VLX Properties, Inc. v. Southern States Utilities, Inc.

• Decision Date: 07 November 1997
• Docket Number: No. 96-1026,96-1026
• Citation: 701 So.2d 391
• Parties: 22 Fla. L. Weekly D2558 VLX PROPERTIES, INC., and CV Reit, Inc., Appellants/Cross-Appellees, v. SOUTHERN STATES UTILITIES, INC., Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

Page 391

701 So.2d 391

22 Fla. L. Weekly D2558

VLX PROPERTIES, INC., and CV Reit, Inc., Appellants/Cross-Appellees, v. SOUTHERN STATES UTILITIES, INC., Appellee/Cross-Appellant.

No. 96-1026.

District Court of Appeal of Florida,

Fifth District.

Nov. 7, 1997.

Dennis K. Bayer and Gary L. Butler of Cobb, Cole & Bell, Daytona Beach, for Appellants/Cross-Appellees.

Tracy A. Bogert, G. Robertson Dilg and Kent L. Hipp of Gray, Harris & Robinson, P.A., Orlando, for Appellee/Cross-Appellant.

PETERSON, Judge.

VLX Properties, Inc. ("VLX"), appeals a final judgment denying its petition for inverse condemnation against Southern States Utilities, Inc., ("SSU"). C.V. Reit, Inc., ("CVR"), as the holder of a mortgage encumbering the title to real property owned by VLX, appeals the trial court's determination that it lacks standing to bring an inverse condemnation claim. SSU cross-appeals the trial court's rejection of its "reasonable use" defense that its discharge of reclaimed water into a pond was a reasonable co-use of that pond by a co-owner.

THE VLX APPEAL

In June of 1990, SSU entered into an Easement and Reclaimed Water Delivery Agreement ("Delivery Agreement") with Glen Abbey Golf Course, Inc. ("GAGC"), which granted to SSU the right to discharge certain reclaimed water onto GAGC's golf course. Because GAGC did not yet own all of the real property over which the reclaimed water was to be discharged, a Joinder and Consent addendum to that Delivery Agreement was executed by Lawyer's Title Investment Fund, Inc., ("LTIF"). LTIF, at the time of the execution of the Delivery Agreement, owned multiple parcels of land in the Glen Abbey planned unit development ("PUD") including nine holes of the golf course which it had contracted to sell to GAGC. LTIF eventually conveyed this portion of the golf course to GAGC, and conveyed its remaining ownership in the subdivision to appellant VLX.

The addendum signed by VLX's predecessor in title, LTIF, specifically provides:

[LTIF], as the owner and contract seller of certain portions of the real property known as the "Property", described in exhibit "A," of the [Delivery Agreement] executed between [SSU] and [GAGC], hereby joins in for the sole and limited purpose of consenting to the foregoing Delivery Agreement. This joinder shall not in any way abrogate or modify the contract for purchase and sale, as amended between [LTIF] and [GAGC] regarding said certain portions of real property.

The real estate described in exhibit "A" was that of the entire PUD, rather than the property intended to be encumbered by the agreement: the golf course. In other words, exhibit "A" included not only the golf course, but lands owned by LTIF that were not under contract to GAGC, as well as the property of several unrelated third parties. This scrivener's error formed the catalyst for this lawsuit.

The trial court found the legal description in the Delivery Agreement to be meaningless. It was persuaded by SSU to admit parol evidence to show, inter alia, that LTIF, by signing the Joinder and Consent addendum, intended not only to consent to the rights granted by its contract vendee, GAGC, but to additionally and independently convey an easement in favor of SSU over all its real property in the PUD. We agree with the trial court that parol evidence was permissible to clarify that the parties intended to have the easement cover only the golf course, i.e., land GAGC owned or was under contract to own, as opposed to the entire PUD as described in exhibit "A." We, however, disagree that parol evidence was permissible to interpret the intent of the Joinder and Consent addendum. SSU urged that the Joinder and Consent addendum was ambiguous because it is unclear whether the use of the term, "owner," was meant to bind LTIF as to "certain portions of the real property" that it owned apart from those lands which it had agreed to sell to GAGC, or if "owner" was simply a further clarification of the term, "contract seller." If it were the former, says SSU, the agreement would bind LTIF with respect to the LTIF real property later conveyed to VLX.

