Howard v. Murray

184 So.3d 1155

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.

Nos. 1D14–1841

1D14–1984

1D14–1996.

District Court of Appeal of Florida, First District.

Nov. 9, 2015.

Rehearing Denied Feb. 29, 2016.

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 trial court ruled that development rights within the Sandestin Development of Regional Impact (DRI) run with the land: The trial court decided that "the issuance of a deed or other instrument of conveyance carries with it the ownership of a reasonable portion of intensity rights" and that "the amount of intensity allowed for a parcel must be determined based upon the individual circumstances of the development." We conclude this approach is unworkable and reverse the final judgment in part, on this basis.

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 trial judge that development rights created by an order authorizing a development of regional impact but never allocated—by the development order or otherwise—to a specific subparcel are automatically conveyed when the subparcel is deeded.

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 Tract 3.⁸ On February 1, 1996, Centaworld Corporation conveyed Tract 3 to Centaworld Holding Corporation (Centaworld Holding). After Centaworld Holding executed a first mortgage in favor of Peoples First Community Bank (Peoples First), encumbering Tract 3, to secure a loan of approximately $227,000.00, Howard obtained an option to purchase Tract 3 (among other parcels) from Centaworld Holding.⁹

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, Centaworld Holding filed for Chapter 11 protection in bankruptcy court. On September 1, 1999, Peoples First assigned its Tract 3 mortgage to Murray. After the bankruptcy case was dismissed, Centaworld Holding conveyed its interest in Tract 3 to K & H Development Group, Inc. by quitclaim deed on May 9, 2000.

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 staff, regarding the NOPC, "reconfirm[ed] that the proposed NOPC does not affect property within Sandestin that is not owned by Howard Group" and that ...