PDT Holdings v. City of Dallas: Defining “Exceptional” Equitable Estoppel Against Municipal Zoning Enforcement

I. Introduction

In PDT Holdings, Inc. & Phillip Thompson Homes, Inc. v. City of Dallas & Board of Adjustment of the City of Dallas, the Supreme Court of Texas revisits one of the most difficult tensions in public law: how far courts may go in applying equitable estoppel against a municipality performing a governmental function—here, zoning and development regulation.

The dispute arises from a three‑story duplex built in Dallas under City‑issued permits that repeatedly confirmed a 36‑foot height compliance. Only after the duplex was roughly 90–95% complete, and more than $1 million had been invested, did the City invoke a different, stricter height limit under its Residential Proximity Slope (RPS) ordinance, asserting the structure could not exceed approximately 26 feet. The Board of Adjustment (BOA) denied three variance requests, leaving the almost‑finished duplex unusable.

The builder sued, seeking to estop the City from enforcing the RPS height limit against this duplex. The trial court, after a bench trial, agreed and entered judgment estopping enforcement. The Dallas Court of Appeals reversed, relying heavily on City of White Settlement v. Super Wash, Inc., and holding this was not one of the “exceptional” cases in which a city may be equitably estopped.

The Texas Supreme Court reversed the court of appeals and reinstated the trial court’s judgment. The Court held:

• There was legally sufficient evidence of the disputed elements of equitable estoppel (false representation, lack of knowledge/means, and detrimental reliance).
• This was one of the “exceptional cases” in which “justice requires” estoppel against a municipality, even though the governing ordinance was publicly available and the City did not proveably “benefit” from its own errors.
• Estopping Dallas from enforcing the RPS ordinance in this single instance would not “interfere” with the City’s future performance of its zoning and planning functions.

In doing so, the Court clarifies and sharpens Texas law on equitable estoppel against governmental entities, particularly in the zoning and permitting context. It explains how affirmative municipal misdirection can overcome constructive notice of public ordinances, confirms that municipal “benefit” is not a necessary precondition for estoppel, and articulates a clear allocation of standards of review between fact issues (estoppel elements) and the “exceptional case” determination.

II. Summary of the Opinion

A. Factual Background

PDT Holdings and Phillip Thompson Homes (collectively, “the Builder”) planned and constructed a three‑story duplex at 5230 Alcott Street, an irregularly‑shaped 6,000‑square‑foot lot in Dallas, abutting both residential and retail uses. Before designing the project, the Builder and its agents:

• Met multiple times with City officials to identify applicable development restrictions; and
• Conducted independent online research for restrictions.

City officials identified a 36‑foot maximum building‑height limit and did not mention any additional height controls such as the RPS ordinance. The Builder’s searches likewise uncovered no additional height‑related restrictions.

Relying on this, the Builder submitted plans for a three‑story duplex approximately 36 feet tall. The City approved the plans and issued a building permit. Construction began in October 2017; by November, one unit was under contract for sale.

In January 2018, a City inspector determined that the parapet on the roof slightly exceeded the 36‑foot limit. The City:

• Issued a stop‑work order citing parapet height, and
• Required the Builder to amend its plans.

The Builder, though disputing the parapet citation, modified the plans to lower the parapet (at a cost of about $7,500), keeping the overall building height at 36 feet. The City:

• Inspected the construction;
• Approved the amended plans; and
• Issued an amended permit again authorizing a 36‑foot‑high structure.

About six months later, with the building roughly 90% complete, the City issued a new stop‑work order—this time on the ground that the structure violated Dallas’s Residential Proximity Slope ordinance, which capped the allowable height at approximately 26 feet due to the project’s proximity to neighboring residential properties.

Confused by the previously undisclosed RPS requirement, the Builder was advised by City officials to seek a variance from the Board of Adjustment. The Builder requested a 10‑foot height variance, arguing that demolishing a nearly complete structure would cause extreme waste. Neighborhood residents opposed the variance and criticized the City’s permitting errors. The BOA denied the first variance.

