Jones v. Dept. of Forests, Parks and Recreation

Jones v. Dept. of Forests, Parks & Recreation (2003-017); 177 Vt. 81; 
857 A.2d 271

2004 VT 49

[Filed 04-Jun-2004]
[Motion for Reargument Denied 28-Jul-2004]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2004 VT 49

                                No. 2003-017


  Joseph C. Jones and Anne J. Jones	         Supreme Court

                                                 On Appeal from
       v.	                                 Rutland Superior Court


  Department of Forests, Parks and Recreation	 January Term, 2004


  William D. Cohen, J.

  Harry R. Ryan, III and John A. Serafino of Ryan Smith & Carbine, Ltd.,
    Rutland, for  Plaintiffs-Appellees. 

  William H. Sorrell, Attorney General, and Jeanne Elias and Rebecca Ellis,
    Assistant Attorneys General, Montpelier, for Defendant-Appellant.


  PRESENT:  Dooley, Johnson and Skoglund, JJ., and Pearson, Supr. J. and
            Gibson, J. (Ret.), Specially Assigned

       ¶  1.  SKOGLUND, J.   The State of Vermont Department of Forests,
  Parks and Recreation appeals from a superior court judgment in favor of
  landowners Joseph and Anne Jones.  The State contends the court erred in
  ruling that the Department is equitably estopped from asserting that the
  Joneses violated the forest management plan governing their property in the
  State's Use Value Appraisal Program (UVA), 32 V.S.A. §§ 3751-3776, and that
  the Joneses are further entitled to retroactively remove their property
  from the UVA program under an expired 1996 statute. We agree that the trial
  court erred, and therefore reverse. 
   
       ¶  2.  The record evidence may be summarized as follows (additional
  facts will be adduced as necessary in the discussion section below).  In
  1980, the Joneses enrolled about 500 acres of their property located in the
  Town of Mendon in the State's UVA program.  The program is designed to
  provide a tax incentive for landowners to maintain their agricultural or
  forest land by taxing it at  its current use value rather than at the
  higher "best use" value.  See 32 V.S.A. § 3752(12) (defining "use value
  appraisal" as price land would command if it remained in agricultural or
  forest use).  Forest land is eligible for enrollment in the UVA program
  only if it is subject to a forest management plan signed by the owner and
  approved by the Department.  Id. § 3755(b)(1).  Upon enrollment, a lien
  attaches to the property in exchange for the tax benefit conferred by the
  program.  Id.  § 3757(f).  The lien secures payment of a land use change
  tax, imposed in the event that any portion of the land is subsequently
  "developed," id., which may include the cutting of timber in a manner
  contrary to the forest management plan.  Id. § 3752(5).   The lien runs
  with the land, but is only payable in the event of development, and only to
  the extent of the value of that area of the land that has been developed. 
  Id. §§ 3757(f), 3757(a).  Thus, upon enrollment of the Jones property in
  the UVA program, a lien of about $78,000 was automatically recorded in the
  land records of the Town.
   
       ¶  3.  The Department, through its inspector James Philbrook, the
  Rutland County Forester, approved the Joneses' 1980 forest management plan,
  as well as revised plans in 1985 and 1991.  Philbrook inspected the Jones
  property in August 1985 and noted problems relating to their compliance
  with the plan, but did not issue an adverse inspection report.  See id. §
  3755(c) (every five years, Department shall inspect enrolled tract to
  verify that terms of forest management plan have been carried out and shall
  file adverse inspection report if it finds that management is contrary to
  conservation or forest management plan).  An inspection in December 1988,
  noted that several scheduled treatments for the property had not been
  performed, but again recommended continued enrollment in the program.  

       ¶  4.  In August 1992, Philbrook received a report of muddy water in a
  brook coming from the Jones property, which suggested logging activity.  He
  visited the property on August 20, and observed clear cutting in the area
  of Stand 5 that was not in conformance with the plan, and evidence of
  logging activity in the western portion of Stand 1 (the 1991 plan, prepared
  in consultation with Mark Riley, an experienced forester, had divided the
  property into five stands numbered 1 through 5).  Philbrook testified that
  he called Mr. Jones after the inspection, advised him that he could lose
  his UVA eligibility if he failed to conform to the plan, and suggested that
  he work more closely with his consulting forester, Mark Riley.   Riley,
  apparently in response, sent a memorandum to Philbrook in late September
  requesting an amendment to the 1991 forest management plan to provide that
  Stand 5 would be "liquidated" due to "excessive rot."  Philbrook approved
  the amendment.
   