We do not find SSU's ambiguity argument to be reasonable. The last line of the addendum specifies that the "certain portions of real property" described in the first line of SSU alternatively argues that even if the trial court erred by concluding that LTIF's Joinder and Consent addendum conveyed an easement to SSU, the error was harmless. SSU points out that a provision in the Delivery Agreement calls for a small body of water known as James Pond to be used as a holding pond for SSU's reclaimed water. A portion of James Pond is located within the confines of the golf course property sold to GAGC. SSU argues that because water, by its nature, is not static, LTIF, in consenting to water being stored in a portion of James Pond was consenting to water being stored in all of James Pond. The fallacy of this argument is that the Delivery Agreement drafted by SSU contains a provision permitting SSU to terminate the agreement if "the owner(s) of the bottom of the Holding Ponds fail or refuse to execute a flowage easement in favor of [SSU] over and within the Holding Ponds to allow [SSU] to utilize the full scope of the easement granted pursuant to this Agreement." SSU, by its inclusion of this language, exhibited its understanding of the concept that water, while fluid in nature, cannot be discharged onto the real property of others in a harmful manner, unless an easement permitting such a discharge is obtained from the affected property owner. Here, no such easement was obtained by either SSU or GAGC from LTIF or VLX, even though as SSU admits, it did pay $120,000 for a flowage easement from another co-owner of the real property underlying James Pond.

the addendum (in which LTIF is described as the "owner" and "contract seller") refer only to those certain portions for which LTIF had a contract to sell to GAGC. The term "owner," in the first line, therefore, is simply a clarification of LTIF's status as the contract seller and does not refer to GAGC's status as an owner of other properties within the PUD. Further, the addendum contains absolutely no terms that would tend to create an easement or any other property interest in favor of SSU or GAGC over LTIF real property that was not under contract with GAGC. The addendum is simply a "consent" to the easement being granted by the contract vendee, GAGC, for real property then owned by contract vendor LTIF, but soon to be conveyed to GAGC.

In summary, LTIF's consent did not convey any property rights to SSU beyond those rights SSU obtained from GAGC in the Delivery Agreement. GAGC obtained from LTIF only the latter's consent to GAGC's conveyance of the easement for storage and discharge of reclaimed water onto the golf course. Because the golf course did not include the entirety of James Pond, SSU's easement did not grant the right to substantially alter the water quality and quantity of the jointly owned pond. By asserting that an unauthorized public use of its private interests took place without compensation, VL X, contrary to the trial court's finding, possibly stated a cognizable claim for inverse condemnation against SSU. Martin v. City of Monticello, 632 So.2d 236 (Fla. 1st DCA 1994); South Florida Water Management Dist. v. Steadman Stahl, P.A. Pension Fund, 558 So.2d 1087 (Fla. 4th DCA 1990), rev. denied, 574 So.2d 143 (Fla.1990); Hillsborough County v. Gutierrez, 433 So.2d 1337 (Fla. 2d DCA 1983); Thompson v. Nassau County, 343 So.2d 965 (Fla. 1st DCA 1977); Elliott v. Hernando County, 281 So.2d 395 (Fla. 2d DCA 1973); Bensch v. Metropolitan Dade Co., 541 So.2d 1329 (Fla. 3d DCA 1989), rev. denied, 549 So.2d 1013 (Fla.1989); Dudley v. Orange County, 137 So.2d 859 (Fla. 2d DCA 1962), appeal dis'd, 146 So.2d 379 (Fla.1962), cert. denied, 372 U.S. 959, 83 S.Ct. 1014, 10 L.Ed.2d 12 (1963).

VLX also asserts that the trial court incorrectly concluded that VLX, at the time it acquired the property from LTIF, was on constructive notice of SSU's pipeline easement encumbering VLX's property.

In 1990, SSU obtained from LTIF a 15 foot wide pipeline easement but failed to record it in the public records. The pipeline parallels a platted road of the Glen Abbey subdivision for approximately 1,000 feet and then traverses two lots to reach the golf course. On this easement, SSU installed an underground pipe. Above the ground, SSU placed a manhole opening, a portion of a meter box concrete vault, and related telemetry equipment. The trial court personally viewed the above ground improvements and If the use of the land was so open and obvious that a reasonable inspection would have revealed that use, VLX had a duty of "inquiry as one acquiring ... title to land so occupied to ascertain the nature of the rights the occupant has in the premises." Florida Power & Light Co. v. Rader, 306 So.2d 565, 566 (Fla. 4th DCA 1975). VLX failed to make such inquiry. The trial court, after hearing the testimony and inspecting the property, found that such an open and obvious use of the property existed at the time of VLX's purchase. Given the trial court's superior vantage point to judge this matter, we do not disturb his ruling that VLX had constructive notice of the pipeline easement. Fields v. Sarasota-Manatee Airport Authority, 512 So.2d 961, 964 (Fla. 2d DCA 1987), rev. denied, 520 So.2d 584 (Fla.1988) (factual findings of the trial judge are entitled to weight of a jury verdict).

found that they were substantial enough to constitute an open and obvious use of the property such that reasonable inspection of the property by VLX would have led to discovery of the pipeline easement.

THE CVR APPEAL

CVR's sole interest in this matter is as a holder of a mortgage on the realty VLX claims has been taken through inverse condemnation. CVR asserts that its interest as mortgagee entitles it to a position of standing to initiate an independent...