EQUITABLE DOCTRINE OF ESTOPPEL CAN DEFEAT ARGUMENT FOUNDED ON LEGAL TECHNICALITY

Arguing a legal technicality, even if one hundred percent right, does not always work, especially when you may have reaped the benefits of the same technicality.  This is because there is a legal doctrine known as estoppel that is based on principles of equity.

 

Estoppel is an equitable doctrine based on principles of fair play and essential justice and arises when one party lulls another party into a disadvantageous position. Estoppel has been defined as the preclusion of a person from asserting a fact by previous conduct inconsistent therewith, on his own part, or part of those whom he claims.

Pipeline Contractors, Inc. v. Keystone Airpark Authority, 44 Fla. L. Weekly D1762a (Fla. 1stDCA 2019) (internal citations and quotations omitted). 

 

For example, in Pipeline Contractors, a special district (airport authority) hired a contractor to construct new airport facilities.  A payment dispute arose and the contractor sued the airport authority and the airport authority counter-sued the contractor and the contractor’s performance bond surety for construction defects.  Not a lot happened in the case for five-to-six years before the contractor filed a motion for summary judgment that the airport authority was not a proper special district under Florida law and, therefore, did not have the capacity to enter into the underlying contract, sue, or be sued.  In making this argument, the contractor was acknowledging that not only could the airport authority not sue it or its surety, but it also could not sue the airport authority.  Clearly, the contractor was angling for the walk-away.

 

The contractor and its performance bond surety’s argument was based on a technicality in the law, that being that the airport authority was formed only by a city when it needed to be formed by Florida’s Legislature.  (The airport authority was not properly formed under the law.). Due to this improper formation, the airport authority could not legally enter into the construction contract, could not sue the contractor or the surety, and the contractor could not sue it.

 

The trial court, as affirmed by the appellate court, did not buy the contractor’s argument based on the equitable doctrine of estoppel.  Putting aside that the contractor waited many years after it initiated the lawsuit to raise this argument, the contractor reaped the benefit of the technicality as it received payment for construction improvements it performed for the airport authority (regardless of whether it was improperly formed under Florida law).

 

“Here [contractor] treated [the airport authority] as if it were a properly organized entity with no issues of capacity for most of the parties’ relationship.  [Contractor] performed (at least in part), accepted payment on the contract, and engaged in years-long litigation with [the airport authority].  Only after all that did [contractor] assert any issues of capacity.  Because they accepted the benefits of the contract through payment from [the airport authority], [contractor and its surety] were properly estopped from raising the argument that the contract was void in an attempt to avoid the burdens of the contract embodied by [the airport authority’s] claims against them

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.