       ¶  5.  Rutland County Forester Nathan Fice, who succeeded Philbrook
  in June 1996, conducted the next conformance inspection of the Jones
  property in October 1996.  Fice discovered three clear-cut areas in Stand 3
  that ranged from one to two acres in size.  He concluded that these were
  not in conformance with the forest management plan, which permitted  much
  smaller "selection cuts approximately 40 feet in diameter." Fice also noted
  heavy logging in portions of Stand 1 contrary to the provisions of the
  plan, which called for "limited single tree and group selection cut in
  overstocked areas." Fice returned several days later to take additional
  measurements, and subsequently filed an adverse inspection report in which
  he documented the violations and recommended that the Jones property be
  discontinued from the UVA program for nonconformance with the forest
  management plan.  See id. § 3756(i) (director of division of property
  valuation and review shall remove from use value appraisal entire parcel of
  managed forest land when  Department has received adverse inspection
  report).  The report was forwarded to the Department of Taxes, which issued
  a notice of discontinuance withdrawing the Jones property from the UVA
  program and imposing a land use change tax of $1547.  This represented 10%
  of the fair market value of the 20.3 acres that had been harvested contrary
  to the plan. See id. § 3757(a) (land use change tax must be paid on portion
  of managed forest land that has been developed).

       ¶  6.  The Joneses appealed the adverse inspection report to the
  Commissioner of the Agency of Natural Resources.  See id. § 3758(d).  
  Following a hearing, the Commissioner issued a written decision and
  findings, affirming the adverse inspection report and determination of
  noncompliance.  The Joneses then appealed to the superior court, which held
  a de novo evidentiary hearing and issued a written decision in November
  2002.  As discussed more fully below, the court concluded that the clear
  cuts in Stand 3 did "not violate the 1991 Forest Management Plan," that the
  logging in Stand 1 did not result in a violation of the plan, and that the
  State was equitably estopped from asserting the alleged violations because
  the Department's inspector had failed to inform the Joneses of the
  violations within thirty days of his site visit in 1992.  See id. § 3755(c)
  (if Department finds that management of tract is contrary to forest
  management plan, it must file adverse inspection report with owner and
  director within thirty days of inspection).  The court also concluded that
  the Department's failure to inform the Joneses of the violations in a
  timely manner had wrongfully deprived them of the opportunity to withdraw
  their property from the UVA program and extinguish the statutory lien under
  a 1996 law then in effect.  This appeal by the State followed.      

 
                                     I.


       ¶  7.  The State raises a number of challenges to the court's
  decision, which we address in the order most conducive to logical analysis. 
  The State contends that the evidence conclusively established the
  violations cited in the adverse inspection report that resulted in the
  Joneses' discontinuance from the UVA program and the imposition of a land
  use change tax of $1547.  While we review the trial court's factual
  findings for clear error, Houle v. Quenneville, 173 Vt. 80, 93, 787 A.2d 1258, 1267 (2001), we treat decisions within the Department's area of
  expertise with substantial deference.  Sec'y v.Upper Valley Reg'l Landfill
  Corp., 167 Vt. 228, 238, 705 A.2d 1001, 1007 (1997).  Applying these
  standards, we conclude that the court's findings and conclusions are
  clearly erroneous.  

       ¶  8.  As noted, the adverse inspection report was based on two
  separate violations of the Joneses' forest management plan.  The first
  involved a series of clear cuts in Stand 3 well in excess of the
  "approximately 40 feet in diameter" prescribed in the plan.  Evidence of
  the extensive cuts - ranging in size from one to two acres - was
  uncontroverted.  The trial court concluded, nevertheless, that the cuts did
  not violate the plan because they had "accomplished [its] regeneration"
  objectives.  As explained below, the record evidence fails to support this
  conclusion.    
   
