Community National Bank v. State

Community National Bank v. State (2000-268); 172 Vt. 616; 782 A.2d 1195

[Filed 07-Sep-2001]



                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2000-268

                               JUNE TERM, 2001


Community National Bank and 	       }	APPEALED FROM:
Newport Harbor Club Condominium        }
Association	                       }
                                       }
     v.	                               }	Orleans Superior Court
                                       }	
                                       }
State of Vermont	               }	DOCKET NO. 52-3-98 Oscv

                                                Trial Judge: Stephen B. Martin  

             In the above-entitled cause, the Clerk will enter:


       Plaintiffs Community National Bank and Newport Harbor Club Condominium
  Association  appeal from a superior court judgment in favor of defendant
  State of Vermont.  Plaintiffs contend the  trial court erroneously: (1)
  declined to extinguish the State's public trust interest in the subject 
  property; (2) refused to equitably estop the State from asserting a public
  trust interest; and (3) made  certain findings unsupported by the evidence. 
  We affirm. 

       As found by the trial court, and established by the record evidence,
  the underlying facts are as  follows.  The Newport Harbor Club Condominiums
  were constructed in 1986 on filled lands that  were once a part of Lake
  Memphremagog.  Filling began in the late 1800's for the purpose of laying 
  railroad tracks, and continued thereafter for the purpose of storing
  lumber.  In 1985, John and Karen  Stevens borrowed $90,000 from the
  Community National Bank to purchase the property.  The title  certificate
  prepared by their attorney noted that a substantial amount of the property
  had been created  by filling, but that it was impossible to determine from
  the land records which portions had been  filled.  

       In 1986, the Stevens constructed condominium units on the property. 
  The following year, a  prospective purchaser of a unit discovered through a
  title search an order of the Vermont Water  Resources Board, dated November
  13, 1969.  The order authorized Raymond E. Blake, one of the  Stevens's
  predecessors-in-title, to dredge a portion of the lake bottom and use it 
  to fill shallow areas  of the property adjacent to the shores of the lake
  for the purpose of constructing a boat house.  The  order specifically
  found that the proposed dredging, fill, and boat house would improve the 
  waterfront area of the City of Newport, and would serve the public good,
  and further stated: "This  order does not convey any title or interest to
  the land fill or to lands lying under public waters or  waters affected, 
  nor does it deprive the Board of the right to order the removal and
  restoration of the  area affected.  All privileges extended to the
  petitioner are subject to the ownership and title 

 

  vested with the State of Vermont, and all such ownership and title shall
  remain with the State of  Vermont." 

       The Water Resources Board order was brought to the attention of the
  Stevens's attorney, who  sent a letter to the Agency of Environmental
  Conservation in December 1986.  The letter noted the  reservation of 
  interest set forth in the 1969 order, and inquired whether the order could
  be amended  to make it clear that the State did not object to the existence
  of the condominium units in their  present location.  Reginald LaRosa, then
  chief of operations for the Department of Water Resources  and
  Environmental Engineering, responded to the attorney's letter several weeks
  later.  LaRosa  indicated in his response that, based on a review of the
  materials submitted by Blake, "no lands and  fill were established by the
  work done by Mr. Blake beyond the mean low water mark that existed at  that
  time.  The Dept therefore concludes that it has no property interest in the
  lands and fill created  by Mr. Blake in accordance with the Nov. 13, 1969
  Order of the Water Resources Board."
      
       In 1996, an attorney for a  prospective purchaser of one of the units
  on which the Community  National Bank had foreclosed raised concerns that
  the condominiums were located on filled land  subject to the "public trust"
  doctrine.  See State v. Central Vermont Ry., Inc., 153 Vt. 337, 341-44, 
  571 A.2d 1128, 1130-31 (1989) (recognizing that under public trust
  doctrine, title to lands  submerged beneath navigable waters is held by
  people as sovereign, in trust for public uses). Boring  samples of the
  property later confirmed that the property was located on fill. 
  Thereafter, the bank  grieved the grand list values of the units it then
  owned, resulting in a reduction of the appraised  values for all of the
  units. In 1998, the bank and the condominium association commenced this 
  action against the State, seeking a declaration that they owned the units
  free of any public trust  interest by the State, or, alternatively, that
  the State was estopped from asserting any interest in the  property.   

       The parties filed cross-motions for summary judgment.  The trial court
  issued a written  decision and order in favor of the State, concluding that
  plaintiffs held the property subject to the  State's public trust interest;
  that the diminution in value of the property was insufficient to estop 
  assertion of the State's interest; and that plaintiffs' reliance on the
  LaRosa letter was misplaced,  because the disclaimer of interest therein
  applied only to fill placed by Blake, not to lands filled  earlier. The
  court subsequently denied a motion to alter or amend the judgment. This
  appeal  followed.  	

