Issue
The United States Court of Appeals recently considered the issue of whether a religious institution was entitled to rely on a building permit issued by a city. (Congregation Etz Chaim v. City of Los Angeles (2004 Daily Journal D.A.R. 7214, 9th Cir. (Cal), June 16, 2004))
Facts
After a long history of litigation regarding City’s building permit requirements, the City of Los Angeles and Congregation Etz Chaim entered into a settlement agreement. After the agreement, Congregation submitted renovation plans, clearly and explicitly describing expansion of Congregation’s existing home from 3,400 square feet to 8,150 square feet. After reviewing the renovation plans in conjunction with the settlement agreement, City’s building department issued a permit and Congregation began work as designated in its plan. Approximately one week later, apparently responding to complaints from neighbors, City issued a stop-work order. Congregation asked a federal district court to require City to lift the stop-work order. The district court ruled in favor of Congregation and City appealed to the U.S. Court of Appeals.
Appellate Court Decision
The principle of equitable estoppel prohibits a governmental entity from preventing a developer’s proposed land use after the governmental entity issues a valid building permit and the developer “performs substantial work and incurs substantial liabilities in good faith reliance on the permit.” Here, Congregation paid over $21,000 for permit fees and over $15,000 for demolition pursuant to the plans approved by City. This involved substantial work and substantial liabilities. “The Congregation’s permit application was reviewed and approved by the City and the subsequent renovations were undertaken in reliance upon the issuance of a valid building permit.”
Thus, the Court affirmed the district court’s decision, concluding that it did not err when it applied equitable estoppel and lifted City’s stop-work order.
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