Before the first BOA hearing, the City lifted the stop‑work order and told the Builder that it was “OK TO FINISH” the duplex. The Builder completed construction. The BOA ultimately denied three variance applications (the second and third with the City’s support), leaving the nearly completed duplex non‑compliant and ineligible for a certificate of occupancy.

B. Procedural History

• The Builder sued the City and the BOA, seeking review of the BOA’s decision under Texas Local Government Code § 211.011 and asserting equitable theories including estoppel, laches, and waiver.
• After a bench trial, the trial court entered judgment for the Builder, estopping the City from enforcing the RPS ordinance or any unraised height‑related ordinances in effect when the 2017 plans were approved and permits issued.
• The City did not request findings of fact and conclusions of law.
• The Dallas Court of Appeals reversed, holding that this was not an “exceptional case” warranting estoppel against a municipality under Super Wash. The court held there was no affirmative misrepresentation, the ordinance was a matter of public record, and estopping enforcement was not necessary to prevent manifest injustice.
• The Builder petitioned for review. The Supreme Court granted review and reversed.

C. Holdings

The Supreme Court of Texas holds:

1. Standard of Review:
   • The elements of equitable estoppel (false representation, knowledge, intent, lack of knowledge/means, and detrimental reliance) involve fact questions resolvable by the factfinder; in a bench trial with no findings, appellate courts imply all findings supported by the record and review for legal/factual sufficiency.
   • Whether a case is “exceptional” such that justice requires estoppel against a municipality, and whether estoppel would impermissibly “interfere” with a governmental function, are equitable determinations for the trial court and are reviewed for abuse of discretion.
2. Elements of Equitable Estoppel:
   • There is legally sufficient evidence that the City made false representations (including repeated confirmation of a 36‑foot height limit, issuing permits for a 36‑foot structure, and telling the Builder it was “OK TO FINISH” after identifying the RPS violation).
   • There is legally sufficient evidence that the Builder lacked knowledge and reasonable means of knowledge of the true height limit, despite due diligence, because City officials affirmatively misdirected the Builder and thereby overcame constructive notice of the public ordinance.
   • There is legally sufficient evidence of detrimental reliance: the Builder invested over $1 million to complete the duplex in reliance on the City’s representations and permits, notwithstanding boilerplate permit language that permits do not authorize ordinance violations.
3. Exceptional Case / Justice Requires Estoppel:
   • This case falls within the narrow “exceptional cases” where “justice requires” estoppel against a municipality and no interference with governmental functions results.
   • Key factors include: affirmative municipal misdirection; the absence of alternative remedies (three denied variances); permanent and extreme loss (likely demolition of a nearly complete $1 million structure); the City’s delayed correction; and the fact that constructive notice of the ordinance is overcome by governmental misdirection.
   • The City’s argument that estoppel requires proof that the City received a benefit is rejected; governmental benefit is a factor, not a prerequisite.
4. No Impermissible Interference with Governmental Functions:
   • Although zoning and planning are governmental functions, estopping the City in this single instance does not bar or materially impede its future enforcement of the RPS ordinance or its broader regulatory functions, nor does it implicate public safety concerns.

Accordingly, the Court reverses the court of appeals and reinstates the trial court’s judgment estopping the City from enforcing the RPS height limit against the Builder’s duplex.

III. Doctrinal Background and Precedents

A. Equitable Estoppel in General

The Court re‑states the classic formulation of equitable estoppel:

• Purpose: To prevent inconsistency and fraud resulting in injustice (citing Kuehne v. Denson and earlier authorities).
• Elements (from Shields Ltd. P’ship v. Bradberry and Gulbenkian v. Penn):
  1. A false representation or concealment of material facts;
  2. Made with knowledge (actual or constructive) of those facts;
  3. With the intention that it should be acted on;
  4. To a party without knowledge or means of obtaining knowledge of the true facts;
  5. Who detrimentally relies on the representation.

The Court emphasizes that for the first element, intent to deceive is not required; the question is whether the representation was in fact untrue, not whether the government intended to mislead.

