In civil matters, where one party has what appears to be a valid claim, the party resisting that claim can defeat it by proving estoppel.

Defense of Estoppel
To show estoppel, the resisting party must prove: (1) the claiming party made a false representation; (2) the claiming party had knowledge of the facts; (3) the claiming party intended that the resisting party act on the falsity; (4) the resisting party had no knowledge of the facts; and (5) the resisting party detrimentally relied on the falsity.

Texas and most jurisdictions hold that estoppel cannot be asserted against a governmental entity, such as an administrative agency. However, the Supreme Court of Texas (SCOTX) recently affirmed estoppel against an administrative agency, saying estoppel could apply in exceptional cases.

Additional Proof
To invoke estoppel against an administrative agency requires further proof a) that the defense is necessary to prevent a manifest injustice and b) that allowing the defense will not interfere with future governmental functions.

Circumstance of Manifest Injustice
In the recent case, SCOTX determined that a builder made the necessary proof to prevent the Board of Adjustments of the City of Dallas from enforcing a height restriction. While an agency oversight would not be enough to show estoppel, SCOTX said the actions of the city officials were more than a mere mistake.

Before construction, city officials said the height limit was 36 feet. During construction, an inspector claimed the structure would slightly exceed 36 feet and issued a stop-work order. The builder disagreed but incurred substantial redesign costs to satisfy the inspector. When the building was 90% complete and over $1 million spent, the city issued a new stop-work order, now insisting the height restriction was 26 feet.

SCOTX held that these acts of the city made this an exceptional case and affirmed the builder’s estoppel defense.

To see SCOTX’s opinion https://www.txcourts.gov/media/1460485/230842.pdf