Defenses of Equitable Estoppel and Laches Barred Where Billboard Was Unlawfully Erected; Claim of Inverse Condemnation Rejected On Same Grounds

By Katherine J. Hart

In West Washington Properties, LLC v. California Department of Transportation (November 5, 2012, B233295) __ Cal.App.4th ___, the Court of Appeal, Second Appellate District, held that despite over two decades of no enforcement by the California Department of Transportation (Caltrans), the defenses of equitable estoppel and laches would not stand to insulate the property owners of a building near Interstate 10 (I-10) in Los Angeles from obtaining a permit and reducing the size of an advertising display that was unlawfully erected on the side of the building in violation of the Outdoor Advertising Act (Act) (Cal. Bus. & Prof. Code[1], § 5300, et seq.).

Factual Background

West Washington Properties LLC purchased a building at 155 West Washington Blvd. in Los Angeles, adjacent to I-10.  The advertising space, also referred to as a “wallscape”, was located on the side of the building facing the I-10 freeway. One of the main reasons West Washington purchased the building was for its ability to sell (and profit from) the wallscape. The wallscape area was 8,000 square feet and had been in place since 1984. When it bought the building in 1999, West Washington found permits issued by the City of Los Angeles for the wallscape, but did not have a permit issued by Caltrans for the wallscape as required by the section 5350 of the Act.

In March 2006, Caltrans issued a notice of violation (NOV) indicating the wallscape violated the Act because (1) Caltrans had never issued a permit for the wallscape, and (2) the wallscape area exceeded 1,200 square feet in a business area located within 660 feet of an interstate.

West Washington contested the NOV on the grounds that (1) Caltrans was equitably estopped from enforcing the Act because it had never done so before with respect to this property, (2) laches applied to prevent Caltrans from enforcing the Act, and (3) enforcement of the Act would amount to inverse condemnation and damages.

The trial court granted Caltrans’ demurrers to West Washington’s first and second amended complaints on ground that equitable defenses of estoppel and laches do not apply to prevent the removal of a condition deemed a nuisance per se by statute. West Washington appealed.

Discussion

On appeal, West Washington argued that the wallscape was lawfully erected under Section 5216.1 because Caltrans had not issued a NOV for the 22 years the wallscape was in existence (between 1984 and 2006).  The appellate court rejected West Washington’s contentions on the grounds that Section 5216.1 merely creates a rebuttable presumption and shifts the burden of proof of unlawful erection to Caltrans. The facts in the record clearly established that the wallscape was not lawfully erected in 1984 since at that time: the Act prohibited advertising displays over 1,200 square feet from being located within 660 feet of an interstate (§ 5804) and further, that advertising displays had to be permitted by Caltrans but were not (§ 5350). West Washington had stipulated that in 1984, the advertising display was over 1,200 square feet within 660 feet of I-10 and further that no one had ever applied for a permit for the wallscape. Thus, there was substantial evidence in the record to support the trial court’s finding that the section 5216.1 presumption was rebutted by Caltrans.

West Washington also argued that equitable estoppel and laches applied to bar Caltrans from enforcing the Act. The appellate court reviewed the four elements of equitable estoppel as well as the additional consideration of whether applying estoppel against Caltrans would violate sound public policy. In citing to a number of estoppel cases, including Feduniak v. California Coastal Com. (2007) 148 Cal.App.4th 1346, 1369, the court also reasoned that “the mere failure to enforce the law, without more, will not estop the government from subsequently enforcing it. [Citations.]” The laches claim was denied on the same grounds.

In the end, the appellate court held that regardless of whether the four elements of estoppel were met here, there were no grounds to override the public interest protected by the Act (i.e., “to promote the public safety, health, welfare, convenience and enjoyment of public travel, … to insure that information in the specific interest of the traveling public is presented safely and effectively….” (§ 5405.) Moreover, the court held that there were no exceptional circumstances warranting the application of equitable principles because the case involved only government inaction as a basis for the estoppel claim, which was purely economic and only effected on landowner (versus multiple landowners).

Finally, the court determined that estoppel was not a valid basis for an inverse condemnation claim since nonconforming displays are nuisances per se under the Act and thus, do not require the payment of compensation. Stated another way, because Caltrans’ enforcement of the Act was a reasonable exercise of the police power, it did not constitute a taking, and thus, no damages could be awarded. Notably, had the wallscape been lawfully erected in 1984 – in compliance with state laws at that time – compensation would be due. But, those were not the facts contained in the record. As such, equitable estoppel could not form the basis of West Washington’s inverse condemnation claim.

Comment

This case is yet another reminder of the might of the police power and that truly “exceptional circumstances” are required to establish a successful equitable estoppel claim against a governmental agency, be it the Coastal Commission, a city, county, or even Caltrans. Moreover, an agency’s failure to enforce statutes, regulations or ordinances, is not a sound basis for an estoppel claim. Finally, the only time an inverse condemnation claim to remove a billboard could stand is if and when the agency in question has otherwise authorized or directed the placement of an unlawful or billboard, or ordered the removal of a non-conforming billboard.

Katherine J. Hart is Senior Counsel at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.



[1] All further statutory references are to the California Business and Professions Code unless otherwise noted.

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