B. General Rule: No Estoppel Against Governmental Functions

Texas has long held that, as a rule, governmental entities performing governmental (as opposed to proprietary) functions are not subject to equitable estoppel based on the unauthorized or mistaken acts of their officers. This principle is rooted in both:

• The sovereign character of the State and its political subdivisions; and
• The public interest in consistent enforcement of laws and protection of public funds and powers.

Key cases:

• City of San Angelo v. Deutsch, 91 S.W.2d 308 (Tex. 1936)
  Refused to estop the city from enforcing a tax lien, holding a municipality is not estopped by unauthorized or wrongful acts of its officers.
• City of Hutchins v. Prasifka, 450 S.W.2d 829 (Tex. 1970)
  Declined to estop the city from enforcing its zoning ordinance based on a later rezoning resolution that turned out to be ineffective; formally announced the general rule and carved out a narrow exception where “justice requires” and there is no interference with governmental functions.
• City of White Settlement v. Super Wash, Inc., 198 S.W.3d 770 (Tex. 2006)
  Reaffirmed the general rule; emphasized that the exception applies only in “exceptional cases” where the circumstances clearly demand estoppel to prevent manifest injustice and where estoppel does not interfere with governmental functions.
• Tex. Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC, 397 S.W.3d 162 (Tex. 2013)
  Refused to estop the State from asserting title based on a subsequent void judgment allegedly supporting the purchaser’s claim; distinguished earlier estoppel‑against‑government cases where there had been affirmative official misdirection.
• Earlier tax and title cases (e.g., Pigeonhole Parking, Tex. Co. v. State, Rolison v. Puckett, Republic Ins. Co. v. Highland Park ISD) all enforcing the rule that unauthorized actions or errors by government officials do not estop the government from asserting its rights.

C. The Narrow Exception: “Exceptional Cases” Where Justice Requires Estoppel

Against this backdrop, the Court highlights decisions where municipal estoppel was allowed:

• Roberts v. Haltom City, 543 S.W.2d 75 (Tex. 1976)
  City officials misled the plaintiff into believing the city would accept performance that did not comply with a charter provision. The Court held that although parties are deemed to know charter requirements, “ignorance of the charter provision was primarily attributable to the actions of the city officials,” so the city was estopped from later demanding strict compliance.
• City of San Antonio v. Schautteet, 706 S.W.2d 103 (Tex. 1986)
  Applied estoppel where city behavior led the plaintiff to believe certain legal requirements had been met or waived.
• Cawthorn v. City of Houston, 231 S.W. 701 (Tex. Comm’n App. 1921, holding approved)
  Established that a city cannot “lull the claimant into a sense of security” by its officials’ conduct indicating a charter provision has been waived, and then insist on strict enforcement to the citizen’s detriment.
• Krause v. City of El Paso, 106 S.W. 121 (Tex. 1907)
  Equitably protected a citizen who, induced by city conduct, had constructed permanent improvements, the destruction of which would have been unjust.

More recently, though not an estoppel case, the Court’s due‑process analysis in Mosley v. Texas Health & Human Services Commission, 593 S.W.3d 250 (Tex. 2019) plays a key role in PDT Holdings. In Mosley, the Court:

• Rebuffed the agency’s attempt to penalize a party for failing to conform to a requirement that directly contradicted the government’s own instructions; and
• Held that a party with “no independent knowledge” of the actual requirement and “not aware of any problem at all with simply following the [misleading] instructions” cannot be faulted for relying on official misdirection.

In PDT Holdings, the Court draws directly on Mosley and Roberts to hold that constructive notice of a public rule does not immunize the government from estoppel where its own officials have affirmatively misdirected the citizen.

