Outdoor Systems, Inc. v. Arizona Department of Transportation

830 P.2d 475, 171 Ariz. 263, 111 Ariz. Adv. Rep. 74, 1992 Ariz. App. LEXIS 119
CourtCourt of Appeals of Arizona
DecidedApril 28, 1992
Docket2 CA-CV 92-0050
StatusPublished
Cited by9 cases

This text of 830 P.2d 475 (Outdoor Systems, Inc. v. Arizona Department of Transportation) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Outdoor Systems, Inc. v. Arizona Department of Transportation, 830 P.2d 475, 171 Ariz. 263, 111 Ariz. Adv. Rep. 74, 1992 Ariz. App. LEXIS 119 (Ark. Ct. App. 1992).

Opinion

OPINION

LACAGNINA, Presiding Judge.

The Arizona Department of Transportation (ADOT) appeals from the reversal of a hearing officer’s decision based upon the trial court’s finding that ADOT was es-topped to cancel the permits issued for three outdoor signs owned by Outdoor Systems, Inc. (Outdoor). Because we find that the trial court erred in applying equitable estoppel against the state in this case, we reverse.

FACTS AND PROCEDURAL HISTORY

During 1985 and 1986 ADOT issued permits for three signs to be constructed along State Route 87 near Riggs Road in Maricopa County. After the permits were issued and the signs erected, Outdoor purchased the signs and permits. In 1988, while ADOT was inspecting for a fourth sign permit applied for by Outdoor in the same area, the field inspector became aware that the three signs Outdoor had purchased did not comply with A.R.S. § 28-2101 because they were not in a “business *264 area” which is defined in the statute as land located within 1000 feet of a commercial or industrial activity. ADOT notified Outdoor by mail that it was cancelling the permits and, following a hearing requested by Outdoor, the hearing officer affirmed ADOT’s cancellation and ordered removal of the signs.

In his findings of fact the hearing officer rejected Outdoor’s argument that the cotton field located between the three signs and the cotton gin “must have been considered by the field inspectors as an integral part of the gin operation in approving these sites for permits.” The hearing officer then stated that ADOT had a legal right to cancel the sign permits because they were not within 1000 feet of a qualifying business as required by the statute. In addition, the hearing officer found that “it is impossible to come to any conclusion on how two different field inspectors could have recommended issuing these permits.” Although acknowledging that it was unfortunate the permits were issued, the hearing officer concluded that “the State cannot be bound by an unlawful act of one of its agents or employees.”

On appeal, the trial court agreed there was no evidence of an integrated land use involving the cotton fields and cotton gin which met the statutory requirement of a commercial or industrial activity located within 1000 feet of the sign. However, the trial court did accept Outdoor’s estoppel argument, finding that the prerequisites to the application of equitable estoppel against ADOT as a government entity existed in this case, citing Freightways v. Arizona Corporation Comm’n, 129 Ariz. 245, 630 P.2d 541 (1981). The court, found that ADOT “clearly” knew all of the facts when it issued the permits in 1986 and that Outdoor could not have known the facts because it did not own the signs at that time. The court also found that ADOT intended that Outdoor act upon the issuance of the permits and that both the previous owners and Outdoor in fact relied upon these permits to their detriment. Finally, the court found that to cancel the permits after Outdoor had paid a considerable amount for the signs would create a substantial injustice, and that allowing the signs to remain would not seriously affect the state’s sovereignty or governmental powers. The court then reversed the order of the hearing officer. ADOT appeals from that judgment and order.

Judicial review of an administrative agency decision is limited to determining whether the hearing officer’s decision was arbitrary, capricious or an abuse of his discretion. Schmitz v. Arizona State Board of Dental Examiners, 141 Ariz. 37, 684 P.2d 918 (App.1984). Neither the trial court nor an appellate court may weigh the evidence, DeGroot v. Arizona Racing Commission, 141 Ariz. 331, 686 P.2d 1301 (App.1984), nor can either court substitute its judgment for that of the administrative agency. Arizona Board of Regents v. Superior Court, 106 Ariz. 430, 477 P.2d 520 (1970). In addition, if any inconsistent factual conclusions are supported by the record, there is substantial evidence to support an agency’s decision that elects either conclusion. Sundown Imports v. Arizona Department of Transportation, 115 Ariz. 428, 565 P.2d 1289 (App.1977).

Outdoor argues that it had a vested right to the signs because it invested substantial sums to acquire them in reliance on validly-issued permits. We disagree. As Division One of this court has previously held, a vested right arises where a permit has been lawfully issued and there has been substantial reliance upon the issuance of that permit and considerable expense incurred. Town of Paradise Valley v. Gulf Leisure Corp., 27 Ariz.App. 600, 608, 557 P.2d 532, 540 (1976). In this case, the permits were not lawfully issued because they were in violation of A.R.S. § 28-2101. The signs subsequently constructed pursuant to those permits are unlawful sign structures under A.R.S. § 28-2105(C), and therefore vested no property rights in Outdoor. National Advertising Co. v. Arizona Department of Transportation, 126 Ariz. 542, 544-545, 617 P.2d 50, 54-55 (App. 1980). Outdoor’s argument that ADOT merely changed its “interpretation” of the cotton fields and nearby gin as an integrat *265 ed operation is not supported by the record. Neither the assumption by Outdoor’s predecessor in interest that the permits were issued based upon such a finding, nor Outdoor’s assertion that ADOT must have based its decision on this finding (because there is no other conceivable reason to have issued the permits) is sufficient.

Outdoor argues that its actions, taken in reliance on the permits, support the application of estoppel in this case. “[Elstoppel will not lie as a defense against a state in the pursuit of its governmental functions. The state cannot be estopped from pursuing statutory remedies available to it because of alleged dilatory conduct of its officers in acting to enforce the remedy.” National Advertising Co. v. Arizona Department of Transportation, supra at 544, 617 P.2d at 52. However, “where the application of estoppel will not affect the exercise by the state of its governmental powers and sovereignty, or bind it by unauthorized acts of its officers and employees, estoppel will, when justice dictates, be applied to the state.” Freightways, Inc. v. Arizona Corporation Comm’n, supra, 129 Ariz. at 248, 680 P.2d at 544.

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Bluebook (online)
830 P.2d 475, 171 Ariz. 263, 111 Ariz. Adv. Rep. 74, 1992 Ariz. App. LEXIS 119, Counsel Stack Legal Research, https://law.counselstack.com/opinion/outdoor-systems-inc-v-arizona-department-of-transportation-arizctapp-1992.