KEITH HOWARD, THE HOWARD COMPANY OF THE SOUTHEAST, INC., AND HOWARD ROCK FEE, LLC, Appellants/Cross-Appellees, v. ROGER MURRAY, K&H DEVELOPMENT GROUP, INC., A FLORIDA CORPORATION, AND BLA-LOCK DESTIN DEVELOPMENT GROUP, INC., A FLORIDA CORPORATION, Appellees/Cross-Appellants, WALTON COUNTY, FLORIDA, Appellee.
CASE NOS. 1D14-1841, 1D14-1984 & 1D14-1996
IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA
November 9, 2015
NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED
Opinion filed November 9, 2015.
Donald A. Mihokovich and Quinn A. Henderson of Adams and Reese, LLP, Tampa, for Appellants/Cross-Appellees.
Charles P. Hoskin of Emmanuel, Sheppard and Condon, Pensacola, for Appellee/Cross-Appellant Roger Murray; Lisa S. Minshew of Lisa S. Minshew, P.A., Pensacola, for Appellees/Cross-Appellants K & H Development and Bla-Lock Destin Development.
Carly J. Schrader, Gregory T. Stewart, and Heath R. Stokley of Nabors, Giblin & Nickerson, P.A., Tallahassee, for Appellee Walton County, Florida.
BENTON, J.
The final judgment before us1 was entered in cases consolidated below, in which
The focus of the parties’ dispute is 1.453 acres located within the Sandestin DRI in South Walton County (Tract 3) which has been a subject of contention between Keith Howard, The Howard Company of the Southeast, Inc., and Howard Rock Fee, LLC (Howard/Howard parties), on the one hand, and Roger Murray, K & H Development Group, Inc., and Bla-Lock Destin Development Group, Inc. (Murray/Murray parties),2 on the other, over a period of some years.
The final judgment decided that Bla-Lock “has vested commercial development intensity rights in its 1.453 acre parcel of real property,” quieted title to the real property “along with associated commercial intensity development rights” in Bla-Lock against Howard, and decreed that Sandestin Investments, LLC (a non-party) “is authorized to confirm to the appropriate Walton County officials that development intensity rights are available to Bla-Lock,” whereupon Walton County could issue a permit to Murray for building on the lot. An earlier summary judgment, also reviewable now that final judgment has been entered, had disposed of other claims.
We affirm the summary judgment in favor of Howard on Murray‘s claims of tortious interference with a business relationship, fraudulent misrepresentation, negligent misrepresentation, and civil theft. We also affirm the trial court‘s dismissal of Murray‘s causes of action for inverse condemnation as not ripe for decision. We reverse both the summary judgment in favor of Murray on Howard‘s claim of tortious interference with an option Howard had on Tract 3 (and the underlying business relationship the option represented) and the final judgment determining Bla-Lock Destin Development Group, Inc. holds vested (albeit unspecified) development rights in Tract 3 that entitle it to a development order at this time.3 We cannot agree with the learned
Aggregate Development Rights Created and Assigned
By the time Walton County entered a development order authorizing the Sandestin DRI on some 2300 acres, Evans & Mitchell Industries, Inc., the original applicant, had gone bankrupt. Property subject to the development order was subdivided among various mortgage holders. After 1976, ownership of the DRI property fragmented further,4 before all owners of undeveloped property subject to the original DRI agreed to the Sandestin Declaration of Covenants, Conditions and Restrictions (CCR), recorded in the Walton County land records in 1980.
After it had acquired all the assets of Lakeland B.V., including its development rights under the DRI order,5 Sandestin Corporation submitted its 1984 Master Plan Update, notifying Walton County that “the Sandestin Corporation and its affiliates [had] succeeded in reestablishing unified development control” and requesting modifications to the DRI order. Accordingly, by Resolution 1984-24, Walton County amended the initial DRI development order, so that Parcel 208/308 consisting of 48.1 acres, including Tract 3, was allotted 550,000 square feet of commercial development rights.