IV. Legal Reasoning in PDT Holdings

A. Standards of Review

The Court carefully separates:

1. Fact questions relating to the five estoppel elements
   These are for the factfinder (here, the trial judge in a bench trial). Because the City did not request findings of fact and conclusions of law, the appellate courts must:
   • Imply all findings necessary to support the judgment that are supported by the record (citing BMC Software Belgium, N.V. v. Marchand and Roberson v. Robinson); and
   • Review those implied findings under traditional legal and factual sufficiency standards.
2. Equitable determination whether the case is “exceptional” and whether estoppel would impermissibly interfere with governmental functions
   This part of the inquiry—whether “justice requires” estoppel and whether it would “interfere” with governmental functions—is entrusted to the court’s equitable discretion. Accordingly:
   • Appellate review is for abuse of discretion, focusing on whether the trial court misapplied the law or reached an unreasonable decision on the record (citing Walker v. Packer; Huynh v. Blanchard for equitable determinations).

This explicit bifurcation of standards—fact sufficiency for the estoppel elements, abuse of discretion for the “exceptional case” determination—is one of the opinion’s most practical doctrinal clarifications.

B. Element 1 – False Representation or Concealment

The City contended it merely made a mistake—an “unintentional oversight”—by issuing a permit inconsistent with the RPS ordinance, which is not a “false representation.” The Court rejects this framing.

Key points:

• The element concerns whether the representation is false in fact, not whether it is intentionally deceptive. A non‑fraudulent but materially incorrect assertion is still a “misrepresentation.”
• Evidence showed multiple, affirmative false representations:
  • When asked about applicable height restrictions, City officials identified only a 36‑foot limit, not the lower RPS‑based limit of 26 feet.
  • After the initial parapet citation, the City inspected the project and issued an amended permit approving the 36‑foot overall height.
  • After invoking the RPS ordinance and issuing a second stop‑work order, the City quickly lifted that order and affirmatively informed the Builder that the duplex was “OK TO FINISH.”

These acts go far beyond a single errant permit; they amount to an ongoing pattern of municipal assurances that the 36‑foot height complied with all applicable law and could lawfully be completed.

C. Element 4 – Lack of Knowledge or Means to Obtain Knowledge; Due Diligence

The City argued the Builder’s reliance was unreasonable because the RPS ordinance was publicly available; under ordinary principles of constructive notice, citizens are presumed to know public laws.

The Court responds in two stages:

1. Due diligence was satisfied factually.
   Evidence showed that:
   • The Builder’s agents met with City officials multiple times to inquire about applicable restrictions;
   • The Builder’s representative performed his own internet queries for restrictions;
   • Neither the City nor these searches surfaced the RPS requirement.
   This satisfies the Barfield standard that a party claiming estoppel must use “due diligence to ascertain the truth.”
2. Affirmative misdirection can overcome constructive notice.
   Citing Roberts, Cawthorn, and especially Mosley, the Court explains that constructive notice of a public law does not automatically defeat estoppel when:
   • The government itself affirmatively misdirects the citizen as to the law’s requirements; and
   • The citizen has “no independent knowledge” of the true requirements and no reason to suspect the official instructions are wrong.

Thus, even though the RPS ordinance was “a matter of public record,” it was reasonable for the Builder to rely on repeated, official guidance that the height limit was 36 feet and that it was “OK TO FINISH.” The failure to unearth the RPS ordinance was “primarily attributable to the actions of the city officials” rather than any negligence by the Builder.

D. Element 5 – Detrimental Reliance

The City relied on boilerplate language in its permits indicating that the permits did not authorize violation of ordinances, arguing the Builder could not reasonably rely on the permits as an assurance of full legal compliance.

The Court rejects this narrow view of reliance, highlighting:

• The Builder did not rely solely on the physical permits; it relied on the full course of municipal communications and conduct:
  • Pre‑permit consultations;
  • Plan reviews and approvals;
  • Inspections and issuance of an amended permit post‑parapet correction; and
  • Explicit assurance that the duplex was “OK TO FINISH” after the RPS problem was identified.
• The Builder invested more than $1 million to bring the duplex to near completion under this framework of City assurances.
• Like Mosley, the Builder had no awareness of any problem in simply following the City’s instruction and continuing construction.

These facts supply more than a scintilla of evidence that the Builder reasonably and detrimentally relied on the City’s representations in building a structure that would otherwise not have been undertaken or completed at that height.

