Applying City of White Settlement v. Super Wash, Inc., 198 S.W.3d 770 (Tex. 2006), the Fifth Court rejected the application of equitable estoppel to bar the City of Dallas’s enforcement of a zoning ordinance. The issue involved the acceptable height for a “parapet wall” of a duplex townhome; the estoppel argument involved communications with a building inspector during construction. The Court noted:

• “While we do not endorse the City’s erroneous issuance of two permits, the errors cannot properly be characterized as affirmative misrepresentations or deliberate actions calculated to induce PDT’s reliance.”
• “PDT’s argument that it reasonably relief on the City’s erroneous permits is similarly unpersuasive. The RPS ordinance is a matter of public record and PDT is charged with notice of its provisions.”
• PDT showed no benefit to the City (contrasting another case involving a direct land conveyance to the municipality)

No. 05-22-00730-CV (June 16, 2023). Interestingly, the opinion notes that the precedent in this area involves equitable estoppel rather than quasi-estoppel (which does not require detrimental reliance)–a potential area for future litigation.

The concept of estoppel is recognized by modern Texas law in many distinct doctrines: quasi-estoppel, equitable estoppel, judicial estoppel, etc. And sometimes, just saying the right words at the right time creates an estoppel, as occurred in a recent Texas Court of Criminal Appeals opinion where this exchange occurred about a key jury instruction:

Held: “The record reflects Appellant specifically asked the trial court to ensure that the jury be instructed they had to agree ‘beyond a reasonable doubt’ that Hogarth was an accomplice. We hold that Appellant, once he stated ‘I’m good’ with the instruction, is estopped from thereafter claiming that the instruction was improper.” Ruffins v. State, No. PD-0862-10 (Tex. Crim. App. March 29, 2023). I thank my friend Doug Gladden, a keen observer of Texas criminal law, for drawing this case to my attention.

Among other issues addressed in Wal-Mart Stores v. Xerox State & Local Solutions, Inc., the Fifth Court examined whether indemnity obligations can give rise to third-party beneficiary status, and concluded that they did not on this record. No. 05-18-01421-CV (Nov. 12, 2020) (mem. op.). (LPHS represented Xerox, the successful appellee.)

Cornwell v. Scothorn, discussed yesterday, also addressed whether quasi-estoppel could be a defense to a claimed breach of fiduciary duty. The Fifth Court affirmed on the basis of the charge submitted while also finding legally-sufficient evidence of reliance–the element that distinguishes “quasi-estoppel” from equitable estoppel. No. 05-18-00799-CV (Sept. 17, 2020) (mem. op.).

Cornwell v. Scothorn addressed the interplay between the opposing sides’ fraud and promissory estoppel claim. It distinguished El Paso Healthcare System v. Piping Rock Corp., 939 S.W.2d 695 (Tex. App.—El Paso 1997, writ denied), as “address[ing] whether an unclean hands defense barred recovery on a promissory estoppel claim. Piping Rock does not stand for the proposition that Stewart’s fraud in this case negated the Scothorns’ promissory estoppel claims. Ro the extent the jury found Stewart committed fraud and damaged McKinney $9427.86 in out-of-pocket damages and $8000 in damages for loss of credit reputation, we cannot conclude this finding precluded the jury from also finding that the Scothorns were entitled to damages of $201,318.04 on their promissory estoppel claim against Cornwell and McKinney.” No. 05-18-00799-CV (Sept. 17, 2020) (mem. op.).

Sometimes to state the issue is to decide it. For example, the Fifth Court’s opinion in Ruff v. Ruff began: “A pivotal question we address is whether a party can initiate an arbitration proceeding pursuant to a specific arbitration agreement, demand that a signatory to that agreement be compelled to participate in that arbitration, and then disavow the resulting award by alleging that he (the initiating party) did not agree to arbitrate according to that arbitration agreement.” The Court answered that question “no,” reviewing the invited-error and several estoppel doctrines. No. 05-18-00326-CV (Aug. 11, 2020).

