Silverwing at Sandpoint, LLC v. Bonner County

          Appeal from the District Court of the First Judicial District of the State of Idaho, Bonner County. Hon. Richard Christensen, District Judge.

         The district court's ruling on the County's Motion for Judgment Notwithstanding the Verdict is reversed and this case is remanded to the district court for action consistent with this Opinion. The judgments in favor of SilverWing are vacated. No attorney fees on appeal are awarded to either party. Costs to appellant.

          Bonner County Prosecutor's Office, Sandpoint, Murphey Law Office, PLLC, Coeur d'Alene and Buchalter, a Professional Corporation, Irvine, California, attorneys for appellant. Paul J. Fraidenburgh argued.

          Givens Pursley, LLP, Boise and Anderson & Kreiger, LLP, Boston, Massachusetts, attorneys for respondent. Debora K. Kristensen argued.

          BEVAN, JUSTICE

         I. Nature of the Case

         This appeal arises from a dispute grounded in promissory estoppel between SilverWing at Sandpoint, LLC ("SilverWing") and Appellant Bonner County (the "County"). SilverWing sought to develop a residential hangar and taxiway adjacent to the Sandpoint Airport for residents who wished to park their aircraft in their home garage. SilverWing alleged that "[i]n 2007, the County provided to SilverWing an ALP that reflected the existing location of the Airport's runway, and made no mention or reference to any plans for the runway to be moved. At the same time, the County promised that there were no plans regarding changes to runway location which would be incompatible with SilverWing's development."

         During the initial stages of engineering for the development, the County informed SilverWing that it needed to move the taxiway from where it was originally planned onto County-owned airport property, to accord with the County's Airport Layout Plan (ALP). SilverWing proceeded with its development based on the County's assurances, and built a taxiway and other infrastructure, including streets, to support its development. Once the taxiway was built, SilverWing learned that the placement of the taxiway was not approved by the FAA. After several years of legal maneuvering, SilverWing proceeded against the County in court, ultimately on a theory of promissory estoppel.

         After trial, a jury returned a verdict in favor of SilverWing. The County then filed a motion for judgment notwithstanding the verdict ("JNOV"), which the district court denied. The County now appeals, arguing: (1) the district court erred in denying the County's JNOV on any of nine stated grounds; (2) the district court erred in awarding SilverWing attorney fees under Idaho Code section 12-120(3) for the promissory estoppel claim; and (3) the County should be awarded its attorney fees and costs incurred in the district court and as a result of this appeal. We reverse the district court's ruling on the JNOV and vacate its ruling regarding attorney fees and remand this case to the district court for action consistent with this Opinion. We decline to award either party attorney fees in this case.

         II. Factual and Procedural Background

         This case is about the development of a residential/hangar combination property adjacent to the Sandpoint Airport (the "Airport"). The Airport is a general aviation airport owned and operated by the County. In April 2006, John McKeown purchased 18.1 acres of land (the "property") directly bordering the west side of the Airport, and later conveyed the property to an entity formed on October 25, 2006, that ultimately became SilverWing. McKeown was the managing member of the LLC.

         SilverWing intended to design and construct a 45-unit Planned Unit Development ("PUD") of hangar structures near the Airport which included optional second-floor residences. As planned, residents could taxi their airplanes directly between the Airport runway and their hangar homes. SilverWing's purchase included a perpetual "Taxi Way Easement" (the "easement") from the County in favor of SilverWing for access to the runway at an access point in the middle of the runway or "mid-field." Thus, from the outset, a crucial aspect of the development was the ability for residents to have direct access in their airplanes from their hangar homes to the Airport's runway.

         Shortly after SilverWing purchased the property, it hired an airport design expert who developed an architectural design and site plan for the PUD. The design included a parallel taxiway that was intended to be constructed on the property, allowing SilverWing residents to exit their residences/hangars in their airplanes, making their way to the mid-field access point on the Airport runway provided by the easement.

         Upon learning of SilverWing's purchase, in the summer of 2006, the Airport Board, through its vice-chair Sol Pusey, requested by email that SilverWing provide it with the plans for the property and a construction schedule. Mr. Pusey also informed SilverWing that the Board had been working with the FAA about installation of a west-side taxiway. McKeown, testifying on behalf of SilverWing, stated that he initially knew nothing about the need to construct the west-side taxiway in the location directed by the County.

         McKeown also had email correspondence discussing the planned development "all the time" with Jorge O'Leary, who held a contract with the County to manage the Airport. O'Leary confirmed with McKeown that O'Leary was the Airport Manager, and he told McKeown not to "hesitate to contact me directly on airport matters." Based on his interaction with O'Leary, McKeown emailed a copy of the initial site plan to O'Leary. McKeown testified further that the response from the Airport Board and O'Leary regarding SilverWing's plans was "[g]reat" and that "everyone was very excited . . . everyone thought it was a great design . . . . It was all really positive." Based on the ongoing interactions among McKeown, O'Leary and the Airport Board, McKeown also requested that O'Leary send him a copy of the current Airport Layout Plan on file with the FAA.