Legal Title to Tract 3 Changes Hands
On December 1, 1984, Sandestin Corporation agreed to sell approximately 16 acres lying within Parcel 208/308, including Tract 3, to Great Southwest Commercial, Inc.6 The sales contract, which was explicitly subject to the DRI order and the CCR, provided that the parties would agree on necessary amendments to the CCR and, on July 1, 1985, a Supplemental Declaration to the CCR was in fact executed. This Supplement to the CCR did not, however, purport to allocate development rights among lots or parcels lying within the 16-acre parcel Sandestin Corporation agreed to sell (or elsewhere within Parcel 208/308‘s 48.1 acres).7
By 1992, Centaworld Corporation had obtained title to the 16-acre parcel, including
Under the terms of the option, Howard paid $150,000 for the right to purchase various subparcels in Parcel 208 at prices calculated to equal (roughly) the debts encumbering the respective, optioned parcels.10 After the option was executed (but before Howard recorded a “Memorandum of Option“), Murray lent several hundred thousand dollars to Centaworld Holding, securing the loan with a second mortgage encumbering some of the property described in the option contract, including Tract 3.
Peoples First initiated proceedings to foreclose the first mortgage on Tract 3 on February 25, 1999,11 and, on May 27, 1999,
As holder of the first and second mortgages on Tract 3, Murray initiated a foreclosure action against K & H in 2004. At the foreclosure sale, both Murray and Howard bid repeatedly on Tract 3. Murray made the winning bid of $2,625,000.00, then assigned purchase rights to Bla-Lock, and the Walton County Clerk of Court issued a certificate of title to Bla-Lock on May 27, 2008.
Development Rights Dealt with Separately
On October 28, 1999, Intrawest Sandestin filed a Notice of Proposed Change (NOPC) to the DRI order. (By then Intrawest Sandestin had succeeded to Sandestin Corporation‘s rights under the DRI order, as amended.) This change, approved by Walton County Ordinance No. 2000-03, stated the total projected available development rights for Parcel 208/308 as 398,000 square feet of retail and 40,000 square feet of office space (based on transfers of intensity of 152,000 square feet of retail and 40,000 square feet of office from other parcels). Walton County Ordinance No. 2000-03 was adopted and recorded in February of 2000.
In June of 2000, Intrawest Sandestin agreed to convey approximately 26.2 acres (described as Parcel 208A and Parcel 208B) to Baytowne Commercial Joint Venture Partners II (another entity controlled by Howard), and acknowledged “that under the currently approved Development Order, a total aggregate of 398,000 square feet of commercial retail intensity and an additional 40,000 square feet of office use intensity is allocated to all of the Property, the Parcel 208A Property and the Parcel 208B Property, collectively.”
On August 6, 2002, Intrawest Sandestin submitted an NOPC that again proposed transferring densities among parcels subject to the DRI order. The NOPC provided, in a footnote:
The majority of Parcel 208/308 is currently undeveloped. The present densities as set forth in the existing and proposed changes applicable to Parcel 208/308 are and will be owned by the Howard Group, with the exception of the densities allocated to the nursing home, Tom Thumb Store, and Applebee‘s restaurant. The nursing home, Tom Thumb Store, and Applebee‘s restaurant are presently owned by non Howard Group entities and the square footages and uses are being established at the request of Walton County to accurately depict what was previously constructed or allocated under the prior DRI amendment. In addition, Tract 3 is unimproved and is not owned by Howard Group. All other improvements on Parcel 208/308 are presently owned by Howard Group.
This NOPC, approved by Walton County Ordinance No. 2002-18, increased the commercial square footage available for retail, banking, office and hotel development on Parcel 208/308.
During a hearing prior to the adoption of Ordinance No. 2002-18, counsel representing K & H requested assurance that Tract 3 was not included in the NOPC. Attorneys for Howard/Intrawest Sandestin represented that the NOPC would not affect development rights for Tract 3. A letter from Keith Howard to Walton County
In 2008 when the Murray parties applied to Walton County for a development order for Tract 3, county personnel advised them it appeared that the Howard parties owned all development rights for Parcel 208,12 in which Tract 3 lies. A “pre-application note” made by Walton County staff suggested that an “NOPC may be needed to transfer density, intensity to this site.”