The appellants in Trubenbach v. Energy Exploration “urge[d] that ‘context matters.’ They argue that as non-signatories, they can compel Energy Exploration to arbitration but Energy Exploration cannot compel them to arbitration. But this is not a case in which non-signatories first moved to compel arbitration, then later changed their minds, withdrew their consent, and proceeded with the litigation in a judicial forum. Here, appellants urged diametrically opposing positions in two different courts at the same time.” (emphasis in original).

As a result, “[t]heir conduct in claiming rights under the arbitration agreement and their conduct throughout the course of this proceeding clearly reflected their willingness to forego their right to a judicial forum.” No. 05-18-01090-CV (March 27, 2020) (mem. op.). The Court also observed: “Appellants’ actions are akin to behavior prohibited by the invited error doctrine—a party may not complain of an error which the party invited.” (citations omitted).

The Fifth Court summarized the current state of its precedent on the difficult interplay between estoppel and standing in probate cases: “In her answer to the will contest, Lisa Jo pled the affirmative defense of estoppel, and was therefore required to demonstrate Tia’s acceptance of the proceeds of the mutual fund was inconsistent with her challenge to the Will. . . . .Rather than satisfy her burden, Lisa Jo relied on a case that disagreed with our holding in Holcomb,and argued Tia was burdened with disproving estoppel. Declining an unacceptable invitation for one panel of this court to disregard the holding of another panel, we hold Lisa Jo failed to satisfy her burden, as the Will’s proponent, by failing to demonstrate that Tia accepted greater benefits than those to which she was entitled under the Will or intestacy laws.” In re Estate of Johnson, No. 05-18-01193-CV (Nov. 4, 2019) (unpubl.)

Jacque Evans and her new husband, Guy Gilliland, formed Nine Syllables, LLC for the purpose of purchasing a note signed by Jacque and her previous husband, Gary Evans. When Jacque and Gary divorced, the note went into default, and the lender sought to foreclose. Jacque joined the lender to the divorce proceeding to enjoin the foreclosure sale, arguing (based on law that has since been amended) the note was an impermissible lien against the homestead, and that the penalty for an illegal lien was forfeiture of all principal and interest due under the note. In the meantime, the lender filed a separate lawsuit against Jacque for payment of the note, and she took the same position in that case. The divorce case eventually settled, with Jacque taking the alleged homestead and Gary assuming liability for the note. The collections case also settled, with Nine Syllables agreeing to purchase the note from the lender. Nine then sought to collect on the note from Gary, despite Jacque’s consistent position in the previous lawsuits that it was illegal and unenforceable. After a bench trial, the trial court agreed with Gary that Nine’s claim was barred by judicial estoppel, and the Court of Appeals affirmed. Although Nine Syllables had not been a party to the previous lawsuits, Jaque was in privity with Nine and had consistently testified and argued that the note was unenforceable.

Nine Syllables, LLC v. Evans, No. 05-13-01677-CV

The Court of Appeals has affirmed summary judgment for the lenders in a foreclosure dispute. Anil and Sheela Das sued Deutsche Bank and others to prevent them from foreclosing on their home. The Dases claimed that DB was not an owner or holder of the note. However, an affidavit from an analyst of the loan servicing company established that the note had been transferred to DB, and that the servicer maintained the original of the note on behalf of DB. Copies of the original instruments were also attached to the affidavit, and that uncontradicted evidence was enough for the Court of Appeals to determine that Deutsche Bank had met its summary judgment burden on the issue. The Court also rejected the borrowers’ argument that the bank was judicially estopped from relying on that copy of the note, as its use of an earlier, unendorsed copy of the note during prior bankruptcy proceedings was not clearly inconsistent with a later copy that included the subsequent endorsement.

