City of Pompano Beach v. Yardarm Restaurant, Inc., No. 4D99-977

• Decision Date: 09 October 2002
• Docket Number: No. 4D00-591, No. 4D00-2499., No. 4D99-977
• Citation: 834 So.2d 861
• Parties: The CITY OF POMPANO BEACH, Appellant, v. YARDARM RESTAURANT, INC., Appellee.
• Court: Florida District Court of Appeals

834 So.2d 861

The CITY OF POMPANO BEACH, Appellant, v. YARDARM RESTAURANT, INC., Appellee.

Nos. 4D99-977, 4D00-D00-2499.

District Court of Appeal of Florida, Fourth District.

October 9, 2002.

Rehearing Denied February 4, 2003.

Henry Latimer and Caran Rothchild of Greenberg Traurig, P.A., Fort Lauderdale, for appellant.

Margaret L. Cooper of Jones, Foster, Johnston & Stubbs, P.A., West Palm Beach, and Randolph W. Adams, Fort Lauderdale, for appellee. Frank A. Shepherd, Miami, for Amicus Curiae Pacific Legal Foundation.

TAYLOR, J.

This case concerns § 1983 due process claims by a developer against a city for obstruction and delay in the issuance of building permits for construction of a hotel and marina on the developer's property. The City of Pompano Beach ("City") appeals a judgment holding it liable for violation of substantive and procedural due process rights of Yardarm Restaurant, Inc. ("Yardarm"). The City also appeals, and Yardarm cross-appeals, the award of damages, attorney's fees, and costs. We have consolidated these cases for review.

I. BACKGROUND

In City of Pompano Beach v. Yardarm Restaurant, Inc., 641 So.2d 1377 (Fla. 4th DCA 1994) ("Yardarm I"), we reversed a judgment finding the City liable for inverse condemnation of property owned by Yardarm. The judgment was based on the trial court's finding that the City's history of obstructing the issuance of Yardarm's permits for a hotel and marina effected a permanent taking of its property. In reversing, we concluded that Yardarm failed to establish a "taking," because the City did not deprive Yardarm of substantially all use of its property. Id. at 1384-87. We further ruled that any "taking" claim was barred by the statute of limitations. Id. at 1388.

We observed, however, in Yardarm I that the facts found by the trial court might support a claim for a due process violation under 42 U.S.C. § 1983. Accordingly, we remanded the case for reconsideration of the summary disposition of appellee's due process claim. Id. at 1389. We expressly declined to rule on the merits of a due process claim on the record then before us. Id. at 1389.

On remand, the trial court reinstated Yardarm's due process claim and the case proceeded to trial in 1998. The court held a non-jury trial on the issue of liability and bifurcated the damages portion. Following a two-week trial, the court found that the City violated Yardarm's procedural and substantive due process rights by its obstructionist conduct in connection with Yardarm's application for building permits. The court ruled alternatively that the City effected a federal taking of Yardarm's property. After determining that recovery was not barred by the statute of limitations because of the "continuing violation" doctrine, the court entered a liability judgment for Yardarm.

Thereafter, a jury returned a verdict assessing damages against the City in the amount of $7,601,920. The trial court later entered a final judgment for damages totaling $19,203,491, which included its calculation of pre-judgment interest through the verdict. The court also awarded attorney's fees and costs to Yardarm. The City appealed both the final judgment on damages and the attorney's fee and cost award. Yardarm cross-appealed portions of both and sought clarification on the post-judgment interest.

II. THE 1998 TRIAL

During the liability phase of the second trial, Yardarm presented numerous witnesses and exhibits to prove that the City willfully obstructed the development of its hotel project from 1973 through 1981 and that its conduct resulted in Yardarm's inability to obtain financing for its expansion plans, ultimately causing Yardarm to lose its property through foreclosure. In addition to presenting much of the evidence from the first trial, Yardarm introduced some new evidence relating to the unofficial "policy" of the Commission and secret meetings and discussions among City officials about plans to repeal the special exception.

Yardarm, which was owned by James and Thomas Stephanis, had operated a successful restaurant in Pompano Beach since 1959 on the east side of its property overlooking the Hillsborough Inlet. In 1972, Yardarm decided to build an eighteen-story hotel tower and marina on this site (the "East Side"). Shortly after its plans became known, political opposition to the hotel began to mount. The Hillsboro Shores Improvement Association ("Association"), a homeowners group located on the south side of the inlet, objected to the hotel's construction because it would block their view of the ocean and the lighthouse at the inlet. The local Pompano Beach Republican Club was also an active opponent of the project.

