Palermo Land Co., Inc. v. Planning Com'n of Calcasieu Parish

• Decision Date: 30 April 1990
• Docket Number: No. 89-C-2562,89-C-2562
• Citation: 561 So.2d 482
• Court: Louisiana Supreme Court
• Parties: PALERMO LAND CO., INC. & Browning-Ferris, Inc. v. PLANNING COMMISSION OF CALCASIEU PARISH & the Police Jury of Calcasieu Parish. Raymond L. NELSON, Sr., Raymond L. Nelson, Jr., Edward W. Nelson, and Patricia Nelson Brummett v. PLANNING COMMISSION OF CALCASIEU PARISH & the Police Jury of Calcasieu Parish. 561 So.2d 482

Page 482

561 So.2d 482

PALERMO LAND CO., INC. & Browning-Ferris, Inc. v. PLANNING COMMISSION OF CALCASIEU PARISH & the Police Jury of

Calcasieu Parish.

Raymond L. NELSON, Sr., Raymond L. Nelson, Jr., Edward W.

Nelson, and Patricia Nelson Brummett v. PLANNING COMMISSION OF CALCASIEU PARISH & the Police Jury of

Calcasieu Parish.

No. 89-C-2562.

561 So.2d 482

Supreme Court of Louisiana.

April 30, 1990.

Rehearing Denied June 21, 1990.

Mack Barham, Robert Arceneaux, Barham & Associates, New Orleans, Richard Ieyoub, Dist. Atty., and Terry Manuel, Asst. Dist. Atty., for applicant.

Joseph Delafield, H. Paul Honsinger, Carmouche & Gray, Lake Charles, for respondents Palermo Land Co., Inc. and Browning-Ferris, Inc.; R. William Collings, and Edward W. Nelson, Collings & Collings, Lake Charles, for respondents Raymond L. Nelson, Sr., Raymond L. Nelson, Jr., Edward W. Nelson, and Patricia Nelson Brummett.

COLE, Justice. ^*

The primary issue in these consolidated cases is whether the decision of the Police Jury of Calcasieu Parish to rezone several tracts of land, thereby preventing expansion of an existing landfill, was arbitrary and capricious, and therefore invalid. For the reasons assigned herein, we hold the Police Jury's decision was not arbitrary and capricious, and we reverse the court of appeal's contrary holding.

FACTS AND PROCEEDINGS BELOW

This litigation involves three adjacent tracts of land in Sulphur, Louisiana. The western tract is owned by the Palermo Land Company, Inc. (Palermo), the eastern tract is owned by the Nelsons, and the middle tract is a solid waste landfill owned and operated by Browning-Ferris, Inc. (BFI). Prior to the instigation of this lawsuit, both Palermo and Nelson had negotiated with BFI to sell their property to it for expansion of the landfill, which is nearing capacity. When these negotiations took place, both tracts were zoned "heavy industrial" (I-2), a classification which, at the time, allowed for a landfill. The area surrounding these tracts is primarily zoned "light industrial" (I-1) and "mixed residential" (R-2). This lawsuit arose as a result of the subsequent rezoning of the Palermo and Nelson tracts and two other contiguous tracts from "heavy industrial" (I-2) to "light industrial" (I-1) in February of 1988. ¹ An I-1 classification precludes use of the property as a landfill.

The Nelson and Palermo tracts were not always zoned I-2. The Palermo tract was originally zoned I-1 (light industrial) in October of 1980. The Nelson tract was originally zoned part C-3 (central business commercial), and part I-2 (heavy industrial), also in 1980.

At one time, the BFI landfill site (the middle tract), while an existing landfill, was owned by the Nelson family. After the site was acquired by BFI, Joseph R. Palermo, Jr., then owner of the Palermo tract, filed suit against BFI for damages caused by the alleged devaluation of his property due to BFI's landfill operations.

In 1981 the Nelsons were granted a rezoning of the C-3 portion of their tract to make the entire tract I-2. Sometime in 1985, Joe Palermo agreed to sell his tract to William Clark, who wanted to use the property as a site for the manufacture of metal buildings. This use of the property would require rezoning from I-1 to I-2. The stipulated (but not actual) price was $150,000 with a downpayment of $5,000. A counter letter was signed acknowledging that the actual price of the property was $40,000 per acre, or a total of $2.4 million. The counter letter also provided the purchase and sale agreement was not to be recorded, and that the sale was subject to Clark's success in realizing his plans for an industrial development. The unrecorded counter letter, which placed on his property a value in excess of $2 million, was Palermo's means of preserving his property devaluation claim against BFI in the event the sale to Clark was not completed.