Present Judicial Proceedings Begin Below
On September 10, 2002, Howard filed suit in Walton County Circuit Court against Murray and K & H, alleging intentional interference with Howard‘s option contract, among other things. Howard asserted that, after Centaworld Holding gave the option on Tract 3, Murray induced Centaworld Holding to execute a second mortgage, which, as a practical matter, prevented Centaworld Holding from performing under the terms of the option: Howard alleged that, because the option price would not be enough to satisfy Murray‘s second mortgage, Centaworld could not convey clear title as required by the option contract. Howard asserted Murray further interfered tortiously by obtaining the first mortgage People‘s First held on Tract 3 and a quitclaim deed to Tract 3 from Centaworld, alleging specifically that Murray had knowledge of the option at the time Murray obtained the second mortgage and quitclaim deed.
Howard‘s suit remained pending when, in 2009, Murray parties (K & H and Bla-Lock) filed against Howard, Walton County, and Intrawest Sandestin, in the United States District Court for the Northern District of Florida. Murray‘s complaint stated federal and state law claims13 alleging Murray was unable to develop Tract 3 even though commercial development rights had been conveyed as a matter of law when Bla-Lock acquired title to Tract 3. Howard counterclaimed for declaratory judgment, asking the federal court to declare that K & H did not own development rights in Tract 3 or any other portion of Parcel 208/308. After entering summary judgment in favor of the defendants on
The Murray parties then filed in state court, alleging (insofar as pertinent here) civil theft, tortious interference with a business relationship, and fraudulent and negligent misrepresentation by Howard; and inverse condemnation on the part of Walton County. Murray alleged that K & H had agreed in 2004 to sell Tract 3 to Parish National Bank for $1.65 million, but that the Bank cancelled the contract after Howard misrepresented to the Bank that Murray did not have development rights for Tract 3. The complaint also alleged that “K & H has not been able to sell [Tract 3], despite several interested purchasers, due to the ongoing intentional interference of the Howard Defendants,” and that Howard had falsely represented that the 2002 NOPC would impact only Howard-owned property on Parcel 208/308. Murray also contended that Walton County had effectively deprived K & H of its property rights in Tract 3 which, it said, constituted a de facto taking.
Murray‘s complaint sought declaratory relief and to “quiet title” to development rights, alleging that the conveyance to Great Southwest by Sandestin included 150,000 square feet of commercial development rights, and that the Murray parties retained their “proportionate share of the development rights through the chain of title.” The trial court consolidated Murray‘s 2009 action with, among others,15 the action Howard had initiated in 2002.
On February 4, 2013, the court ruled, on cross motions for summary judgment, that the Great Southwest contract (even read together with the Supplemental Declaration to the CCR) did not transfer development rights, and noted that none of the deeds in the Murray parties’ chain of title purported to convey development rights to Murray parties or to their immediate predecessor in interest. This ruling has not been directly challenged on appeal.
The order granting summary judgment also ruled against Howard on the 2002 complaint for damages and against Murray on the 2009 damages claims for tortious interference with a business relationship, fraudulent or negligent misrepresentation, or civil theft. The same order ruled inverse condemnation issues were not ripe
Development Rights Distinct From Legal Title
To recapitulate, Tract 3 was part of a 16-acre parcel Sandestin Corporation conveyed in 1985. No document reflects an allocation or conveyance of development rights to Great Southwest or to the trustee who first received title to the parcel. The July 1985 deed to Mark E. Bentley, Trustee, conveying the fee estate, did not convey commercial square footage intensity for development. The deed‘s language granting legal title to the real property17 made no mention of development rights.
