Town of Ponce Inlet v. Pacetta, LLC

Citations: 226 So. 3d 303; 2017 Fla. App. LEXIS 8842; 2017 WL 2605150Docket: 5D14-4520

Court: District Court of Appeal of Florida; June 12, 2017; Florida; State Appellate Court

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The Town of Ponce Inlet appeals a significant judgment from a jury trial concerning an inverse condemnation claim against Pacetta, LLC, Down the Hatch, Inc., and Mar-Tim, Inc. The appeal arises from a prior liability ruling that favored Pacetta. The Town is a small, predominantly residential municipality situated in Volusia County, bordered by the Halifax River and the Atlantic Ocean, with limited commercial development primarily consisting of three riverfront enterprises, including Pacetta’s property.

The dispute originated in 2003 when the Town adopted a Comprehensive Land-Use Plan, approved by the State of Florida, that designated a "riverfront commercial" category with restrictions on building height, square footage, and the development of marinas. In January 2004, the Town established a Riverfront Overlay District, further limiting dry stack boat storage facilities. In June 2004, Pacetta, led by Lyder and Simone Johnson, acquired two parcels: one in the riverfront commercial zone and another in a medium-density residential zone, initially intending to build a residence but later planning a mixed-use waterfront development, encouraged by the Town. Additional property acquisitions were necessary for this expanded project.

In August 2005, Pacetta acquired parcels 3 and 4, followed by parcels 5–9 in March 2006, and parcel 10 in May 2006, totaling ten contiguous parcels encompassing sixteen acres. These parcels housed the Sea Love Boat Works and Down the Hatch restaurant, with parcel 10 zoned for nineteen townhouses and an equivalent number of boat slips. Pacetta planned to develop these parcels as the Villages of Ponce Park, intending to build townhomes, expand the restaurant, and establish a dry slip storage facility. However, this development conflicted with the Town’s 2003 Comprehensive Land-Use Plan and the 2004 ROD, which are legally binding frameworks for land use and development. To proceed, Pacetta needed the Town to amend its Comprehensive Land-Use Plan and ease zoning restrictions. The Town began amending its plan to accommodate Pacetta's project, which required certain commitments from Pacetta that were mutually acceptable. Between June 2004 and 2008, Pacetta and the Town maintained a cooperative relationship, although tensions arose in late 2007 due to opposition from some officials and citizens. In August 2007, the Town passed an ordinance for "citizens’ initiatives" related to land actions and later imposed a year-long building moratorium. Nonetheless, in March 2008, the Town council approved amendments to the Comprehensive Land-Use Plan, eliminating square foot limits on commercial buildings and permitting boat storage, both crucial for Pacetta's project. The Town submitted this amendment to the Florida Department of Community Affairs for review.

The Department of Community Affairs (DCA) issued objections, recommendations, and comments on a proposed amendment to the Comprehensive Land-Use Plan after the Town modified the plan to address its concerns. Following this, the amended plan was presented to the town council for a second reading and final approval. Concurrently, a fall 2008 election included a referendum from a citizen initiative to amend the town charter, aiming to elevate existing land-use restrictions to an immutable charter provision to limit future development. Under Florida Statutes § 163.3184, the amendment process involves a local government first deciding whether to transmit the proposed amendment for review. If transmitted, the DCA reviews it and provides feedback. The local government then has three options: adopt the amendment, adopt it with changes, or reject it. Amendments are legislative policy decisions. The Fifth Amendment protects against the taking of private property without just compensation, typically through eminent domain. However, Pacetta claimed that no physical invasion occurred but rather an inverse condemnation, which arises when a property is effectively taken without formal eminent domain action. Regulatory takings can be total (denying all economically beneficial use) or partial. The assessment for partial takings includes evaluating the economic impact, interference with investment-backed expectations, and the nature of government action. The Federal Takings Clause, applicable to states via the Fourteenth Amendment, is noted, along with relevant case law. In the case of Town of Ponce Inlet v. Pacetta, LLC, the court affirmed a summary judgment regarding whether Pacetta’s land was one parcel or ten, referencing the statutory definition of a "parcel of land."

Pacetta argued that its acquisition of ten tracts of property constituted a single contiguous sixteen-acre parcel intended for development as one unit. The court affirmed a summary judgment indicating that the citizens’ initiative referendum affected five or fewer parcels, thus violating section 163.3167(12) and rendering the referendum and related ordinance invalid. Subsequently, Pacetta initiated a lawsuit alleging unconstitutional "taking"/inverse condemnation against the Town. The Town contended that the trial court erred by not ruling on Pacetta’s federal due process and equal protection claims, focusing solely on state constitutional claims. Pacetta's complaint included allegations of violations under both Florida and federal laws, seeking damages rather than injunctive relief. During the bench trial, the court found in favor of Pacetta, noting the Town’s illegal actions, including collusion with citizens’ groups and refusal to accept building applications since 2004. At the jury trial, the Town successfully moved for a directed verdict, citing the lack of evidence for damages, but the court did not grant the dismissal without prejudice that Pacetta requested, limiting their future legal options.

Pacetta asserted post-trial that the trial court could not adjudicate its federal constitutional claims due to an "England reservation," which allows a party to preserve federal claims for federal court while addressing state claims in state court. This principle, established in England v. La. State Bd. of Med. Exam’rs, permits a party to inform state courts of the federal claims for compliance purposes, intending to return to federal court if the state court rules against them. However, this reservation is conditional on the party not subsequently asking the state court to resolve the reserved federal issues. In this case, Pacetta pursued both state and federal due process claims and received a favorable liability finding, with the court deferring the damages assessment to the jury. Pacetta’s counsel did not demonstrate proof of damages nor argue against a directed verdict for the federal claims based on the reservation, leading to a requirement for a directed verdict on all claims due to lack of damages proof. The court concluded that it erred by not entering a final judgment for Town on Pacetta’s federal constitutional claims in counts II and III. The case is remanded for an amended final judgment favoring Town on those counts and for a new trial on liability regarding count I, specifically assessing the potential for a "partial" or "as-applied" taking of a relevant parcel and the claim's ripeness. The court declined to address additional issues raised by Town concerning the jury trial on damages.