Ocean Palm Golf Club P'ship v. City of Flagler Beach

• Decision Date: 30 May 2014
• Docket Number: No. 5D12–4274.,5D12–4274.
• Citation: 139 So.3d 463
• Parties: OCEAN PALM GOLF CLUB PARTNERSHIP, Appellant, v. The CITY OF FLAGLER BEACH, etc., Appellee.
• Court: Florida District Court of Appeals

139 So.3d 463

OCEAN PALM GOLF CLUB PARTNERSHIP, Appellant,

v.The CITY OF FLAGLER BEACH, etc., Appellee.

No. 5D12–4274.

District Court of Appeal of Florida, Fifth District.

May 30, 2014.

Philip M. Burlington and Adam J. Richardson of Burlington & Rockenbach, P.A., West Palm Beach, and Ethan J. Loeb, David Smolker and Jon Tasso of Smolker, Bartlett, Schlosser, Loeb & Hinds, P.A., Tampa, and Dennis K. Bayer of Bayer & Maguire, P.A., Flagler Beach, for Appellant.

Dale A. Scott and Michael J. Roper of Bell & Roper, P.A., Orlando, for Appellee.

COHEN, J.

Ocean Palm Golf Club Partnership (“Ocean Palm Golf”) appeals from the final order and judgment entered in favor of the City of Flagler Beach (“the City”) in an action brought by Ocean Palm Golf and Caribbean Condominium Limited Partnership (“Caribbean Condo”) seeking compensation for the City's alleged taking of two parcels.¹ We affirm.

This is an inverse condemnation case involving two parcels of land located in Flagler Beach. The first parcel is a thirty-four-acre parcel that had been operated as a nine-hole golf course (“the golf course parcel”). The second parcel is a vacant 2.94–acre parcel situated inside the golf course parcel (“the condo parcel”). While the two parcels at issue are now owned by different entities, that was not always the case. For several decades, the golf course parcel and the condo parcel made up a single parcel owned by one entity, Ocean Palm Estates, Inc. (“Ocean Palm Estates”), which was the predecessor in title to Appellant, Ocean Palm Golf. The two parcels had been operated as a golf course for more than forty years. What is now referred to as the condo parcel was the driving range; the remainder of the property was operated as a nine-hole golf course under the applicable recreational zoning designation.² Eventually, Ocean Palm Estates, claiming to be losing money on the operation of the golf course, threatened the City with litigation over its refusal to change the zoning from recreational.

To resolve this dispute, the City and Ocean Palm Estates entered into a Development Agreement in 1989. The Development Agreement created a Planned Unit Development consisting of two parcels. The golf course parcel would remain designated recreational in the Comprehensive Plan, and Ocean Palm Estates would continue to operate that parcel as a golf course, which was to be open to the City's residents. If not operated as a golf course, the golf course parcel would be maintained as an open space. In return, the City would allow residential development on the condo parcel. The Comprehensive Plan designated the condo parcel as “high density residential” and the zoning was changed to RPUD. The building was to not be higher than eighty-five feet, consistent with an attached conceptual plan, and was limited to eighty-four units with a restaurant and golf facilities. The Development Agreement further required the proposed development to be “developed according to all the applicable zoning and building regulations of the City.” By its own terms, the Development Agreement would expire on July 1, 2003.

In 1999, before it attempted to develop the property, Ocean Palm Estates sold both parcels, deeding the golf course parcel to Appellant Ocean Palm Golf for $1.5 million and the condo parcel to Ocean Palm Condominium Ventures, Inc. (“Ocean Palm Condo”), which was Caribbean Condo's immediate predecessor in interest. Stephen Cejner was a principal of both Ocean Palm Golf and Ocean Palm Condo, and he is the president of Ocean Palm Golf. Cognizant of the terms of the Development Agreement, he expected to build condominiums on the condo parcel and rehabilitate and operate the golf course parcel; the ability to operate the golf course depended on the ability to sell the eighty-four residential units.

Ocean Palm Condo's first attempt at development in 2000 resulted in a proposal for an eighty-four-unit condominium tower with a width of 210 feet, with the golf course as an amenity. The City, however, objected to the tower, causing Ocean Palm Condo to fashion a different plan to respond to the City's concerns.

Ocean Palm Condo's second attempt at development was not successful, either. Instead of the tower plan, Ocean Palm Condo proposed three connected buildings of 210 feet in length. While Ocean Palm Condo was working to develop the condo parcel, Ocean Palm Golf was actively re-building the golf course parcel. Again, the City found fault, concluding that the buildings did not meet the Development Agreement's conceptual plan.

