State v. Long Beach Harbor Resort, LLC

346 So.3d 406

The STATE of Mississippi, BY AND THROUGH Michael WATSON in his Official Capacity as Secretary of State as Trustee of Public Tidelands

v.LONG BEACH HARBOR RESORT, LLC

NO. 2021-CA-00430-SCT

Supreme Court of Mississippi.

August 25, 2022

ATTORNEYS FOR APPELLANT: JOSHUA W. DANOS, Pascagoula, G. CHARLES BORDIS, Ocean Springs, OFFICE OF THE ATTORNEY GENERAL, BY: MARY JO WOODS, Jackson

ATTORNEYS FOR APPELLEE: HENRY LAIRD, MICHAEL CAVANAUGH, MICHAEL WHITEHEAD, Biloxi, FREDERICK T. HOFF, JR.

BEFORE KITCHENS, P.J., MAXWELL AND CHAMBERLIN, JJ.

CHAMBERLIN, JUSTICE, FOR THE COURT:

¶1. Long Beach Harbor Resort, LLC (the Resort), leased a parcel of land located on the Public Trust Tidelands from the City of Long Beach. This Court is asked to determine whether the Resort is required to enter into a separate lease with the Secretary of State for the use of the tidelands property or whether the Resort already has a valid lease allowing use of the tidelands in question. This Court finds that the State of Mississippi has, through its Boundary Agreement and Tidelands Lease with the City of Long Beach, ratified the prior lease entered into between the City and the Resort. Accordingly, this Court affirms the chancery court's grant of summary judgment in favor of the Resort and finds that the Resort has a valid tidelands lease as ratified by the Secretary of State.

FACTS AND PROCEDURAL HISTORY

¶2. On February 11, 2010, the City of Long Beach Port Commission (Port Commission) and Blue Ridge Properties, LLC,¹ entered into an Amended and Restated Lease Agreement. (the Resort Lease) The agreement was an assignment of a prior lease that originated on September 18, 2000, between the Port Commission and a different entity. Two parcels of land were included in the 2010 lease: Parcel A was north of U.S. Highway 90 where a building with a value of no less than $750,000 was to be constructed, and Parcel B was a parking lot south of U.S. Highway 90.

¶3. The Resort Lease granted the Resort exclusive gaming rights to the property. Article 5, section 1, allowed the Resort to operate gaming on the premises so long as it was in compliance with the rules of the Mississippi Gaming Commission, and "no actual gaming activities [were to] be conducted or permitted south of U.S. Highway 90."

¶4. Article 17 of the Resort Lease was titled "Quiet Enjoyment" and contained the following provision in section 2:

Lessor makes no warranties, either express or implied regarding any claim or asserted claim to any portion of the leasehold property as public trust tidelands. Lessee must satisfy himself as to the status of any such claims, and Lessee's only relief or recourse in the event of such a claim or determination is cancellation hereof.

This provision recognized that, in the event the Secretary of State insisted that the Resort needed a tidelands lease, the City would not be a party to that dispute.²

¶5. On May 18, 2011, the City and the Port Commission³ entered into a Boundary Agreement with the State of Mississippi, through the Secretary of State, to delineate the Public Trust Tidelands within the Long Beach harbor. The land agreed to be Public Trust Tidelands included a portion of the land from the Resort Lease.

¶6. On the same day, the City, with the approval of the Port Commission, entered into a Tidelands Lease with the Secretary of State. The lease authorized the City to use the tidelands defined by the Boundary Agreement but located within the city harbor. A portion of the land leased to the Resort for a parking lot was included in this Tidelands Lease. The Tidelands Lease authorized the city to use the leased area in the tidelands for harbor and development uses only.

¶7. On December 5, 2017, the Resort entered into an Option Agreement with the Secretary of State for a Public Trust Tidelands Lease. The purpose of the Option Agreement was to allow the Resort and the Secretary of State to come to an agreement on the terms of a tidelands lease for the parcel of land the Resort was leasing from the City that was located on the tidelands. One of the Secretary of State's contingencies to entering a Tidelands Lease with the Resort was the cancellation or termination of any existing tidelands lease with the City and Port Commission. The Option Agreement expired on April 30, 2018, but the Secretary of State and the Resort never entered into a tidelands lease.

