Metropolitan Dade County v. Sunlink Corp., 91-509

• Decision Date: 28 January 1992
• Docket Number: No. 91-509,91-509
• Citation: 642 So.2d 551
• Parties: 17 Fla. L. Weekly D352 METROPOLITAN DADE COUNTY, a political subdivision of the State of Florida, Appellant, v. SUNLINK CORPORATION, Appellee.
• Court: Florida District Court of Appeals

Page 551

642 So.2d 551

17 Fla. L. Weekly D352

METROPOLITAN DADE COUNTY, a political subdivision of the State of Florida, Appellant, v. SUNLINK CORPORATION, Appellee.

No. 91-509.

District Court of Appeal of Florida Third District.

Jan. 28, 1992.

On Motion for Rehearing En Banc

Granted Feb. 2, 1993.

Rehearing and Clarification of En Banc Opinion Denied Sept.

14, 1994.

Robert A. Ginsburg, Dade County Atty., and Daniel A. Weiss, Asst. County Atty., for appellant.

Adorno & Zeder P.A., and Jon W. Zeder and Raoul G. Cantero, III, Coconut Grove, for appellee.

Before BASKIN, JORGENSON and GODERICH, JJ.

BASKIN, Judge.

Metropolitan Dade County [County] appeals a final summary judgment declaring void as an unreasonable restraint on alienation a restrictive covenant binding property held by Sunlink Corporation [Sunlink]. We affirm the final summary judgment.

Sunlink acquired from American Telephone and Telegraph Company [AT & T], property that was subject to a Declaration of Restrictive Covenants. The Declaration, recorded by AT & T, provides as follows:

2. Industrial Zoning. As to all property which may be zoned thereunder to classification IU-C or other industrial classification, Owners agree that there will be no sales, leases or other transfers of ownership or right to possession or use, except to entities owned, controlled by, or affiliated with the Owner American Telephone and Telegraph Company ("Telephone"), which for the purpose hereof includes, but is not limited to, Southern Bell Telephone & Telegraph Co. and Western Electric Company.

....

12. Term of Restrictions. These covenants are to run with the land, and shall be binding on all parties and all persons claiming under it for a period of thirty (30) years from the date these covenants are recorded, after which time they shall be extended automatically for successive periods of ten (10) years, unless an instrument signed by a majority of the then owner(s) of the real property and a majority of those within 500 feet of the boundary of the property has been recorded, agreeing to change the covenants in whole or in part, providing the covenants have first been released by the Commission.

In an effort to obtain rezoning of its property, AT & T recorded the Declaration in 1974 to assure the County's Board of County Commissioners [Board] that AT & T's zoning application representations were true and correct. AT & T hoped to persuade the Board to grant its rezoning request. Consequently, the property, originally zoned for residential use, was rezoned to light industrial use. In 1984, pursuant to AT & T's divestiture, a 70 acre parcel of the property was transferred to Sunlink. By 1989, however, the nature of the telecommunications industry had changed to such an extent that Sunlink needed only a small portion of the property, and no permitted transferee had any use for the remainder of the property. No further industrial application remained, and any other use would be incompatible with the surrounding residential areas.

Sunlink contracted to sell the property, but the sale was impeded by the restrictive covenant as the prospective buyer was not in the covenant's permitted class of purchasers. Sunlink filed an action against the County, ¹ seeking a declaratory judgment invalidating the covenant. It predicated the lawsuit on changed circumstances and unreasonable restraint on alienation. When Sunlink filed a motion for summary judgment, the trial court granted the motion, and entered summary final judgment, finding:

as a matter of law that that portion of Paragraph 2 set forth herein of the aforesaid Declaration of Restrictive Covenants constitutes an unreasonable and illegal restraint upon [Sunlink's] right to alienate, transfer use and convey its property and is therefore void ab initio and of no further force and effect.

The final summary judgment announced that "[n]othing contained herein shall effect [sic] the land use designation or zoning of the property owned by SUNLINK CORPORATION which may only be changed pursuant to the ordinances and procedures established by Dade County." On appeal, the County raises several issues; one merits discussion. ²

The central issue is whether the restrictive covenant is invalid as an unreasonable restraint on alienation. "[C]ourts have traditionally undertaken to determine the validity of restraints by measuring them in terms of their duration, type of alienation precluded, or the size of the class precluded from taking." Seagate Condominium Ass'n, Inc. v. Duffy, 330 So.2d 484, 485 (Fla. 4th DCA 1976). The first consideration is the duration of the restraint. The duration of the restrictive covenant at issue is thirty years; it will remain in effect until the year 2004. After termination of the initial thirty-year period, the covenant continues automatically for ten-year periods, unless Sunlink obtains a release from the Board and a release from a majority of the property owners whose property is within 500 feet of the boundary of Sunlink's property. At the present time, the land within 500 feet of Sunlink's property is developed for a variety of uses: single family residential, townhouse residential, condominium residential, apartment rental residential, commercial and industrial. The number of persons and entities whose properties lie within 500 feet of the boundary of Sunlink's property is between five and nine thousand. The impracticality of obtaining a release from a majority of such a large number of property owners is obvious. Under these circumstances, the duration of the covenant is unreasonable.

