jury’s verdict, explaining that “[e]stoppel generally is not available against a municipal defendant with regard to the exercise of its governmental functions or its correction of an administrative error.”

Noting that although there are exceptions to this “general rule,” and that they are applicable only when there are "exceptional circumstances" such as the "wrongful or negligent conduct" of a governmental entity, or that entity's "misleading nonfeasance" induces a party "relying thereon to change his or her or its position to his or her or its detriment" and which resulted in a "manifest injustice," the Appellate Division concluded that there was no valid line of reasoning and permissible inferences from which the jury could rationally have found that Tuckahoe had engaged in any wrongful or negligent conduct or misleading nonfeasance resulting in a "manifest injustice" that would trigger the application of an exception to the general rule with respect to Plaintiffs' situation in this instance.

Accordingly, said the Appellate Division, Supreme Court properly granted Tuckahoe’s motions pursuant to CPLR §§4401 and 4404(a).

* Education Law §3203(1) provides for the selection of a school for a child to attend when the boundary line between two school districts runs through the dwelling on the property or, in the case of an owner-occupied single family dwelling unit, runs through the property on which the dwelling unit is located.

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