         Shortly thereafter, in September 2006, O'Leary informed McKeown^[1] through email that he had some "urgency" in talking to McKeown because he had information to convey that "could change [SilverWing's] project layout and parameters [that would] involve land swapping with the County." McKeown responded by sending O'Leary an updated site plan in which the taxiway continued to be located entirely on SilverWing property.

         O'Leary then sent McKeown an electronic version of the ALP known as "ALP Alternative 2(B)" ("ALP 2(B)"). In this plan, the County intended that the taxiway be relocated from SilverWing's site plan to a location on Airport property, with all but 7.5 feet of the taxiway on Airport property. In an email accompanying the transmission of ALP 2(B), O'Leary conveyed that the County was "looking to buy 60 feet to the west from [its] property line that is 250 feet from the centerline of the runway. The west-side taxiway will connect with the runway in the south." McKeown testified that he was not sure what O'Leary was referring to when he received the email, but that in "actually put[ting] everything together," he realized that the County was talking about developing a west-side taxiway. That said, McKeown suggested that this information did not concern him at that time because they were in the early development phase of the project and the details were still being worked out.

         At about the same time, SilverWing hired Clearwater Engineering (Debbie Van Dyk) to engineer the development, including the west parallel taxiway to connect the property to the Airport runway. Clearwater also hired ES Engineering (Corrie Esvelt-Siegford), an expert engineer relative to airports, to perform additional engineering tasks related to FAA issues. Esvelt-Siegford began her "due diligence" for preliminary engineering by contacting the FAA to verify that the ALP the engineers had received by email was the same ALP the FAA was using. Esvelt-Siegford testified that the FAA assured her that the "runway was not going to move" and they could proceed with their design. The engineers then requested that O'Leary provide them with an FAA approved copy of the ALP for the Airport. Van Dyk went to the Airport office and O'Leary provided her a hard copy of ALP 2(B), stating "this is what you work from." A few days later, O'Leary confirmed,

[w]e would allow you to build inside our property line so that it aligns and conforms with where the taxiway should go for its future full length. It would conform to FAA specs.

         Van Dyk testified that "[i]t would have been a huge red flag" if O'Leary would have told her that she needed to wait for future approval of the ALP from the FAA. Given O'Leary's assurances, SilverWing's engineers relied on ALP 2(B) to site the parallel taxiway and to lay out the development of the SilverWing site, with the taxiway located as set forth on ALP 2(B), almost entirely on Airport property.

         In December 2006, McKeown met with the Airport Board, the Airport Engineer, and O'Leary. McKeown took SilverWing's final site plan with him to the meeting, which showed that SilverWing had moved the taxiway to its new location consistent with ALP 2(B). McKeown testified that during the meeting the Board and O'Leary assured him that the taxiway, as located on the new site plan, was in the correct place. He added that by "correct," he meant that the taxiway as shown on ALP 2(B) was approved by the FAA, so that SilverWing could go forward with their development.

         Shortly thereafter, McKeown took the same site plan to another meeting with Bonner County Commissioner Lewis Rich, along with the Airport Manager and the Airport Board to "confirm exactly what [the County] wanted." McKeown testified that Rich spoke with him at length about the location of the taxiway as depicted on ALP 2(B). Rich expressed no concerns with the location of the taxiway and "actually thanked" McKeown for including the taxiway in SilverWing's development. Rich gave his commitment that placing the taxiway as shown on ALP 2(B) was the way to proceed.

         Right after the meeting, McKeown, O'Leary, and the County's Engineer Mark Napier met at the Airport to discuss some Airport equipment that needed to be moved as part of the development. Napier brought a copy of ALP 2(B) and showed McKeown where to move the equipment. The three men then walked the area of the taxiway, and Napier confirmed the location of the taxiway for the project. At no time during the meeting at the Airport did either the County's engineer or its Airport Manager suggest that the taxiway should not be located as depicted on ALP 2(B).

         In January 2007, SilverWing formalized its intentions. SilverWing had to submit two forms to the FAA for approval of its development; however, it was instructed to submit such forms to the County through the Airport manager, and the County would forward the forms to the FAA. SilverWing sent the County its plans, which included ALP 2(B) as an attachment, through FAA Form 7480 (Notice of Landing Area Proposal) and FAA Form 7460 (Notice of Proposed Construction and Alteration). SilverWing's engineers, O'Leary and Napier, exchanged emails with comments about the forms, which were incorporated into SilverWing's final submission. The County, as Airport sponsor, submitted SilverWing's plans to the FAA on February 14, 2007. A few days later, the Sandpoint Planning Commission approved SilverWing's PUD and the City of Sandpoint later followed suit. On April 30, 2007, the FAA responded to the County, noting that it had reviewed SilverWing's Form 7480 and said that the FAA had "no objection to its construction, provided that the taxiway design standards meet FAA [requirements as to] Airport Design." Shortly thereafter the FAA approved SilverWing's Form 7460 for construction of its project.