Henthorn v. Tri Par Land Dev. Corp., 221 So.2d 465 (Fla. 2d DCA 1969), and Balzer v. Indian Lake Maintenance, Inc., 346 So.2d 146 (Fla. 2d DCA 1977) are distinguishable. While both cases approved covenants of fixed duration, those covenants did not restrict the alienability of property. Henthorn, 221 So.2d 465 (covenant providing for annual charge to lot owners, not to exceed $120.00 per year, for purpose of maintenance of recreational areas and facilities not unreasonable); Balzer, 346 So.2d 146 (covenant providing for payment of maintenance fees not unreasonable despite provision for automatic extensions of covenant duration).

The second consideration is the type of alienation precluded. Seagate Condominium. The alienation precluded by the subject restrictive covenant is alienation of title; the restrictive covenant forbids "transfers of ownership or right to possession" except to AT & T affiliates under all circumstances. Compare Seagate Condominium, 330 So.2d 484 (restriction that prohibits only leasing of property under certain circumstances is not unreasonable or unlimited restraint on alienation); Holiday Out in America at St. Lucie, Inc. v. Bowes, 285 So.2d 63 (Fla. 4th DCA 1973) (condominium declaration that grants developer exclusive right to undertake to rent units is not a restraint on alienation). The extent of the preclusion renders the covenant an unreasonable and virtually unlimited restraint.

The third consideration is the size of the precluded class. Seagate Condominium. All persons or entities not affiliated with, owned, or controlled by AT & T, an enormous class, are forbidden from taking. Thus, it is apparent that the restrictive covenant binding Sunlink's property violates all three considerations, and is unreasonable. Seagate Condominium, 330 So.2d at 486.

Moreover, "[t]he validity or invalidity of a restraint depends upon its long-term effect on the improvement and marketability of the property." Iglehart v. Phillips, 383 So.2d 610, 614 (Fla.1980). The restrictive covenant in question unreasonably limits the marketability of the property. ³ The rule against unreasonable restraints on alienation endeavors to "ensure that property is reasonably available for development by prohibiting restraints that remove property from a beneficial use for an extended period of time." Iglehart, 383 So.2d at 613; Johnson v. Girtman, 542 So.2d 1033 (Fla. 3d DCA 1989). This restrictive covenant contravenes that purpose by rendering the property useless. Notwithstanding the parties' intent in entering into the covenant, where, as here, a change in circumstances renders the property unmarketable, enforcement of the covenant would be inequitable. See Iglehart. Cf. Sinclair Refining Co. v. Watson, 65 So.2d 732 (Fla.) (en banc) (circumstances had not sufficiently changed to make enforcement of a covenant restraining certain uses of a property inequitable), cert. denied, 346 U.S. 872, 74 S.Ct. 121, 98 L.Ed.2d 381 (1953). For these reasons, we conclude that the trial court correctly found that the restrictive covenant constitutes an unreasonable restraint on alienation.

Affirmed.

GODERICH, J., concur.

JORGENSON, Judge, dissenting.

I respectfully dissent.

In 1974, AT & T sought a zoning change to allow for light industrial use of residential property it owned. AT & T proffered a Declaration of Restrictive Covenants to the Dade County Board of Commissioners [the County] in an effort to induce the County to rezone the area. To assure the preservation of the property and the surrounding community, the covenants were to run with the land, therefore binding subsequent property owners. As a result of AT & T's recordation of the Declaration, the County rezoned the property.

After ten years, AT & T transferred a portion of the property to its wholly owned subsidiary, Sunlink Corporation [Sunlink]. Five years later, Sunlink contracted to sell a parcel of its property. This prospective sale was predicated upon the removal of the restrictive covenant and upon Sunlink's obtaining a rezoning of the subject property. ¹

In determining whether the restrictive covenant is an unreasonable restraint on alienation, the court misapplies the factors set forth in Seagate Condominium Ass'n, Inc. v. Duffy, 330 So.2d 484 (Fla. 4th DCA 1976).

Duration of the Restraint

I disagree with the conclusion that the release mechanism...