       ¶  9.  As described in the forest management plan, Stand 3 consisted
  largely of aging softwood spruce and fir and included areas mapped as deer
  yard.  The growth management goal for the area, as set forth in the plan,
  was "Spruce/Fir regeneration by completing group selection cuts
  approximately 40 feet in diameter" to maintain and enhance winter cover for
  the deer herd.  Nate Fice, the county forester, testified that the
  extensive clear cuts had resulted in the regeneration of predominantly
  hardwood trees, in direct contravention of the plan's objective.  Although
  Mark Riley, the Joneses' forest management consultant, claimed that the
  cuts had accomplished the plan's goal for Stand 3, his testimony that the
  cuts had resulted in the regeneration of equal percentages of hardwoods and
  softwoods contradicted the assertion.   The court also found that Fice
  would not have cited the Joneses for a violation if he had known that
  experienced loggers such as Riley or his subcontractor Randy Wilcox  -
  rather than the Joneses - had marked the areas  for cutting, but again
  there is no support in the record for this finding.  Fice testified only
  that if he had known that Riley or Wilcox marked the cuts he would have
  asked them to explain their reasons for departing from the clear dictates
  of the forest management plan.  We conclude, therefore, that the court's
  ruling with respect to Stand 3 was clearly erroneous.

       ¶  10.   The second alleged violation occurred in a 232-acre section
  of the Jones property known as Stand 1.  There, the management plan called
  for "limited single tree and group selection cuts" of overstocked areas of
  hardwoods while "maintain[ing] [an] average BA of 80."  "BA" or basal area
  is a measure of forest density based on the square footage of trees per
  acre.  Fice determined that logging in a 15.8-acre section of Stand 1 had
  resulted in a total basal area of 45 square feet, well below - and in
  direct contravention of - the plan's target of 80.  

       ¶  11.  Nevertheless, the court concluded that the 1992 logging did
  not result in a basal area below the requirements of the plan.  This
  conclusion was apparently based on its findings that there were no
  standards for establishing basal area violations in these circumstances,
  that Fice did not know the basal area of the trees in Stand 1 or the
  15.8-acre area prior to the 1992 logging, and that the 15.8-acre section
  was one that Fice had created to produce a violation.  The record does not
  support these findings.  
   
       ¶  12.  The 1991 forest management plan stated that the total basal
  area of Stand 1 was 65, and ranged between 60 and 80.  Randy Wilcox, who
  did the field research and took the measurements for the plan in 1991,
  testified that he had spent the better part of a day walking the area of
  Stand 1 and had taken spot measurements.  He also recalled that he was in
  the 15.8-acre section in question, that it was one of two areas that he
  believed was overstocked and needed cutting, and that - while he did not
  note a specific basal reading for the area - it was probably in excess of
  the 60 to 80 average for the Stand as a whole.  

       ¶  13.  Thus, the record evidence does not support the court's finding
  that the basal area of Stand 1 or the specific acreage in question was
  unknown prior to the logging in 1992.  Nor does the record support the
  court's finding that Fice artificially created a 15.8-acre area to produce
  a violation.  The plan permitted limited logging only in "overstocked"
  areas, which according to Wilcox consisted of only a few portions of Stand
  1, including the 15.8-acre section in question.   Fice focused on this area
  because his inspection revealed extensive evidence of overcutting there. 
  That evidence defined the boundaries for purposes of taking the basal-area
  measurements.   Thus, the 15.8-acre section was not arbitrary or
  artificially created merely to produce a violation. 
   
       ¶  14.  Nor does the record support the court's finding that there
  were no "standards" for determining basal-area violations in large and
  varying areas such as Stand 1.  Based on his training and experience, Fice
  testified that the cutting in the area clearly violated the plan's call for
  limited  logging in overstocked areas, that the 15.8-acre section of
  overcutting was large enough under forest management principles to
  represent a separate stand by itself for purposes of determining basal area
  measurements, and that his readings supported a finding of nonconformance
  with the plan.   We have cautioned that courts are not "a higher
  environmental agency entrusted with the power to make environmental
  policy," but rather exercise a "narrow role in ensuring that the decisions
  of  ANR are made in accordance with law." Conservation Law Found. v. Burke,
  162 Vt. 115, 126, 645 A.2d 495, 502 (1993).  We discern no basis to
  conclude that the Department's finding of a violation in this case was
  standardless, unsupported by the evidence, or contrary to law. 
  Accordingly, we conclude that the court's findings were clearly erroneous
  and must be reversed.