E. The “Exceptional Case” Analysis – When Does Justice Require Estoppel?

In Super Wash, the Court identified several considerations relevant to determining whether “justice requires” estoppel against a municipality:

• Affirmative government misrepresentation or misleading conduct;
• Availability of other effective remedies;
• Whether the misrepresentation has caused permanent or severe loss;
• Whether the ordinance was a matter of public record; and
• How quickly the government corrected its mistake once discovered.

Applying those factors, the Court finds the trial court did not abuse its discretion in concluding this case is “exceptional”:

1. Affirmative misdirection, not mere oversight.
   This was not a case of a single mistaken permit. Key facts include:
   • The City affirmatively told the Builder that the height limit was 36 feet.
   • The City conducted a height inspection and approved an amended 36‑foot plan.
   • The City invoked the RPS ordinance only after the project was nearly complete and then, even after doing so, lifted the stop‑work order and told the Builder it was “OK TO FINISH.”
   Taken together, these actions “lulled” the Builder into a sense of security that its height was compliant, mirroring the conduct that justified estoppel in Cawthorn and Roberts.
2. No remaining remedies.
   The Builder pursued the only statutory remedy available: a variance from the Board of Adjustment under Local Government Code § 211.009. The BOA denied the variance three times, including twice when the City supported the variance. There is no realistic alternative relief:
   • Challenging variance denials is possible, but the Court notes that variance decisions are highly discretionary, and there is no suggestion the BOA acted unlawfully apart from the equitable concerns now resolved via estoppel.
3. Permanence and severity of loss.
   The duplex cost over $1 million to construct. Given the RPS limit, compliance would effectively require razing the building and constructing a shorter structure. That represents the very type of “extreme waste” and permanent loss that historically justifies equitable relief (Krause).
4. Public record vs. misdirection.
   While acknowledging that the RPS ordinance was publicly available, the Court holds—as in Roberts and Mosley—that constructive notice does not automatically foreclose estoppel when the government’s conduct itself caused the citizen’s ignorance of the true legal requirement.
5. Delay in correction.
   The City did not act promptly. It:
   • Took over six months after the initial permit to raise the RPS issue, by which time the project was 90% complete; and
   • Even then, it undermined that correction by lifting the stop‑work order and telling the Builder to finish construction.

The City also argued that estoppel should be unavailable absent evidence that the City acted “deliberately to induce” a party in a way that benefited the City. The Court firmly rejects the idea that governmental “benefit” is a prerequisite:

• Super Wash said governmental benefit “weighs in favor” of estoppel; it did not say benefit is required.
• A.P.I. Pipe likewise noted the absence of governmental benefit as a reason to deny estoppel but did not elevate benefit to a mandatory element.
• The core question remains whether equity and justice require estoppel to avoid manifest injustice, not whether the government profited from its misdirection.

On these facts, the Court holds the trial court “could reasonably have reached only one decision: justice requires estoppel against the City.”

F. Governmental Function / Non-Interference Requirement

The second prong of the exception asks whether estoppel in this case would “interfere with the exercise of governmental functions.”

Drawing on Super Wash, the Court explains:

• The inquiry is not whether the government is prevented from acting in this one instance, but whether estoppel would:
  • Bar the future performance of the function; or
  • Materially impede the government’s ability to perform other governmental functions or protect public safety.

Here:

• The relevant functions—zoning, planning, and plat approval—are classic governmental functions (as recognized in the Tort Claims Act, Civ. Prac. & Rem. Code § 101.0215(a)(29)).
• Estopping enforcement of the RPS ordinance in this single, fact‑specific instance does not:
  • Invalidate the ordinance;
  • Prevent Dallas from enforcing it against other properties; or
  • Compromise public safety (no evidence suggested that the 36‑foot duplex created heightened safety risks).

The City pointed to neighborhood opposition and argued that it must retain the ability to respond to neighbors’ concerns. The Court acknowledges that neighboring landowners may have independent claims (and expressly leaves their remedies untouched), but finds no evidence that allowing this one building to remain would bar Dallas from fulfilling its zoning responsibilities going forward.