In 2001, Ocean Palm Condo deeded the condo parcel to Caribbean Condo, which was a partnership formed to own and develop the parcel. The partnership consisted of Ocean Palm Condo, Cejner, Todd Lynch, and others. Lynch's company, Chase LLC, owns thirty-seven percent of Caribbean Condo. Caribbean Condo was a separate company from Ocean Palm Golf, and neither could control the other. Not everyone who owns part of Caribbean Condo also owns Ocean Palm Golf, and not everyone who has an ownership interest in Ocean Palm Golf also owns a share of Caribbean Condo.

In June 2002, Caribbean Condo made a third development proposal to the City, again proposing a single-tower design. Knowing the Development Agreement would soon expire, Caribbean Condo sought an extension of the agreement while the third proposal was being considered. The City denied the extension, but it did approve the site plan, with conditions attached, including a 150–foot maximum on the building's length instead of the 210 feet it was designed to be. Caribbean Condo was unable to revise the plan from 210 feet to 150 feet. If it had done so, the other items required by the Development Agreement, i.e., a restaurant, a pro shop, and other amenities, would not fit into the building.

Even though the Development Agreement had expired in July 2003, Caribbean Condo made a fourth attempt to develop the condo parcel in 2004. This time, it proposed a forty-two-unit project only thirty-five feet high and 150 feet wide. To be built, it required that Caribbean Condo purchase one acre of the golf course parcel from Ocean Palm Golf.³ The City found issues with the plan and asked Caribbean Condo to resolve the issues before the City would reschedule a hearing. Caribbean Condo, unable to resolve the issues, abandoned the proposed plan.

In 2008, Cejner and his group decided to try another approach to development. This time, they abandoned the high-density proposals and tried to get the property “down-zoned” so they could develop single-family residences on both the condo parcel and the golf course parcel.⁴ To do so, they had to first get the Comprehensive Land Use Plan amended to make both parcels “low density residential.” The ownership of the two parcels was not, however, merged for purposes of this proposal. In June 2008, they submitted a proposed amendment to the Comprehensive Plan to the City.

The application for the Comprehensive Plan amendment listed Ocean Palm Golf as the owner, even though the application sought an amendment re-designating both the golf course parcel and the condo parcel as “low density residential” with PUD zoning. Moreover, the application listed the number of acres involved as “36.9” without distinguishing between the two parcels.

On October 30, 2008, a public hearing was held on the proposed amendment to the Comprehensive Plan, during which the City considered whether to transmit the proposed amendment to the Department of Community Affairs. Citizens spoke out against the amendment. At the conclusion of the hearing, the City voted against transmitting the proposed amendment.⁵

A second public hearing was held, again drawing strong public opposition to the proposed amendment. The City denied the amendment. Ocean Palm Golf brought suit in the circuit court unsuccessfully, with the court ruling that it was within the City's discretion to reject the plan amendment.

In February 2010, Ocean Palm Golf and Caribbean Condo jointly filed the instant suit, alleging, in pertinent part, that the City's refusal to change the Comprehensive Plan's designation of the two parcels left the parcels without any economic viability, resulting in a taking thereof by the City. ⁶ The case proceeded to trial in September 2012. Ocean Palm Golf's position was that the City's denial of its proposed Comprehensive Plan amendment from recreational to low-density residential (a) deprived Ocean Palm Golf of all economically beneficial use of the golf course parcel and, thus, amounted to a total taking, or, at a minimum, (b) resulted in a substantial diminution in the value of the parcel and was therefore a partial taking.

At trial, the parties presented evidence regarding the economic viability of the two parcels. For their part, representatives of Ocean Palm Golf and Caribbean Condo testified that they bought their respective parcels with the plan of developing the condo parcel into a high-density residential complex pursuant to the terms of the Development Agreement and operating the golf course as an amenity thereto. The income from the condominium sales and sales of associate memberships in the golf course would support the golf course operation. Without the development of the condo parcel, the golf course parcel was not a money-maker. In fact, the golf course was never profitable. From its purchase in 1999 until Ocean Palm Golf closed the course in 2008, it never showed a profit. It did have revenue; the revenue was usually in the $100,000 range, but once was as high as $400,000. The expenses were even greater, however, and Cejner never was able to take a salary from the project. Cejner, based on his experience and knowledge of golf course market conditions, believed that a golf course could never be profitably operated on the thirty-four-acre parcel. He testified that beginning in 2007, the golf industry “started to fall apart” all across the country. Furthermore, because the golf course...