                                     II.


       ¶  15.  The State next contends the court erred in concluding that it
  was equitably estopped from asserting the violations. (FN1)  The elements
  of equitable estoppel are well established.  The party invoking the
  doctrine has the burden of establishing four essential components: (1) the
  party to be estopped must know the facts; (2) the party being estopped must
  intend that his or her conduct shall be acted upon or the acts must be such
  that the party asserting the estoppel has a right to believe it is so
  intended; (3) the party asserting estoppel must be ignorant of the true
  facts; and (4) the party asserting estoppel must rely on the conduct of the
  party to be estopped to his or her detriment.  Agency of Natural Res. v.
  Godnik, 162 Vt. 588, 592, 652 A.2d 988, 991 (1994).  In addition, we have
  held that estoppels "against the government are rare and to be invoked only
  in extraordinary circumstances," In re McDonald's Corp., 146 Vt. 380, 383,
  505 A.2d 1202, 1203-04 (1985), where the "injustice that would ensue from a
  failure to find an estoppel sufficiently outweighs any effect upon public
  interest or policy that would result from estopping the government in a
  particular case." Godnik, 162 Vt. at 592-93, 652 A.2d  at 991. Here, it is
  clear that the first and fourth elements (knowledge and reliance) were not
  met.                                                         
   
       ¶  16.  The trial court's decision hinged on its finding that Jim
  Philbrook, the Department inspector who visited the property in 1992, "was
  aware of the cuttings that took place on Stands 1 and 3 in 1992" but failed
  to cite the Joneses for them, as was his duty.  See 32 V.S.A. § 3755(c) (if
  Department finds from inspection that management of tract is contrary to
  forest management plan or minimum acceptable standards for forest
  management, it shall file adverse inspection report within thirty days).
  "[H]ad the Joneses known that they were in violation of the [p]lan," the
  court reasoned, they could have availed themselves of a legislative program
  (since expired) to opt out of the UVA program, extinguish the $78,000 lien
  on the property, enjoy the then-existing ten percent penalty (rather than
  the current twenty percent penalty) for violations, and save "tens of
  thousands of dollars in taxes and penalties" which the State asserts they
  owed as a result of the violations.    

       ¶  17.  A review of the record reveals no evidence to support the
  court's finding that the Department's inspector was "aware of the cuttings
  that took place on Stands 1 and 3 in 1992."  Philbrook testified that
  although he observed some potential violations in Stand 5, he was not in
  the area of Stand 1 where the cited violations occurred, and observed no
  logging in Stand 3 out of compliance with the plan.  Furthermore, while
  there was conflicting evidence as to whether the cuts in Stands 1 and 3 had
  even occurred before Philbrook's visit, the court did not resolve the
  issue, finding that it was "unknown" whether the areas of the alleged
  violations in Stands 1 and 3 had been cut when Philbrook visited the
  property. This finding alone negates the court's contradictory conclusion
  that Philbrook was aware of the cuts  when he visited the property in 1992. 
  The assertion of equitable estoppel against the State thus fails at the
  threshold, as there is no evidence to show that the Department knew of the
  violations in 1992 and failed to disclose them. See Godnik, 162 Vt. at 592,
  652 A.2d  at 991 ("the party to be estopped must know the facts"). (FN2)     
   
       ¶  18.  We note, as well, that the court's finding of detrimental
  reliance was flawed in several respects.  Even assuming, without deciding,
  that estoppel against the government could have been based on a failure to
  disclose a known violation, the court's finding presumed that "had the
  Joneses known that they were in violation of the [p]lan they could have
  availed themselves at the time of the legislature's 1992 or 1995
  advantageous tax benefit program by withdrawing their property from the
  [p]lan."  The finding overlooks the fact that the Joneses' entire parcel
  would have been removed from the UVA program upon the filing of an adverse
  inspection report for nonconformance with the plan under 32 V.S.A. §§ 
  3755(b)(3) and 3756(i), and they could not have taken advantage of the
  opt-out program without an enrolled parcel.  See 1996,  No. 178, § 292
  (Adj. Sess.) (providing limited period during which owner of enrolled
  parcel in UVA program may withdraw property and be relieved of obligations
  under the program).