Accordingly, estoppel here does not “interfere” with governmental functions as that term is used in Super Wash and Prasifka.

V. Complex Concepts Simplified

A. Equitable Estoppel vs. Promissory Estoppel

• Equitable estoppel (at issue here) is about preventing a party from denying facts or positions when:
  • It made factual or legal representations;
  • Another party reasonably relied on those representations; and
  • That reliance caused injury.
• Promissory estoppel (not central in this opinion) concerns enforcing promises that induced reliance, even in the absence of a formal contract.

In municipal zoning disputes, estoppel is usually equitable estoppel: the city is barred from denying what it led the citizen to believe about legal compliance.

B. Governmental vs. Proprietary Functions

• Governmental functions are activities performed as an arm of the State, such as lawmaking, policing, zoning, tax collection, and regulation. They enjoy strong immunity from estoppel and tort liability.
• Proprietary functions are more akin to business activities—operating utilities, certain economic ventures—where municipalities are often treated more like private actors.

Zoning and plan approval are governmental functions, which is why the bar against estoppel is so strong and the exception so narrow.

C. Residential Proximity Slope (RPS)

A “residential proximity slope” is a geometric device embedded in zoning regulations to limit the bulk and height of structures near residential properties. In Dallas’s code:

• An imaginary plane is projected from the property line of a residential lot upward and outward at a defined angle (e.g., 45° for MF‑2(A) zoning).
• Structures above a base height (here, 26 feet) cannot extend into the space above that plane.

Practically, RPS rules are designed to:

• Prevent overpowering or overshadowing neighboring homes;
• Protect access to light and air; and
• Minimize abrupt transitions between low‑rise residential zones and taller, denser uses.

D. Variances and the Board of Adjustment

Under Texas Local Government Code § 211.009, local boards of adjustment may grant variances from zoning rules when:

• Strict enforcement would cause “unnecessary hardship” due to special conditions;
• The variance is “not contrary to the public interest”; and
• The “spirit of the ordinance” is observed and “substantial justice is done.”

Variance decisions are highly discretionary and often deferentially reviewed by courts. In this case, the Builder sought a height variance three times; all were denied, including two supported by the City. That history is critical in showing:

• There was no realistic remedy other than estoppel; and
• Estoppel is needed to avoid the extreme hardship of demolishing a nearly completed, lawfully permitted (from the Builder’s perspective) structure.

E. Standards of Review Simplified

• Legal sufficiency: Whether there is at least some evidence (more than a mere “scintilla”) supporting each necessary fact finding. If so, the finding stands.
• Abuse of discretion: Whether the trial court’s decision was arbitrary, unreasonable, or based on an incorrect understanding of the law. A decision within the range of reasonable outcomes, even if debatable, will be upheld.

Here:

• Did the evidence support the factual findings for the estoppel elements? Yes – so the appellate court could not reweigh evidence.
• Was it unreasonable for the trial court to conclude that this was an “exceptional” case in which justice requires estoppel and no interference with government functions? No – the evidence strongly supported that conclusion, so denying estoppel would itself have been an abuse of discretion.

VI. Impact and Implications

A. For Builders and Developers

This opinion strengthens the position of builders in narrow but significant circumstances:

• Reliance on municipal guidance: While developers remain obligated to exercise due diligence and cannot simply presume that all city actions are correct, PDT Holdings confirms that:
  • Repeated, affirmative assurances from city officials about applicable restrictions and plan compliance carry legal consequences.
  • Where city conduct reasonably leads a builder to believe a project complies, and large expenditures are made in reliance, equitable estoppel may prevent later enforcement of a conflicting ordinance in truly exceptional cases.
• Documentation becomes crucial. Developers should:
  • Record communications with city officials regarding code interpretation and compliance;
  • Retain all versions of approved plans, inspection reports, emails, and notes from pre‑application meetings; and
  • Document their own due‑diligence efforts (searches, consultations, legal opinions).
• Risk allocation: The case may influence contract drafting with purchasers and lenders, who will be more aware that municipal misdirection can sometimes, but not always, be remedied in equity.