         Beginning in September 2007, SilverWing began significant work on the 1, 098-foot taxiway, mainly on Airport property consistent with ALP 2(B). SilverWing paid $851, 120.00 in construction costs, although this amount was in dispute. Building the taxiway on Airport property led to increased costs for SilverWing because of the heightened requirements for on-Airport construction.

         Although SilverWing already had runway access rights under its easement, SilverWing decided to negotiate a Through the Fence Airport Access Agreement ("TTFA"), in part to help share the costs associated with Airport access. The TTFA granted SilverWing, in exchange for a yearly access fee, a perpetual right to access the Airport's runway from its property in private aircraft. The Airport Board adopted the TTFA by unanimous vote and Lewis Rich executed the TTFA on behalf of the County, which included an acknowledgement that SilverWing was constructing 44 residential airplane hangars.

         The County also sent the partially executed TTFA to the FAA for review. On May 3, 2007, the FAA responded that it considered residential use adjacent to a public airport an incompatible land use and encouraged the Airport to ensure through the TTFA that access not be provided to hangars with residences. The FAA never approved the TTFA. Even so, one week later the County sent McKeown two copies of the TTFA along with a cover letter stating: "Enclosed are two copies of the revised through-the-fence agreement that the Commissioners signed reflecting the changes made by the Airport Advisory Board. Please return one copy to us. The other copy if [sic] for you to retain for your records." The County did not inform SilverWing that the FAA had not approved the TTFA. On June 6, 2007, SilverWing executed the TTFA as requested and returned one copy to the County.

         In December 2008, the FAA placed the Airport in "non-compliance" status because the County had: (1) on May 25, 2000, before SilverWing's ownership, granted an easement without FAA approval; (2) entered into the TTFA with SilverWing allowing "through-the-fence" access to the runway; and (3) allowed numerous private property owners mid-field access to the runway. The non-compliance status was to remain in place for three years, or until the Airport achieved compliance regarding: (1) the County entering into the TTFA with SilverWing without FAA approval and (2) the existence of mid-field runway access points throughout the Airport. To resolve the compliance issues, the County implemented a Corrective Action Plan ("CAP").

         The CAP was designed to remedy the FAA's concerns by: (1) pursuing all avenues to extinguish the perpetual nature of SilverWing's TTFA easement; and (2) pursuing an amendment to the SilverWing TTFA to require access only through the end of the runway. The County's plan announced that "midfield access is unacceptable from a safety perspective."

         Given the County's position, on March 25, 2009, the FAA notified the County that SilverWing's taxiway had not been constructed based on an "approved ALP." The FAA also stated that if "the taxiway was constructed in the incorrect location, then SilverWing needed to have a plan to relocate the taxiway, when the runway is shifted." McKeown testified that this was the first time he was made aware of the fact that ALP 2(B) had not been approved by the FAA, but SilverWing continued to rely on the County's assurances that the taxiway would not have to be torn out and relocated.

         From March 2009 to 2011, SilverWing continued work on the development, while representatives from SilverWing and the County worked with the FAA to bring the Airport back into compliance. In March 2011, an FAA interim policy which allowed existing residential developments with through-the-fence access went into effect. On October 11, 2011, the County approved an amended ALP which would require moving both the runway and taxiway 60 feet to the west, with the County to buy a portion of SilverWing's development. McKeown testified that the amended ALP "ripped up all of my front lots, it ripped up all my taxiways, interior, and it ripped up the taxiway I built on behalf of the County." The amended ALP was approved by the FAA on October 24, 2011. The following December, the County submitted an amended CAP to the FAA which included the approved, amended ALP.

         In 2012, Congress enacted the FAA Modernization and Reform Act, which rescinded the previous prohibition on residential through-the-fence access agreements, rendering SilverWing's TTFA compliant with FAA standards. Pub. L. 112-95 § 136, 126 Stat. 23-24 (amending 49 U.S.C. § 47107).

         On May 11, 2012, SilverWing initiated this matter by filing a complaint, which contained three claims against the County: (1) breach of covenant of good faith and fair dealing; (2) taking without compensation - inverse condemnation pursuant to 42 U.S.C. section 1983; and (3) violation of equal protection pursuant to 42 U.S.C. section 1983. The case began in Bonner County, but the County removed it to the U.S. District Court for the District of Idaho on June 6, 2012, due to the federal claims. ...