       Plaintiffs first contend that the public trust doctrine articulated in
  Central Vermont should be  "modified" to recognize the power of the
  legislature to convey public trust lands into private  ownership free of
  any vestigial claim by the State.   We acknowledged in Central Vermont that
  some  authority supported recognition of such a power, but did not resolve
  the question because the record  demonstrated that "the legislature did not
  intend to grant the lands at issue free from the public trust."  Id. at
  347, 571 A.2d  at 1133; see also Opinion of the Justices to the Senate, 424 N.E.2d 1092, 1103  (Mass. 1981) (legislature may determine that land once
  vested with public trust has undergone such  change over time that it is no
  longer suitable for public trust purposes). We explained that even 
  assuming such a power on the part of the legislature, an "'intent to
  abandon must be clearly 

 

  expressed or necessarily implied; and if any interpretation of the statute
  is reasonably possible which  would retain the public's interest in
  tidelands, the court must give the statute such an interpretation.'"  Id.
  at 347-48, 571 A.2d  at 1133 (quoting City of Berkeley v. Superior Court,
  606 P.2d 362, 369 (Cal.  1980)). Construing the statutes at issue in this
  light, we found no intent - express or implied - to  abandon the public
  trust.  See id. at 348-50, 571 A.2d  at 1133-35.   

       Here, similarly, the record contains no clear expression of a
  legislative intent to abandon the  public trust interest in the land in
  question. Plaintiffs rely solely upon the LaRosa letter disclaiming a 
  "property interest in the lands and fill created by Mr. Blake in accordance
  with" the Water Resources  Board permit.  LaRosa was then the chief of
  operations for the Department of Water Resources and  Environmental
  Engineering within the Agency of Environmental Conservation, and as such
  was  charged by statute with managing the State's public trust lands.  See
  29 V.S.A. § 401.  Nothing in the  statutory scheme, however, supports the
  assertion - implicit in plaintiffs' argument - that the  Vermont
  Legislature had delegated authority to LaRosa or the department he
  represented to convey  into absolute private ownership all State interest
  in public trust lands.   As noted, title to the public  trust lands is held
  in trust for the people of Vermont by the General Assembly, see Central
  Vermont,  153 Vt. at 343-44, 571 A.2d  at 1131,  and even if it could grant
  title free of the trust, or delegate that  authority to an agency of the
  executive branch, there is no evidentiary basis to support the conclusion 
  that it had done so here.  See id. at 352, 571 A.2d  at 1136 (noting that
  legislative control over uses of  land subject to public trust "cannot be
  delegated to others").  La Rosa thus lacked the authority to  disclaim or
  abandon the State's interest in the public trust lands.  

       Relying on the LaRosa  letter, plaintiffs further contend that the
  State should be "equitably  estopped" from asserting a public-trust
  interest in the property.  A similar claim was raised and  rejected in
  Central Vermont, where we noted that "the doctrine of equitable estoppel is
  rarely  invoked against the government, being allowed only where the
  injustice that would otherwise result  is of sufficient magnitude to
  justify any effect that the estoppel would have upon the public interest." 
  Id. at 354, 571 A.2d  at 1136-37.  Thus, we held that "as a practical matter
  . . .  the doctrine of  equitable estoppel [is] inapplicable where the
  public trust is at stake." Id. at 1137.  Plaintiffs urge that  the facts
  here compel a reconsideration of our ruling.  We agree, however, with the
  trial court's  conclusion that the asserted "injustice" to plaintiffs -
  consisting of diminished property values  attributable to the existence of
  public trust lands - is not of "sufficient magnitude" to warrant 
  application of the doctrine in this case, even assuming that estoppel
  applied in the public-trust  context and that its other elements, including
  knowledge, intent, and justifiable reliance, were  satisfied.  See In re
  McDonald's Corp., 146 Vt. 380, 383-84, 505 A.2d 1202, 1204 (1985)
  (outlining  elements of estoppel, including knowledge of the facts by the
  party to be estopped, intent that the  party's conduct will be acted on,
  ignorance of the true facts by the other party, and reliance); Harding  v.
  Commissioner of Marine Resources, 510 A.2d 533, 537 (Me. 1986) (rejecting
  argument that  public trust considerations include affect on property
  values).  

       Finally, plaintiffs contend the trial court erred in finding that the
  disclaimer of interest set forth  in the LaRosa letter applied only to
  lands filled by Blake, and not to the entirety of the filled land.   They
  assert that the lands filled by Blake were indistinguishable from the
  previously filled land.  


 

  Having concluded that the alleged inequity was insufficient to trigger the
  doctrine of equitable  estoppel in this context, the claim is immaterial. 
  Furthermore, contrary to plaintiffs' assertion, the  meaning and scope of
  LaRosa's reference to "lands and fill created by Mr. Blake" is not apparent 
  from the record evidence; there is no indication that LaRosa was fully
  cognizant of the existence or  extent of the previously filled land, or
  that he actually intended to disclaim the State's interest in such 
  property.  The trial court correctly concluded, therefore, that the LaRosa
  letter was insufficient to  establish the intent and knowledge necessary
  for application of the doctrine of equitable estoppel,   and was equally
  insufficient to demonstrate a clear legislative intent to abandon the
  public's  interest  in the property.  See Central Vermont, 153 Vt. at 347,
  571 A.2d  at 1133.  Accordingly, we discern no  error.  See Bissonnette v.
  Wylie, 166 Vt. 364, 370, 693 A.2d 1050, 1055 (1997) (trial court's findings 
  will not be disturbed unless clearly erroneous, and conclusions must be
  upheld if supported by  findings).


       Affirmed. 


                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice