Gorman v. Pima County (10/4/2012)

October 29, 2012

Arizona Court of Appeals Division Two Holds That Pima County Has Not Delegated General Contracting Power to the County Administrator and That In an Equitable Estoppel Claims Against a Government Actor, a Mere Writing Does Not Necessarily Satisfy the Requirement That the Actions Relied On Bear a Sufficient Degree of Formalism.

James and Jean Gorman’s son, Brad Gorman, was killed in 1999 while biking on the Catalina Highway in Pima County. Following his death, the Gormans set up the Brad P. Gorman Memorial Fund to promote bicycle safety in Pima County. In 2000, Jean Gorman began talking with the Pima County Administrator about building a memorial bike park at the base on Mount Lemmon. Discussions on the park progressed, but in 2008 county officials notified the Gormans that it would not continue development of the park idea because it did not have funds and it did not have final approval from the County Administrator. Ms. Gorman sent a letter to the County Administrator offering to complete the project with private funds and asked for approval from the county. The County Administrator responded in a letter saying that the county would be “honored if the Gormans took “those actions necessary to fund” the park and that the county would assist. The Gormans secured $80,000 in partial funding for the park from the Regional Transportation Authority (RTA). In 2008, the county issued building permits and began soliciting bids from contractors. County officials requested that the Gormans use their personal funds to pay the designers, engineers, and others. The Gormans ended up spending over $30,000. At the end of 2009 the County told the Gormans that it might cancel the project and sent final notification in February 2010 that the project was canceled. The Gormans sued the county for breach of contract, equitable estoppel, and negligent misrepresentation. The trial court granted summary judgment for the County on all of the claims, and the Gormans appealed.

The Court of Appeals affirmed in part, and reversed and remanded in part. On the breach of contract claim, the Gormans contended that Ms. Gorman’s letter to the County Administrator was an offer and that his return letter was an acceptance. The court held that the county had not delegated general contracting power to the County Administrator and that “Arizona law is clear that persons dealing with public officers are bound, at their peril, to know the extent and limits of their power and that no right can be acquired except that predicated upon authorized acts of such officers.” (quotation marks and citations ommitted). Because the County Administrator “was not authorized to accept a contract offer or grant funding on the County’s behalf,” the court held that there was not a contract and it affirmed the trial court’s grant of summary judgment on the contract claim.

The court of appeals reversed the trial court’s grant of summary judgment on the Gormans’ equitable estoppel claim. The first element in an equitable estoppel claim is that it must be “the party to be estopped commits acts inconsistent with a position it later adopts.” To show this in an equitable estoppel claim against a government actor, “the actions relied upon must bear some ‘considerable degree of formalism.’” The court rejected the Gormans’ argument that a mere writing from a government official was enough to show the requisite level of formalism because such a writing might represent “no more than an off-the-cuff opinion.” The court held, however, that there were sufficient facts alleged to show equitable estoppel because the County Administrator’s “letter cannot be construed reasonably as a mere ‘off-the-cuff opinion’ about” the park. The court held that there was also sufficient formalism because the county issued a building permit “based on its approval of the plans paid for by the Gormans” and because the county amended its intergovernmental agreement with the RTA to provide for construction and funding of the park. The court also held that there were sufficient facts to show that the Gormans relied on the county’s actions and that they were injured. Explaining that it had “carefully considered the potential impact on the public interest” the court rejected the county’s argument “that if estoppel is applied here, in the future, it will be estopped from denying the existence of a contract based on the unauthorized acts of its employees.” Accordingly, the court reversed the trial court’s ruling on equitable estoppel and remanded the case.

Judge Vasquez authored the opinion; Judges Espinosa and McCarville concurred.