Das v. Deutsche Bank Nat’l Trust Co., No. 05-12-01612-CV

In July 2011, the Dallas Court of Appeals ruled — in a rare en banc opinion — that an arbitration clause contained in a testamentary trust could not be enforced because there was no contract with the trust’s beneficiary to arbitrate his claims. Rachal v. Reitz, 347 S.W.3d 305 (Tex App.-Dallas 2011). This morning, the Texas Supreme Court reversed that decision, holding that the beneficiary was bound to arbitrate his claims against the trustee due to the doctrine of direct benefits estoppel. In brief, that doctrine means that if the plaintiff accepts the benefits of the trust, he also has to accept the arbitration clause contained in the trust. In reaching that decision, the Supreme Court noted that the Texas Arbitration Act requires an “agreement” to enforce arbitration, not a “contract” with the claimant. Such an agreement could be satisfied through direct benefits estoppel, as the beneficiary failed to disclaim his interest in the trust, thereby accepting both its benefits and its burdens.

Rachal v. Reitz, No. 11-0708

The Court affirmed a summary judgment in favor of Frost Bank on counterclaims related to a loan default. TAM failed to pay off a loan it received from Frost by the maturity date stated in the written loan agreement. Frost setoff part of the amount due with money from TAM’s operating account and sued for the remainder. TAM counterclaimed, alleging that Frost had orally extended the maturity date in a meeting with TAM’s representative and that Frost’s wrongful setoff caused TAM significant damage. Frost moved for, and TAM failed to challenge, traditional summary judgment on its breach of contract claims, which the court granted based primarily on the written loan agreement. It then granted no-evidence summary judgments dismissing TAM’s counterclaims related to the alleged oral extension. TAM appealed, challenging the trial court’s judgment on TAM’s counterclaims for breach of contract, promissory estoppel, negligent misrepresentation, fraud, conversion, and wrongful setoff.

On appeal, the court held that because TAM did not challenge the traditional summary judgment on Frost’s breach of contract claim, the trial court’s judgment as to the enforceability of the written agreement between TAM and Frost was binding. Thus, TAM’s corresponding counterclaims for breach of contract, negligent misrepresentation, and fraud, which were based on the alleged oral extension, failed due to the written agreement’s enforceability. The court agreed that there was no evidence that TAM relied on the alleged oral extension in its decision to deposit more money into the operating account, so TAM’s promissory estoppel claim also failed. And because TAM’s conversion and wrongful setoff claims required that TAM be entitled to possession of the funds in the operating account, and thus relied on the success of at least one of TAM’s other failed counterclaims, those claims likewise failed.

Trevino & Associates Mechanical v. Frost National Bank, No. 05-11-00650-CV

One day, Appellee Dale Allen came home to see construction workers installing “HardiPlank” siding on his neighbor’s house.  This neighbor, Appellant Michael Jamison, had chosen to use HardiPlank on the exterior of his house because it is virtually indistinguishable from wood, and yet remains  fire resistant, rot resistant, and insect resistant.  HardiPlank does not shrink, it does not swell, and it does not absorb moisture.  It turns out, however, that the one thing HardiPlank is not resistant to is the subdivision’s restrictive covenant, which required that the “exterior walls” of the homes be covered in approved materials only.  And HardiPlank was not an approved material.

Allen, thus, brought suit to ensure that Jamison complied with the neighborhood’s exterior standards.  The only problem:  Allen himself had wrapped HIS house’s gables in HardiPlank.  Jaimson pointed out Allen’s hypocrisy, arguing, under the doctrine of quasi estoppel, that Allen cannot enforce a covenant with which he failed to comply.  The trial court rejected Jamison’s argument, finding that a “gable” is not the same and an “exterior wall,” and ruled in Allen’s favor.  The court of appeals, however, plunged the depths of Webster’s Third New International Dictionary and determined that a “gable” does, in fact, qualify as an exterior wall.  Having so determined, the Court then held that Allen was estopped from suing to require that Jamison comply with the very covenant he refused to abide by.

Jamison v. Allen, No. 05-11-00603-CV