That said, the Court is careful to reaffirm that these are exceptional circumstances, not a general right to rely on any erroneously issued permit.

B. For Municipalities

Cities face increased litigation exposure where:

• Permitting and inspection processes are fragmented or poorly coordinated;
• Officials provide oral or written assurances about legal compliance that contradict existing ordinances; and
• Significant private investment occurs before errors are corrected.

Practical implications:

• Internal controls:
  • Improve cross‑checks in plan review and inspections to ensure all relevant ordinances, including overlay districts and special height rules like RPS, are applied consistently.
  • Ensure inspectors and plan reviewers have up‑to‑date training on complex regulations and most common pitfalls.
• Communication discipline:
  • Officials should avoid categorical assurances such as “OK TO FINISH” where code issues are unresolved.
  • Clear, written qualifications may be needed, but PDT Holdings also suggests that generic disclaimers are not enough if officials’ specific conduct and statements reasonably convey full compliance.
• Early error correction:
  • Supervisory review and early audits of unusual or boundary‑case projects can help catch misapplications before substantial reliance costs accrue.

The opinion does not open the floodgates to estoppel claims; the exceptional‑case and non‑interference requirements remain strict. But it raises the stakes for persistent or repeated municipal misdirection in high‑value projects.

C. For Zoning and Land‑Use Doctrine

Doctrinally, PDT Holdings:

• Clarifies the “exceptional case” test by:
  • Emphasizing affirmative misdirection over mere negligence;
  • Recognizing constructive notice as a factor, not a trump card, especially when government conduct caused the ignorance; and
  • Rejecting governmental “benefit” as a necessary element for estoppel.
• Strengthens the linkage between estoppel and due process:
  • By invoking Mosley, the Court suggests a broader principle: government cannot mislead individuals about legal requirements and then penalize them for faithfully following those instructions.
• Signals to courts:
  • Appellate courts must respect the trial court’s equitable discretion when evidence strongly supports manifest injustice and non‑interference with future governmental functions.
  • Overly rigid applications of Super Wash that collapse the exception into virtual non‑existence are disfavored.

D. For Neighbors and Third Parties

The Court expressly notes that its decision does not address, or limit, potential remedies of neighboring landowners who object to the over‑height structure. It leaves open:

• Whether, in future cases, courts should weigh the severity of injustice to neighbors when deciding whether “justice requires” estoppel in favor of a developer;
• What private or public nuisance or other statutory remedies neighbors may have directly against developers or municipalities.

This signals that estoppel against the City does not insulate private parties from claims by other private parties; it only prevents the municipality itself from enforcing the specific ordinance in this instance.

VII. Conclusion

PDT Holdings v. City of Dallas is a significant refinement of Texas law on equitable estoppel against municipalities in the zoning context. The Court:

• Reaffirms the general rule that cities are ordinarily not estopped when performing governmental functions, but
• Gives concrete content to the narrow “exceptional cases” exception, making clear that it is real and applicable when:
  • Municipal officials affirmatively mislead a citizen about legal requirements and compliance;
  • The citizen exercises reasonable due diligence yet remains unaware of the true rule because of governmental misdirection;
  • Substantial and often permanent reliance costs are incurred (here, a nearly complete $1 million duplex);
  • No meaningful alternative remedies remain; and
  • Estoppel in that single instance will not impede future performance of the governmental function.

By reinstating the trial court’s estoppel judgment, the Court protects reliance interests against egregious municipal misdirection without loosening the general bar on estoppel against governmental entities. It also clarifies the interplay between constructive notice, due process, and equitable relief: public availability of an ordinance does not allow a city to contradict its own laws in practice, encourage citizens to build accordingly, and then invoke those laws only after substantial investments are irretrievably made.

Going forward, PDT Holdings will serve as a leading authority in Texas on when and how municipal governments can be estopped from enforcing zoning and development regulations. It offers a clear framework for courts, local governments, and developers navigating the difficult boundary between governmental error and private reliance in land‑use regulation.