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Philadelphia Business Lawyers: The Doctrine of Equitable Estoppel in Pennsylvania

Equitable estoppel is thought of as a shield, not a sword.  It does not itself create a cause of action, but is used to prevent an unjust result and to preserve rights that are already acquired.  As defined by the courts in Pennsylvania, the doctrine of equitable estoppel applies when one person, by his or her acts, representations, or admissions or by his or her silence when he or she ought to speak out, intentionally or through culpable negligence induces another person to believe certain facts to exist and such other person rightfully relies and acts on such belief, so that he or she will be prejudiced if the former is permitted to deny the existence of such facts. Price v. Chevrolet Motor Div. of General Motors Corp., 2000 PA Super 410, 765 A.2d 800, 43 U.C.C. Rep. Serv. 2d 593 (2000); Zitelli v. Dermatology Educ. and Research Foundation, 534 Pa. 360, 633 A.2d 134, 87 Ed. Law Rep. 157 (1993).

The two essential elements of equitable estoppel are inducement and justifiable reliance on that inducement. The inducement may be words or conduct and the acts that are induced may be by commission or forbearance provided that a change in condition results causing disadvantage to the one induced. Novelty Knitting Mills, Inc. v. Siskind, 500 Pa. 432, 436, 457 A.2d 502, 503-04 (1983) (citing Funds for Business Growth, Inc. v. Woodland Marble and Tile Company, 443 Pa. 281, 278 A.2d 922 (1971); Ham v. Gouge, 214 Pa.Super. 423, 257 A.2d 650 (1969)).  There will be no equitable estoppel where the complainant’s act appears to be the result of his or her own will or judgment rather than the product of what the defendant did or represented.  Some courts view this issue – whether the complainant knew or should have known about the facts (duty of inquiry) – as the third element of equitable estoppel. Chester Extended Care Center v. Com., Dept. of Public Welfare, 526 Pa. 350, 586 A.2d 379 (1991); Appeal of Heim, 151 Pa. Commw. 438, 617 A.2d 74 (1992).

Generally stated, equitable estoppel applies to prevent a party from assuming a position or asserting a right to another’s disadvantage inconsistent with a position previously taken. The person inducing the belief in the existence of a certain state of facts is estopped to deny that the state of facts does in truth exist, over a different or contrary state of facts as existing at the same time, or deny or repudiate his acts, conduct or statements.  Novelty Knitting Mills, Inc. v. Siskind, 500 Pa. 432, 436, 457 A.2d 502, 503-04 (1983). (internal citations omitted).  The burden of proof rests on the party asserting the estoppel to establish such estoppel by clear, precise and unequivocal evidence. Id.