In the absence of any agreement to convey specified development rights, no development rights were transferred when the 16-acre parcel “separated” from the 48.1-acre Parcel 208/308 (as the trial court itself acknowledged), much less when any Murray entity acquired Tract 3. There was no contract between any holder of development rights and the Murray interests, and Murray‘s only claim to development rights rests on naked title to the real estate. Bla-Lock acquired title to Tract 3 through mortgage foreclosure proceedings (after K & H had received a quitclaim deed making no mention of development rights). Obtaining title to real estate subject to a DRI order does not, however, in and of itself confer development rights.
As the trial court explained, “[b]y their nature, DRIs are designed to allow flexibility in the distribution of development rights within the development area. Rather than immediately creating small lots and assigning a certain amount of square footage for development to each, the property is divided into larger tracts with the intent that they later be subdivided by deeds into such smaller pieces as the market dictates. The intensity needed for individual development is then assigned to each smaller parcel as indicated, and county officials are notified, so that the assigned amount can be deducted to reflect on the county records the intensity remaining available for future development.”
Development rights allocated to a parcel of DRI property need not be deployed uniformly over the entire parcel.
In sum, we hold development rights do not pass automatically with the conveyance of the fee interest in a DRI subparcel. See Keith v. Mountain Resorts Dev., L.L.C., 337 P.3d 213, 227 (Utah 2014) (“Land development rights, which are a conditional right granted and controlled by the county government, are not included as a matter of law in a deed‘s general terms of conveyance giving a grantee the ‘rights and privileges belonging’ to a piece of real property.“). There is no automatic transfer of a specific proportion (or even
Alleged Interference with Howard‘s Option Contract on Tract 3
On review of summary judgment, the court‘s “task is to determine whether, after reviewing every inference in favor of Appellants as the non-moving party, no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law.” Dianne v. Wingate, 84 So. 3d 427, 429 (Fla. 1st DCA 2012). “If there is even the slightest doubt that material factual issues remain, summary judgment may not be entered.” Alpha Data Corp. v. HX5, L.L.C., 139 So. 3d 907, 910 (Fla. 1st DCA 2013).
Four elements are required to establish tortious interference with a contractual or business relationship: (1) the existence of a business relationship or contract; (2) knowledge of the business relationship or contract on the part of the defendant; (3) an intentional and unjustified interference with the business relationship or procurement of the contract‘s breach; and (4) damage to the plaintiff as a result of the interference. See Tamiami Trail Tours, Inc. v. Cotton, 463 So. 2d 1126, 1127 (Fla. 1985); McKinney-Green, Inc. v. Davis, 606 So. 2d 393, 397-98 (Fla. 1st DCA 1992) (treating absence of justification as a separate element).
There is no dispute that Mr. Howard and Centaworld Holding entered into a contract giving Howard an option to purchase Tract 3. Material factual issues exist regarding the remaining elements.20 Mr. Howard and his attorney testified on deposition that Mr. Gardner told them that when he assigned the second mortgage to Murray, Mr. Murray was well aware of the option agreement and Howard‘s efforts to assemble all the property in Parcel 208/308. See Progressive Express Ins. Co. v. Camillo, 80 So. 3d 394, 399 (Fla. 4th DCA 2012) (“A trial court may not weigh the evidence or judge the credibility of witnesses in arriving at summary judgment.“). Mr. Howard testified that Mr. Gardner,21 who controlled Centaworld, told him that Mr. Murray promised to release the parcels encumbered by the second mortgage upon payment of the purchase prices set out in the option agreement.