On May 1, 1973, before Yardarm applied for a building permit for its East Side project, the City enacted an ordinance imposing a ten-story height restriction on new buildings in the city. In response, Yardarm applied for a special exception to construct its eighteen-story hotel. On October 2, 1973, the City passed Ordinance No. 73-96, which granted Yardarm a special use exception for the project. The Association vigorously opposed the special exception and filed suit to set it aside. Ultimately, the circuit court upheld the special exception, finding that the Hillsboro Shores residents had no legal right to unobstructed views of the lighthouse and inlet.

On February 8, 1974, Yardarm applied for a building permit. The Building Official, Walter C. Williams, issued the permit on February 14, 1974. However, four days later, the Building Official revoked the permit, citing noncompliance with applicable codes and regulations, failure to obtain necessary approvals from other regulatory agencies, the existence of an easement on the property, and certain deficiencies in the application and plans, including inadequate parking spaces.

Yardarm responded by filing suit against the City for re-issuance of the permit. This litigation resulted in an order that acknowledged the City's right to rescind the permit but ruled that Yardarm could apply for a new permit upon plans that complied with the building and zoning laws in effect on February 14, 1974, the date the permit was originally issued, together with approvals from the regulatory agencies required by the City at that time.

In February 1977, after the City denied Yardarm's re-application for a building permit because of inadequate parking spaces, Yardarm sought supplemental relief from the circuit court. The court ruled in Yardarm's favor, reiterating that the "February 14, 1974 regulations apply." On March 15, 1977, the day following the court's ruling, Yardarm was issued a new building permit.

In April 1977, having finally resolved the parking issues and obtained the permit for its hotel, Yardarm closed its restaurant and demolished the building. At the time, the restaurant was free and clear of any encumbrances or mortgages and had just experienced its most profitable year. Though Yardarm needed permanent financing to build the East Side project, it proceeded with preliminary site work.

Soon thereafter, Yardarm became aware that its new permit issued in 1977 did not include the seawall, dock, and quays that had been included in the former, revoked permit. Yardarm continued site preparation while filing for approval of the seawall and docks. The City ultimately approved the seawall, but refused a permit for the docks, as did the board of appeals. In January 1978 Yardarm sought supplemental relief from the circuit court. Almost a year later, following trial, the parties stipulated to an order which permitted Yardarm to build a dock and directed the City to give the Corps of Engineers any required written assurances. However, when Yardarm sought approval from the Corps of Engineers for construction of the dock, the City Manager wrote the Corps opposing the dock permit and demanding a public hearing if the Corps was undecided on the matter.

The Corps eventually issued the dock permit. However, in July 1979, while the matter was still pending, the City determined that Yardarm's building permit had lapsed because there had been no construction on the site for ninety days. This determination was based on a recently enacted rule that litigation between the parties would not toll work requirements. Yardarm went to court, again contending that the applicable rules were those in place in 1974, when it first applied for a permit. Ultimately, in July 1981, after an appeal to this court, the Yardarm's permit was reissued.¹

In the meantime, construction costs increased dramatically from $5 million to over $9 million. Hoping to make the project more attractive to institutional lenders and obtain a management contract with a major hotel chain, Yardarm decided to expand the project. In February 1981, Yardarm purchased a second parcel, west of the property Yardarm already owned (the "West Side"). To finance this additional land, Yardarm mortgaged the East Side parcel. Yardarm then abandoned the East Side project and redrew plans for a completely different hotel project on both the East and West Sides (the "East/West Project").

Yardarm sought financing for the expanded project. One potential deal turned out to be a scam that cost Yardarm $205,000. Because Yardarm had been required to take on a partner, it continued to seek a loan which would fully compensate it up front for the value of property and its costs—a total of about $6 million. Yardarm received two substantial offers to buy its stock in 1983: one for $4.25 million and one for approximately $8 million. Yardarm rejected the first offer, and the second offer was withdrawn when the offeror discovered that Yardarm had given someone else an option to buy the property. Meanwhile, to fund enough construction on the existing project to prevent the permit from lapsing, Yardarm took out a number of short term loans. The last of these was a $2.8 million loan obtained in January 1984 from Sunrise Savings and Loan...