¶8. On January 30, 2019, the Mississippi Gaming Commission meeting minutes reflect that the Resort was granted gaming site approval. At the time of this approval, the Resort was in the process of purchasing Parcel A, the land north of U.S. Highway 90, and had continued to rent Parcel B as a parking lot for its restaurant. Pursuant to Mississippi Code Section 97-33-1(b)(2) (Rev. 2020), the gaming site was to be constructed with the "entire proposed gaming area located onshore within eight hundred feet of the mean high water line of the Mississippi Sound."⁴ The leased parking lot on the tidelands was used to satisfy the Mississippi Gaming Commission regulations and statutory requirement that the Resort control property adjacent to the waters of the Mississippi Sound that are continuous with the property where the actual gaming will be conducted and located within eight hundred feet of the mean high water line. See Miss. Code Ann. § 97-33-1 ; 13 Admin. Code Part 2, Rule 1.4 (adopted May 1, 2013), Westlaw. The parking lot was used as the reference point for determining the eight hundred foot distance from the mean high water line.

¶9. On September 10, 2019, counsel for the Secretary of State sent a letter to the Resort's counsel with a proposed tidelands lease. In the letter, the Secretary of State required the tidelands property at issue to be removed from any prior leases and evidence that the City approved of a direct, gaming-related lease between the Resort and the Secretary of State. Once all the contingencies were met, the Resort could enter a tidelands lease.

¶10. On September 27, 2019, the Resort filed a declaratory judgment action against the State, by and through Delbert Hosemann, in his official capacity as then-Secretary of State. The Resort asked the chancery court to declare that the Resort did not need a tidelands lease because (1) "the real property is not part of the Mississippi Public Trust Tidelands"; (2) the use of the real property is for a higher public purpose pursuant to Mississippi Code Section 29-15-1 to -23 (Rev. 2020); and (3) the Mississippi Gaming Commission's approval of the site negated the need for approval from the Secretary of State pursuant to Mississippi Code Sections 75-76-1 to -63 (Rev. 2016).

¶11. On November 1, 2019, the State responded and argued that the Boundary Agreement was binding and required that the Resort have a lease. Additionally, the State argued that the property is held in trust by the State, with the Secretary of State as trustee, so any acquisition by the Resort of the tidelands was void.

¶12. On March 30, 2020, pursuant to Mississippi Rule of Civil Procedure 56, the Resort filed three motions for summary judgment arguing that no issues of material fact remained. The Resort argued in the three separate motions that (1) further approval from the State was not required because the site had been approved by the Mississippi Gaming Commission as suitable for gaming; (2) the land was not a part of the Mississippi public trust tidelands; and (3) the real property was and will continue to be used for higher public purposes. In support of the second motion the Resort attached copies of various pieces of legislation. See H.B. 886, Reg. Sess., 1962 Miss. Loc. & Priv. Laws ch. 917; H.B. 1234, Reg. Sess., 1987 Miss. Loc. & Priv. Laws ch. 861; H.B. 1768, Reg. Sess., 2016 Miss. Loc. & Priv. Laws ch. 959.

¶13. Over the following months, the parties conducted discovery via interrogatories and requests for production of documents. Throughout the course of discovery, it was eventually established that the disputed property was part of the Public Trust Tidelands.

¶14. On December 14, 2020, the court entered a final judgment denying the Resort's first two motions for summary judgment and granting the third. In the final judgment, the court found:

Resort has a valid and enforceable property right, albeit a leasehold interest, in and to the Leased Premises by virtue of its lease with the Port Commission/City of Long Beach. The Port Commission had the full jurisdiction, control and management of the Leased Premises as of the date of the Amended and Restated Lease, which was more than a year prior to the May 18, 2011, Boundary Agreement and the Public Trust Tidelands Lease between the City of Long Beach/Port Commission[.]

The court also found that

the house bills vested the Port Commission with full jurisdiction and control of the Long Beach port and harbor without any reservation of the right to require lessees of the port commission to enter into tidelands leases with the State.... Further, the Court finds that grant and control of the Long Beach Harbor to the Port Commission does not violate Section 90 of the Mississippi Constitution. The Port Commission/City is a political subdivision of the State and not a private person or corporation.

The court amended the judgment on April 1, 2021, after the State filed a motion to reconsider. The court found that it did "not have jurisdiction to determine the rights between the parties with respect to the ‘in lieu’ " payments, but, otherwise, the judgment was unchanged.

¶15. The State appealed the final judgment granting the Resort's third motion for summary judgment, arguing that neither the City nor the Port Commission had the authority to lease the tidelands property; therefore, the Resort should be required to obtain a tidelands lease.

STANDARD OF REVIEW

¶16. "This Court employs a de novo standard of review when considering a trial court's grant or denial of summary judgment." Hobson v. Chase Home Fin., LLC , 179 So. 3d 1026, 1033 (Miss....