Genuine issues of material fact exist regarding whether Murray knew about the option and intentionally interfered with the contract or Gardner‘s business relationship with Howard in a commercially unjustified manner. Mr. Murray claims he was unaware of the option but also argues that he was entitled to advance or protect his own business or financial interests for any lawful reason or motive, using proper methods. See McCurdy v. Collis, 508 So. 2d 380, 384 (Fla. 1st DCA 1987) (“The justification for intentional interference ‘depends upon a balancing of the importance, social and private, of the objective
Alleged Taking and Interference with Murray‘s Contract to Sell Tract 3
We affirm entry of summary judgment on Murray‘s 2009 claims. First, the trial court correctly determined the claims against Walton County for inverse condemnation were not ripe. A claim “is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.” Alachua Land Investors, LLC v. City of Gainesville, 107 So. 3d 1154, 1158-59 (Fla. 1st DCA 2013) (quoting Williamson Cnty. Reg‘l Planning Comm‘n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985)). Although “extraordinary delay” may obviate the finality requirement, see Grosscup v. Pantano, 725 F. Supp. 2d 1370, 1379 (S.D. Fla. 2010), the record establishes the delay in this case can be attributed to Murray‘s failure to provide the County with needed additional information regarding matters other than the contested development rights. See Wyatt v. United States, 271 F.3d 1090, 1098 (Fed. Cir. 2001) (stating “that a taking may occur by reason of ‘extraordinary delay in governmental decisionmaking,‘” but that “delay in the permitting process may be attributable to the applicant as well as the government.” (citation omitted)).
Finally, Murray‘s argument that the trial court erred in granting summary judgment on its claims of tortious interference with a business relationship, fraudulent misrepresentation,22 negligent misrepresentation,23 and civil theft24 all rely on Murray‘s claim to have had development rights for Tract 3 and Murray‘s claim that Howard‘s representations that
Affirmed in part, reversed in part, and remanded for further proceedings.
WOLF and RAY, JJ., CONCUR.
Notes
“Tract A” referred to in the option is the property referred to elsewhere in this opinion as Tract 3.1. Property: Howard agrees to buy and Centaworld agrees to sell that certain land located within Tract 208 Sandestin Resort . . . . Parcel 1 consists of approximately 1.453 acres (“Tract A“). . . .
The Purchase Price for Tract A is Two Hundred Thirty Five Thousand Dollars ($235,000) plus the release price, which shall not exceed $265,000, as determined by Jay Odom, holder of a mortgage encumbering Tract A. . . .
In no event shall the total purchase price paid for all Tracts exceed Two Million Nine Hundred Fifteen Thousand Dollars. . . . Purchase Prices shall be payable as follows:
A. Option Payment: Simultaneous with the execution of this agreement by all parties, Howard shall pay to Centaworld the sum of One Hundred Fifty Thousand Dollars ($150,000.00) as an option payment to be applied to Centaworld‘s Equity as listed in Exhibit B . . ..
B. Loan Payments: For a period of six (6) months following the conclusion of the Inspection Period, Centaworld will be responsible for loan payments to the lenders as set forth in Exhibit “B” attached here (the “Loan Payments“). Thereafter, Howard will be responsible for the Loan Payments thereafter until closing or the termination of this Agreement. . . .
3. Closing: Closing on Tracts A, B and C shall occur no later than eighteen (18) months of the Effective Date, provided; however, the debts itemized in Exhibit B to Jay Odom and Peoples First Community Bank shall be paid in full within twelve (12) months of the execution of this agreement. . . .
Prior to making any internal, likekind transfer within the DRI, the proposed transfer, with the exception noted below, must first be approved by Sandestin. After Sandestin has approved of the transfer, a notice of the proposed transfer must be submitted in writing to the Walton County Planning and Zoning Department with an explanation of the proposed change. The Walton County Planning and Zoning Department shall review the proposed change and inform the applicant in writing within fifteen (15) days whether the proposed transfer is approved, denied, or requires additional information, and the reasons for the Department‘s decision. The Walton County Planning and Zoning Department shall approve the transfer if the type of use to be transferred is available for development and is being transferred to an area which has been previously approved for that type of use within the DRI. The approval of Sandestin shall not be required for any likekind transfers within Parcels 208/308 which are owned by the Howard Group. . . .
4. In the 2006 case Plaintiffs K&H Development Group, Inc., Blalock Destin, Inc. and Roger Murray, Jr. have asserted claims against Defendants Howard Rock Fee, LLC and Sebring Zimbari, Inc., for slander of title and quiet title.
5. In the 2007 case Plaintiffs K&H Development Group, Inc. and Roger Murray have asserted claims against Defendants Sebring Zimbari and Keith Howard for trespass and for an injunction against Howard Rock Fee, LLC.