       ¶  19.  The court's finding of detrimental reliance and granting of
  equitable relief in allowing the  Joneses to retroactively exercise the
  withdrawal provision of the 1996 opt-out legislation also appears to have
  been based on a mistaken belief that the violations triggered the payment
  of the $78,000 lien. (FN3)  The two were unrelated.  The lien was required
  only to secure payment of any land use change tax imposed on a portion of
  the parcel that has been developed, which in this case totaled $1547 on
  20.3 acres.  See 32 V.S.A. § 3757(f).  The Joneses voluntarily paid off the
  lien under the terms of a later sale of the property to the City of
  Rutland, which apparently contemplated a resale to the United States Forest
  Service conditioned upon removal of the lien. Thus, the violations did not
  trigger the lien payoff.  Finally, the court appears to have mistakenly
  concluded that the State assessed the land-use-change tax at the current
  rate of twenty percent of the land's fair market value under 32 V.S.A. §
  3757(a), rather than the ten percent rate in effect in 1992.  In fact,
  however, the property was assessed at the ten percent rate.     

       ¶  20.  We hold, in summary, that the record evidence supports the
  violations specified in the adverse inspection report that resulted in the
  finding of noncompliance with the forest management plan, withdrawal of the
  property from the UVA program, and imposition of the land-use-change tax
  of $1547.  We further hold that the elements of waiver and equitable
  estoppel were not established so as to preclude imposition of the tax or to
  warrant equitable relief in the form of a retroactive withdrawal of the
  property from the UVA program under the expired 1996 legislation. 
  Accordingly, the judgment must be reversed, and the $1547 land-use-change
  tax reinstated.      

       The judgment declaring the State to be estopped from asserting the
  violations of the land use management plan and the land to have been
  withdrawn from UVA program effective August 30, 1996, is reversed, and the
  land-use-change tax of $1547 resulting from the violations is reinstated.



                                       FOR THE COURT:



                                 _______________________________________
                                 Associate Justice



------------------------------------------------------------------------------
                                  Footnotes


FN1.  The court found that the State had waived its right to assert the
  violations, and was equitably estopped from doing so.  Although the State
  has focused on estoppel, it has also implicitly challenged the waiver
  finding in asserting that there was no evidence of the common element of
  knowledge to support either of the court's theories.  Accordingly, we
  reject the Joneses' claim that the State failed to preserve the issue for
  review on appeal.

FN2.  The court also suggested that Philbrook's site visit in 1992 qualified
  as an inspection under 32 V.S.A. § 3755(c) (requiring inspections every
  five years to verify conformance with forest management plan), and that he
  "had an obligation to inspect the property thoroughly to determine if there
  were any violations."  (Emphasis added.)  This finding could have formed
  the basis for an argument that Philbrook should have known - or had
  constructive knowledge - of the violations even if he did not actually
  observe them, but the court did not ground its decision on such a
  conclusion.  Rather, the court observed that "waiver is the intentional
  relinquishment of a known right," and concluded that the State had waived
  its right to assert the violations based on its erroneous finding that
  Philbrook "was aware of the cuttings that took place on Stands 1 and 3 in
  1992." (Emphasis added.)  The finding of an estoppel against the State was
  similarly based on the court's underlying finding that "the State knew of
  the 1992 cuttings and declined to file an adverse report." Thus, we need
  not here address the question whether, or under what circumstances, the
  government may be estopped from asserting a violation based on a prior
  inspector's failure to find the violation. 

FN3.  The court had earlier found that "[a]s a result [of the violations],
  the Joneses were withdrawn from the Program and a lien of nearly $80,000
  was imposed on the property,"  and further observed that "[t]he State now
  asserts that the Joneses are in violation and as a result, they owe tens of
  thousands of dollars in taxes and penalties."