City of Freeport v. Beach Cmty. Bank

• Decision Date: 18 February 2013
• Docket Number: No. 1D12–3415.,1D12–3415.
• Citation: 108 So.3d 684
• Parties: CITY OF FREEPORT, Florida, Petitioner, v. BEACH COMMUNITY BANK, Respondent.
• Court: Florida District Court of Appeals

108 So.3d 684

CITY OF FREEPORT, Florida, Petitioner,

v.BEACH COMMUNITY BANK, Respondent.

No. 1D12–3415.

District Court of Appeal of Florida, First District.

Feb. 18, 2013.

Scott J. Seagle and Gwendolyn P. Adkins, of Coppins, Monroe, Adkins & Dincman, P.A., Tallahassee, for Petitioner.

Steven B. Bauman and Jeffrey L. Burns, of Anchors, Smith, Grimsley, Ft. Walton Beach, for Respondent.

RAY, J.

City of Freeport, Florida (the “City”) petitions for a writ of certiorari to review a non-final order denying the City's motion to dismiss a negligence action brought against it in circuit court by Beach Community Bank (the “Bank”). Because we conclude that the City has sovereign immunity from suit, we grant the petition.

I. Factual Allegations

In March 2006, the City issued a development order to Riverwalk Freeport, LLC, a developer of real estate within the city limits. The name of the proposed residential development at issue is Riverwalk Phase I. Article 2, section 2.01.05(I)(2)(d) of the City's Land Development Code (LDC) expressly provides that a final development order may require a developer to post bond equal to 110% of the costs of the services or facilities that a developer is required to construct for the benefit of the project, as security to ensure completion of the infrastructure. Article 2, section 2.01.05(N)(3)(a) of the LDC states: “The amount of the security listed in the improvement agreement shall be approved as adequate by the Code Enforcement Officer.” In the instant case, security could be fully satisfied in several ways, including the developer's posting an irrevocable letter of credit with the City. In compliance with the LDC, the developer provided the City with an irrevocable standby letter of credit loan in the amount of approximately $4.87 million from DC Capital DC Banking Group (DC Capital) in July 2007. The City Planner wrote the developer that the “surety [was] acceptable to the City.”

In June 2008, nearly a year after the City approved the Riverwalk project for development, the Bank made a $2.4 million loan to the developer. The Bank secured this loan with a mortgage against twenty of the platted lots in the Riverwalk subdivision. The developer failed to complete the infrastructure and, in 2009, Petitioner attempted to collect on the security. The DC Capital letter of credit ultimately proved to be fraudulent and/or uncollectable.

Thereafter, the Bank sued the City, alleging that the City had breached its duty to 1) ensure that the developer posted adequate security for completion of the infrastructure, 2) conduct a reasonable investigation to ascertain the authenticity and adequacy of the letter of credit, and 3) determine whether DC Capital was a legitimate business enterprise and, if so, was financially able to pay the letter of credit if it was called.

The City moved to dismiss the complaint for failure to state a cause of action on the grounds that the City owed the Bank no common-law, statutory, or special duty of care, but even if a duty existed, the decisions at issue were policy-making, planning-level functions for which the City is immune from suit. The circuit court denied the motion to dismiss and directed the City to file a responsive pleading. The City seeks review of this non-final order.

II. Jurisdictional Analysis

Article V, section 4(b)(3) of the Florida Constitution, provides that district courts of appeal have original jurisdiction to issue writs of certiorari. See alsoFla.R.App.P. 9.030(b)(2)(A). “Certiorari is the proper remedy, in limited circumstances, to review a non-final order that is not subject to appeal under Florida Rule of Appellate Procedure 9.130.” AVCO Corp. v. Neff, 30 So.3d 597, 601 (Fla. 1st DCA 2010). The authority of the district courts to issue writs “functions as a safety net and gives the upper court the prerogative to reach down and halt a miscarriage of justice where no other remedy exists.” Broward Cnty. v. G.B.V. Int'l, Ltd., 787 So.2d 838, 842 (Fla.2001). Certiorari review is not a mechanism for piecemeal appellate review as a matter of right; instead, it is triggered on a case-by-case basis, upon a showing by petitioner that the order under review (1) constitutes a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case, (3) that cannot be remedied on post judgment appeal. Williams v. Oken, 62 So.3d 1129, 1132 (Fla.2011). Because the last two elements are jurisdictional, we must analyze them first. Id.