When Clark requested rezoning of Palermo's tract in 1985, one of the Nelsons informed the Police Jury that he was negotiating with BFI to sell the Nelson tract for extension of the BFI landfill. In an attempt to avoid the possibility of competition from Palermo, he asked the Police Jury to condition the rezoning of the Palermo tract from I-1 to I-2 so as to exclude use of the Palermo tract as a landfill. The Police Jury considered Mr. Nelson's request, and the Ways and Means Committee recommended adoption of a new ordinance conditioning use of property for landfill purposes upon issuance of developmental permits. The Police Jury voted against the recommendation, and granted Clark's rezoning request without the condition suggested by Mr. Nelson.

Clark's industrial development deal fell through. Thereafter, in October of 1985, BFI contacted Joe Palermo through his attorney and began negotiating for the purchase of the Palermo tract, conditioned upon Joe Palermo's dismissal of his lawsuit against BFI. In December of 1985, Palermo and BFI reached an agreement under which the property would be sold to BFI for $1.4 million if BFI could obtain all necessary licenses and permits for operation of a landfill on the property by March 1, 1988. Failure to close the deal by this date was to result in nullification of the purchase agreement.

BFI expended approximately $580,000 preparing the necessary studies which it presented to the Department of Environmental Quality (DEQ) for licensing. In response to requests from citizens of Sulphur, including a petition with over 5,000 signatures, the Planning Commission in January and February of 1988, conducted a zoning reclassification feasibility study of an area including the three tracts at issue. The study found that land use in the area was 10% residential, 5% publicly owned, 20% commercial, and 65% undeveloped, with the greatest increase in development being for residential uses. The study also measured traffic flow, topography, flood zones, and degrees of environmental contamination. The study recommended rezoning the Palermo tract, the Nelson tract, and two other pieces of property from I-2 to I-1. There were public hearings before both the Planning Commission and the Police Jury. The Planning Commission voted 4-3 to recommend the rezoning. On February 28, 1988, the Police Jury voted 8-6 to rezone the area.

On March 4, 1988, Palermo and BFI filed suit to restore I-2 zoning to the Palermo tract. The Nelsons filed a suit which was consolidated with that of Palermo and BFI. At some point BFI bought thirteen of the sixty acres of the Palermo tract, and by November of 1988 it had increased its total expenditures to more than $1.2 million. On March 11, 1988, DEQ informed BFI that its permit application for expansion of its landfill had 47 deficiencies and that the application would not receive further review unless the zoning of the Palermo tract was restored to allow use as a landfill. Then, in July of 1988, the Police Jury accepted a recommendation of the Planning Commission to create a special zoning classification for solid waste landfills, I-2R, heavy industrial restricted. ²

The trial court dismissed plaintiffs' claim of equitable estoppel, and found the actions of the Police Jury were not arbitrary and capricious, thus the rezoning of the Nelson and Palermo tracts was valid. The court of appeal reversed. Palermo Land Co. v. Planning Com'n, 550 So.2d 316, and Nelson v. Planning Com'n, 550 So.2d 328 (La.App. 3rd Cir.1989). It based its holding upon the doctrine of equitable estoppel, and upon a finding that the rezoning was subject to the "change or mistake" rule under which it failed as an arbitrary and capricious exercise of police power. We granted certiorari to review the decision of the Third Circuit. 553 So.2d 478 (1989).

EQUITABLE ESTOPPEL

The court of appeal found the Parish could be equitably estopped from rezoning property when the property owner justifiably relied upon conduct by the Parish indicating the property would not be rezoned. As authority for its holding, the court of appeal cited State ex rel. Re-Lu, Inc. v. City of Kenner, 284 So.2d 866 (La.App. 4th Cir.1973), and acknowledged this is the only Louisiana case in which equitable estoppel was discussed in the zoning context. In City of Kenner, the Fourth Circuit declined to apply equitable estoppel, although the plaintiff developer had relied upon information that if he obtained a preliminary permit before adoption of the new ordinance, construction would be allowed within one year of the permit. The Fourth Circuit found the developer was not justified in relying upon the information he had received because he had knowledge the new ordinance was under consideration prior to his purchase of the property.

Rather than finding City of Kenner distinguishable, as did the court of appeal, we find the facts of this case analogous. The acts of the Parish discussed by the Court of Appeal as indicative that the property would not be rezoned are as follows: 1) the upzoning of the Palermo property from I-1 to I-2 in 1985; 2) the failure of the Parish to adopt the recommendation of the Ways and Means Committee in July of 1985 conditioning use of property for landfill purposes upon issuance of developmental permits; 3) three identical letters sent by three police jurors on October 16, 1986 to BFI expressing that the author of each letter, "along with some of [his] colleagues," supported a landfill expansion; 4) an assurance from one police juror to Palermo that BFI was free to go about the business of preparing for the landfill; 5) discussions between Palermo and the parish planner of BFI's proposed landfill expansion; 6) a letter from the Superintendent of Solid Waste for the Police Jury requesting a copy of the proposed landfill expansion site plan, and stating that several police jurors had inquired about the location of the proposed entrance and exit gates for the expansion; 7) a newspaper interview with the parish planner in which he said he was aware that BFI was in the...