Sovereign immunity, which is the basis for the City's motion to dismiss, derives exclusively from the separation of powers provision found in article II, section 3 of the Florida Constitution. ¹Wallace v. Dean, 3 So.3d 1035, 1045 (Fla.2009). Other policy considerations underpinning the doctrine of sovereign immunity include the “protection of the public treasury” and the “maintenance of the orderly administration of government.” Am. Home Assur. Co. v. Nat'l R.R. Passenger Corp., 908 So.2d 459, 471 (Fla.2005). Sovereign immunity prohibits the judiciary from “second guess[ing] the political and police power” decisions of coordinate branches of government “absent a violation of constitutional or statutory rights.” Trianon Park Condo. Ass'n v. City of Hialeah, 468 So.2d 912, 918 (Fla.1985). While the Florida Legislature has codified a limited waiver of sovereign tort immunity in section 768.28, Florida Statutes, the doctrine of separation of powers mandates that “certain [quasi-legislative] policy-making, planning or judgmental governmental functions cannot be the subject of traditional tort liability.” Wallace v. Dean, 3 So.3d at 1053 (citing Commercial Carrier Corp. v. Indian River Cnty., 371 So.2d 1010, 1020 (Fla.1979)). Accordingly, where governmental actions are deemed discretionary, as opposed to operational, the government has absolute immunity from suit. See Commercial Carrier Corp., 371 So.2d at 1020–22.

The erroneous denial of sovereign immunity has been held to be a material, irreparable injury to justify certiorari review. See Miami–Dade Cnty. v. Rodriguez, 67 So.3d 1213, 1219 (Fla. 3d DCA 2011), rev. granted,76 So.3d 938 (Fla. Dec. 1, 2011).² This holding in Rodriguez is consistent with the host of cases where certiorari jurisdiction was properly invoked to review trial court orders denying other types of immunities from suit.³ The reasoning underlying these decisions is that if the defendant is entitled to immunity from suit, it is the trial itself that constitutes the material harm. See Tucker v. Resha, 648 So.2d 1187, 1189 (Fla.1994); Rodriguez, 67 So.3d at 1219–20 & nn. 3–4. This harm cannot be cured by plenary appeal because it is impossible to “reimmunize” the defendant from suit after the fact. Bd. of Regents v. Snyder, 826 So.2d at 387.

The Bank argues that the Florida Supreme Court's decision in Department of Education v. Roe, 679 So.2d 756 (Fla.1996), precludes all avenues of interlocutory review of a non-final order denying sovereign immunity. On this point, we agree with the Third District Court of Appeal that Roe is inapplicable to discretionary review by certiorari where immunity is based on the separation of powers doctrine:

[Respondent] misreads Roe. Roe did not determine the availability of discretionary jurisdiction. Instead, Roe simply declined the State's invitation to extend the same right of interlocutory appeal from orders denying immunity from suit to the state and its political subdivision as the court had extended to its employees acting in the scope of their employment.

* * *

[T]he immunity issue in this case is predicated on the doctrine of separation of powers. That principle is distinct from immunity resting on the sovereign character of the state or municipality in the performance of its governmental functions. The focus of a separation of powers analysis is on the nature of government conduct and the government category into which the particular activity falls. It is animated by the continuing need at all levels of government to preserve the pattern of distribution of governmental functions prescribed by the constitution and statute....Recognizing the importance of this fundamentally prescribed structure at every level of government, our high court wisely concluded in the seminal case construing the scope of the waiver of immunity from suit in section 768.28 that certain functions of the legislative and executive branches of our local governments may not be made subject to scrutiny by a judge or jury as to the wisdom of performance. See Commercial Carrier Corp. v. Indian River Cnty., 371 So.2d 1010 (Fla.1979).

Rodriguez, 67 So.3d at 1220–21 (some internal citations omitted). The instant case is also distinguishable from this Court's decisions denying certiorari review in Citizens Property Insurance Corp. v. San Perdido Association, Inc., 46 So.3d 1051, 1053 (Fla. 1st DCA 2010) (involving a claim of immunity pursuant to section 627.351(6)(s) 1., Florida Statutes), approved by Citizens Property Insurance Corp. v. San Perdido Association, Inc., 104 So.3d 344 (Fla. 2012), and Keck v. Eminisor, 46 So.3d 1065 (Fla. 1st DCA 2010) (involving a claim of immunity from personal liability pursuant to section 768.28(9)(a), Florida Statutes), quashed in part by Keck v. Eminisor, 104 So.3d 359 (Fla. 2012) (concluding that a claim of immunity under section 768.28(9)(a), Florida Statutes, should be reviewable by a non-final appeal and declining to address the issue of whether a writ of certiorari would be an alternative avenue). Both of those cases involved the interpretation of limited, statutory grants of immunity; neither of them involved the application of traditional sovereign immunity like that claimed by the City in this case. The governmental immunity at issue here “derives entirely from the doctrine of separation of powers, not from [the absence of] a duty of care or from any statutory basis.” ⁴Wallace, 3 So.3d at 1045 (emphasis...